Supreme Court Declines Review of Medicare Secondary Payer Decision: Three Key Takeaways

Three Key Takeaways

October 8, 2012

On Oct. 1, 2012, the Supreme Court of the United States declined review of a 6th Circuit decision that upheld the government’s authority under Medicare Secondary Payer (MSP) law to recover all expenses paid on behalf of a Medicare beneficiary when that beneficiary, in turn, recovers from a third party.

In this case, a beneficiary was injured in an accident and subsequently reached a settlement with a third party for expenses arising from that accident. Under the authority of the Medicare Secondary Payer Act (MSPA), the government demanded that the beneficiary repay the full amount of his medical expenses. The beneficiary argued that he should repay Medicare only for the percentage of his medical expenses caused by the settling third party. The 6th Circuit rejected his argument and held that the government was entitled to fully recover the amounts paid on the beneficiary’s behalf.

The Supreme Court’s refusal to review this case highlights the broad discretion that the courts have granted the government in MSP recovery actions. The following are the three key takeaways from the 6th Circuit decision:

  1. Under MSP Law, the Government is not Limited to Subrogation. The 6th Circuit decision demonstrates that the government can enforce its rights by recovering from any entity (whether provider, beneficiary, or other) that has received payment from a primary payer (e.g., a settlement in a tort case). And as such, there is no requirement that the government’s recovery be limited to a proportionate share.
  2. Medicare v. Medicaid: Recoveries do not have to Look the Same. The beneficiary in this case argued that, under the federal Medicaid statute, the state is entitled to recover only its share of a discounted settlement according to the extent of the third party’s liability for medical expenses. See 42 U.S.C. § 1396a(a)(25). While the court agreed that such a limitation applies in a state’s recovery of Medicaid payments, no such limitation exists for Medicare. The court held that, under the MSPA, a beneficiary who receives payment as part of a settlement is responsible for reimbursing the government for the full amount that is demanded. See 42 U.S.C. § 1395y(b)(2)(B)(ii).
  3. When Reviewing MSP Recovery Amounts, the Court Will Focus on the Scope of the Beneficiary’s Claim Against a Third Party. The court held that a beneficiary cannot claim a third party is responsible for all his medical expenses, on the one hand, and subsequently tell the government that the same third party was responsible for only a percentage of those expenses on the other. Thus, even if the beneficiary settles or compromises on the amount that the third party will pay, and even if the third party never admits liability, the beneficiary can be required to reimburse the government for the Medicare payments made on his behalf.