If a Medicare beneficiary has filed or plans to file a liability claim (a claim for
damages) against a party that allegedly caused an injury or illness, Medicare initially
pays for services related to that injury or illness (if they are covered) subject
to recovery from the beneficiary, if the beneficiary later receives payment from a
liability insurer or a self-insured party as a result of a judgment on, or settlement
of, the liability claim. Since liability claims are usually not settled or adjudicated
until after protracted negotiations and possible litigation, Medicare pays first where
a liability claim is pending and recovers only after the beneficiary receives payment
from the liability insurer.
The beneficiary's obligation to refund the Medicare payment is reduced by a portion
of the cost (including attorney fees) the beneficiary incurred in procuring the total
settlement or judgment. The Medicare intermediary or carrier determines the amount
the beneficiary must refund based on the Medicare regulations.
If Medicare is not reimbursed after the beneficiary receives an insurance payment,
the amount due Medicare (up to the amount of the insurance payment) may be withheld
from any social security benefits to which the beneficiary is entitled.
A provider of services or a physician or supplier that accepts assignment may not
bill a liability insurer since payment to a provider, physician or supplier by the
liability insurer directly reduces the amount the beneficiary recovers from that insurer.
That is a violation of the provider agreement in Section 1866 of the Act and the assignment
agreement in Section 1842(b)(3)(B)(ii).
A Medicare provider or a physician or supplier that accepts assignment may not bill
a beneficiary for covered services even though the beneficiary has received payment
from a liability insurer for the injury or illness for which the services were furnished.
This rule applies whether or not the provider has claimed or accepted conditional
primary Medicare benefits. Since these are covered services, the beneficiary is protected
by the provider and assignment agreements, i.e., a provider of services may not bill
a beneficiary for such services, except for deductible and coinsurance amounts. Medicare
providers or a physician or supplier who accepts assignment may not file a lien against
a beneficiary's liability insurance proceeds. To do so is tantamount to billing the
beneficiary and is a violation of the provider or assignment agreement.
Effective for items and services rendered on or after January 1, 1987, if a liability
insurer fails to make appropriate reimbursement to Medicare when Medicare has paid
for services reimbursable under liability insurance, the claimant has the right to
take legal action against the insurer and to collect double damages.