Medicare Secondary Payer Mandatory Reporting— Another Y2K or Cause for Concern?

October 7, 2009

The Medicare, Medicaid and SCHIP Extension Act of 2007 (“MMSEA”) establishes very significant obligations on parties and their counsel when resolving claims or lawsuits involving Medicare beneficiaries. This article will explore the new Medicare reporting requirements, existing rules on Medicare liens, and practical implications for lawyers resolving cases involving Medicare beneficiaries.


Medicare is a federal health insurance program for those sixty-five and older, those under age sixty-five with certain disabilities, and people of all ages with End-Stage Renal Disease. In 1980, Congress passed the Medicare Secondary Payer Act (“MSP”) which is codified at 42 U.S.C. § 1395y. The purpose of the MSP is to reduce Medicare costs by shifting the burden of payment for medical treatment to private entities when payments are made or can reasonably be expected to be made under a worker’s compensation plan or liability insurance policy or plan (including self-insured plans.) Under the MSP, these private plans have primary responsibility for payment of medical bills for Medicare recipients. Medicare acts as the “secondary payer” and is responsible for amounts not covered by the primary plan. As a “secondary” payer, Medicare may conditionally pay for treatment and seek reimbursement. Due in large part to rising Medicare costs and Medicare’s ineffective recovery of secondary payments, President Bush signed the MMSEA into law in 2007. The MMSEA and subsequent regulations establish comprehensive reporting obligations for liability insurance (including self-insurance), no fault insurance and worker’s compensation plans, all of which are referred to as Responsible Reporting Entities (“RRE’s”).


Section 111 of the MMSEA imposes mandatory reporting requirements upon RRE’s that settle claims or pay judgments involving Medicare beneficiaries. The reporting will be made electronically. RRE’s must register with the Center for Medicare and Medicaid Services (“CMS”) Coordination of Benefits Contractor (“COBC”). The RRE’s then must test data submissions before submitting production claim input files. The CMS has repeatedly extended the reporting deadlines. The implementation date in the statute is July 1, 2009. In the July 31, 2009 version of the MMSEA § 111 Medicare Secondary Payer Mandatory Reporting User Guide, however, CMS moved the cut-off date and stated that “RRE’s will submit their initial claim files containing information…where the settlement, judgment, award or other payment date is January 1, 2010, or subsequent.” Due to the conflicting dates in the user guide and the statute, the best practice for RRE’s would be to report payments made after July 1, 2009. Each RRE will be given a seven-day “file submission timeframe” after registration. The first reporting timeframe will occur during the second quarter of 2010, and subsequent quarterly reports will be required for new claims and changes to previously reported claims.


The Section 111 reporting responsibilities are a comprehensive way for CMS to obtain information when Medicare is a secondary payer. The reporting responsibilities do not, however, replace or eliminate existing obligations under the MSP. Medicare still has a “super lien” for secondary payments. The statute and regulations give the United States a private cause of action against anyone required or responsible to make payment where Medicare made secondary payments, even if that entity has already reimbursed the Medicare beneficiary. Moreover, the statute and regulations authorize the United States to collect double damages if it is required to file a lawsuit to recover its lien. 42 U.S.C. 1395y(b)(2)(B)iii. Medicare must be reimbursed within sixty (60) days of the date of the primary payment. There is no notice requirement. Medicare liens are enforceable even if the primary payer had no knowledge of the lien.


The most immediate practical implication of the MMSEA is that all RRE’s must register and eventually report appropriate settlements and judgments involving Medicare beneficiaries. The CMS User Guide states that RRE’s must “implement a procedure in their claims review process to determine whether an injured party is a Medicare beneficiary and gather the information necessary for § 111 reporting.” In addition, the Medicare Secondary Payer Manual provides that an attorney must “immediately, upon taking a case, that involves a Medicare beneficiary, inform the COB Contractor about a potential liability lawsuit….” As a practical matter, attorneys for both plaintiffs and defendants have an incentive to notify the COBC early in litigation of a claim asserted by a Medicare beneficiary, so that any issues regarding the Medicare lien can be addressed prior to settlement discussions. Defendants should confirm the claimant’s Medicare beneficiary status at its source. This can be done by requiring the claimant to complete a Social Security Consent to Release Form (SSA 3288). The form authorizes the Social Security Administration to provide the claimant’s Social Security Disability status and entitlement dates for Medicare, SSDI or any other Social Security benefit. The CMS also allows RRE’s to submit a query to the COBC to determine a claimant’s Medicare status. Any RRE that fails to comply with the reporting requirements is subject to imposition of a civil penalty of $1,000 for each day of non-compliance with respect to each claimant. 42 U.S.C. § 1395y(b)(8)(E)i.

Medicare will surely use the information gathered in the reporting to beef up its lien enforcement and collection. It will be increasingly important for litigants and lawyers to take the necessary steps to protect Medicare’s interests. The hand wringing and consternation concerning the reporting requirements is reminiscent of the fear generated before Y2K. This time the fear might be well-founded.

Nicholas Pappas
Jeffrey Mortier

Nick Pappas and Jeff Mortier are members of Frost Brown Todd LLC. They represent corporations in product liability, litigation and commercial matters. They also advise clients on Medicare reporting and lien issues, and serve as national coordinating counsel for Medicare reporting for a product manufacturer.