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You Have Questions? We’ve Got Answers!

The Medicare Secondary Payer Act is known for being among the most complex statutes written. One Court described it as one of the most “impenetrable texts within human experience.” Ass’n of Va. V. Kozlowski, 42 F.3d 1444, 1450 (4th Cir. 1994). Given the complex nature of the statute and the challenges it poses to settlement, one of our primary goals is to educate our clients and colleagues and provide the tools needed to settle claims and comply with the MSPA.

With that goal in mind, we kicked off 2021 with a series of webinars, each focusing on a different aspect of MSP compliance. We are beyond grateful for the time you took in attending those webinars and the thoughtfulness in your follow up questions. So, for the next several months, we are letting you direct the education by answering some of your questions.

Let’s get started!


Q: Regarding the recovery cap, if I have settlement authority for $20,000, how could I settle the claim and repay Medicare liens within that authority?

A: When Medicare payments equal or exceed the settlement amount, Medicare’s recovery is the total settlement amount minus the total procurement costs. 42 C.F.R. ∫411.37(d). In other words, Medicare’s recovery is capped at the total settlement amount less claimant’s attorney fees and costs. This information can be extremely useful when evaluating a case for settlement. Let’s walk through an example using the question above.

In a claim with $20,000 in settlement authority, it is possible to settle the claim and repay any Medicare-related liens and still stay within that authority. To do that, offer the claimant up to half of the authority, $10,000, to settle the claim with the knowledge that the remaining $10,000 in authority may have to be paid to Medicare, a Medicare Advantage Plan, or a Medicare Prescription Drug plan to reimburse their lien.


Q: In my liability claims, I find that Plaintiffs’ attorneys prefer to deal with Medicare themselves. Who is responsible for negotiating with Medicare?

A: All parties have a responsibility to ensure that Medicare, Medicare Advantage, and Medicare Prescription Drug Plan liens are resolved in settlement. This responsibility should be discussed during settlement negotiations and the parties should agree upon and document a plan for reimbursement. There are several methods the parties can utilize to ensure that the Medicare liens are resolved. While, direct payment by the primary payer/defendant to Medicare is highly recommended, that is not always possible, as demonstrated by the above question.

If Plaintiff’s attorney prefers to handle the conditional payment claim research themselves, a portion of the settlement proceeds can be withheld to address conditional payments. Ideally the “holdback” funds would be retained by the primary payer/defendant to repay Medicare directly. Another option is for Plaintiff’s attorney to agree to hold the funds in trust pending receipt of the final lien information and payment of the same. In either instance, Plaintiff’s attorney could handle communications with Medicare. The attorney would need to notify Medicare of the settlement (it is important that this be done post-settlement), obtain the final demand, and provide the primary payer/defendant with a copy of the same. Upon receipt of the final demand, the party with the “holdback” funds would issue payment to Medicare and then release any remaining funds to the plaintiff. If Plaintiff’s attorney is responsible for repaying Medicare, the primary payer/defendant should require proof of repayment and correspondence from Medicare confirming satisfaction of the final demand.

The key here is cooperation. If the parties desire to settle the claim, they can work together to develop a plan that will ensure that the Medicare, Medicare Advantage, and Medicare Prescription Drug plan liens are resolved. The parties’ plan should be documented in the release and protective language should be included if Plaintiff’s attorney will be responsible for reimbursing the lien.


Q: How do we know when Medicare received notice? How does the SOL apply to dormant workers’ compensation claims with lifetime medical that were not reported through Section 111 until they returned for active treatment?

A: The MSP statute provides a three (3) year statute of limitations for the United States to file a lawsuit after the date of receipt of notice of a settlement, judgement, award, or other payment made through Section 111 Reporting. 42 U.S.C. ∫ 1395y(b)(2)(B)(iii) (emphasis added). Courts that have applied the three year statute of limitations looked to the Section 111 reporting dates as the date that Medicare received notice and the starting point for the statute of limitations. Thus, the statute of limitations is “triggered” by the Section 111 report of ORM and/or TPOC.

The application of the three year statute of limitations has been inconsistent when recovery is sought based on ORM (ongoing responsibility for medicals). The prior CRC contractor recognized the application of the three year statute of limitations, but the current contractor has not done so. It remains, however, an appropriate issue to raise in appeals, whenever applicable.

As always, we hope you find this information helpful. If you have a question and don’t see it answered in this month’s newsletter, please send it to us. Email your question to or with “Monthly Highlight Question” in the subject line and tune in next month for a chance to see your question featured.


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