The Great and (Simultaneously) Terrible Medicare, Part I

When federal law and health insurance combine, the result is a life-saving public monstrosity that will make you want to cheer and cry at the same time.

When federal law and health insurance combine, the result is a life-saving public monstrosity that will make you want to cheer and cry at the same time.

Where you been, man?!

Sorry everybody! I fully intended to blog last week, but ended up not being able to because it got INSANELY busy around here. I'll do my best to make it up to you by writing a killer introductory article on Medicare, m'kay?

Fine. What is Medicare, anyway?

Medicare is a health insurance program created by federal law and providing insurance for older Americans, as well as those suffering from certain conditions or disabilities. Enacted under Lyndon Johnson's White House in 1965, Medicare is one of the programs included in the ever-popular Social Security Act.

You probably know that Medicare has different subparts that cover different types of medical services:

  • Part A - Hospital insurance covering inpatient visits, long-term care, and some home and hospice care. Most folks who have Part A don't pay a premium because that person or their spouse already paid for it with payroll taxes while they were working.
  • Part B - More traditional medical insurance covering doctor visits, outpatient care, medical supplies, and preventative services. There's typically going to be a premium for Part B.
  • Part C - Medicare "Advantage Plans" which are offered by private insurers contracting with Medicare to provide benefits that would traditionally fall under Part A or B. A lot of Part C plans will also cover basic prescriptions.
  • Part D - Covers prescription costs. Normally seen in addition to coverage under Parts A or B.

The one thing about Medicare that you really need to be aware of - especially in a personal injury setting - is that Medicare is a "secondary payer." 

What in the world is a secondary payer?

"Secondary payer" means that Medicare will only pay for your medical bills if there is no other source of available funds. Other insurance available? Medicare's going to refuse to pay. Likelihood of recovering in a personal injury claim? Medicare's probably going to refuse to pay. Keep in mind, however, that the Program is now allowed to make "conditional payments" where the primary source of payment isn't expected to cough up the money for at least 120 days from the date (i) the claim is made, (ii) the service is provided, or (iii) the patient is released from care. The 120-day "prompt period" allows providers a little bit of extra flexibility in deciding who to bill, and it also affords an extra layer of protection to Medicare recipients.

So when the doctor does decide to bill Medicare, the Program is going to look at the bills (remember the lovely ICD9/ICD10 codes we talked about awhile back?) to determine whether there's another possible source of payment. If it appears that there might be other health insurance or an automobile liability policy to recover from, there's a great chance that Medicare is going to hold back. This does not mean that Medicare will never pay the bills; it means that Medicare is going to wait and see whether anyone else pays. If nobody does, then Medicare will come back and say, "Fine. I'll pay. Happy?" Or something to that affect.

If Medicare does pay, it does so on the strict condition that if any source of funds becomes available in the future, Medicare will have a right to be reimbursed from that source. Let's put this into practice, because I know that it can get confusing.

Let's say that you got hurt in a bang-bang car accident where mechanics and liability are contested. The other driver's liability carrier flat-out refuses to pay anything, arguing that (i) you were completely at fault and (ii) even if you weren't completely at fault, at the very least contributory negligence will prevent you from recovering anything. In the meantime, you have to have surgery to repair a fractured vertebra. The surgeon performs the operation, which costs $15,000. Since liability is contested and the liability carrier is denying outright, a § 44-49 lien wouldn't be real smart, so the surgeon goes ahead and bills Medicare for that amount. Since your only health insurance is Medicare Part B, and since the liability carrier won't pay anything, at least not anytime soon, Medicare reviews the bills and proceeds to pay at its traditionally-and-arbitrarily-low discounted rate.

Now, it's two years later. You went ahead and sued the other driver, who is of course indemnified by his liability carrier, because that is after all what insurance is. To your glee and the insurance company's surprise, the jury returns a judgment for all of your damages. Now you've got a check in hand and you're ready to do your happy dance. BUT!!! You have to keep in mind that because Medicare's payment of your surgery bill was conditional, Medicare still has a right of reimbursement against that check in your hand. They get back whatever amount they paid towards the injuries that you received in the accident.

Anything else for now?

Only four quick points before we adjourn for the day:

1. There is not a notice requirement for Medicare to assert its right of recovery. That is going to attach automatically whether Medicare's put you on notice of it or not.

2. There is a difference between a lien and a right of recovery/reimbursement. The latter is what Medicare has; it's stronger than a lien and takes priority over any liens that might apply. So if Medicare's right of reimbursement eats up the whole settlement amount and squeezes out a bunch of § 44-49 liens, then you're still going to be on the hook for those amounts.

3. This priority right of reimbursement is going to take effect regardless of what the circumstances are; whether there's an admission of liability or not, and especially regardless of how your recovery is designated. If Medicare's right of recovery is $5,000 and your recovery is $5,000, designated entirely as lost wages, then Medicare still gets their pound of flesh.

4. Along the same lines, Medicare's right of recovery attaches regardless of where the recovery comes from. Whether the settlement check comes from liability, uninsured, underinsured, Medpay or even workers' compensation, Medicare's right of reimbursement still applies.

Stay tuned; more to come on Friday!