Liability Cases and Medicare Recovery Claims – How They Work and What to Know

By Mark Popolizio, J.D., Shawn Johnson, J.D.

June 26, 2026 / 13 min read

Medicare recovery claims (also referred to hereinafter as “Medicare conditional payment” or “lien” claims) continue to present several challenges for liability insurers when settling claims. There are many moving parts, several different players, and no perfect or one-size fits all approaches to addressing Medicare liens and protecting against potential liability. However, having a general understanding of the different types of Medicare recovery claims and how they impact liability cases is critical to help navigate this frustrating area.

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To support this objective, this article focuses exclusively on Medicare recovery claims in liability cases, aiming to provide liability insurers with a better understanding of the process and key considerations to improve best practices in handling these claims. Medicare recovery as it relates to no-fault/med-pay/PIP and workers’ compensation claims is outside the scope of this article and will be addressed in future pieces.

With that context, the authors outline the following considerations related to Medicare recovery and liability claims:

The first step – determine the claimant’s Medicare status

Determining whether the claimant is a Medicare beneficiary (or was a beneficiary at any one point during the claim) is the first step in assessing whether there may be a potential Medicare recovery claim. Here, the Center for Medicare and Medicaid Services’ (“CMS’s”) Section 111 “Query Process” can be very helpful.^[1]

In general, as part of CMS’s Section 111 Query Process, an insurer, or other risk-bearing entity (known as the Responsible Reporting Entity or “RRE” in the Section 111 context),^[2]can submit the “Big 5 Data” points through the Query to determine the claimant’s Medicare status. The Big 5 data points are the claimant’s (a) first name, (b) last name, (c) gender, (d) date of birth, and (d) the Social Security Number (“SSN”) or Medicare ID (Health Insurance Claim Number [HICN] or Medicare Beneficiary Identifier [MBI]).^[3]

If there is a “match,” CMS confirms that the claimant is a Medicare beneficiary and provides the claimant’s current Medicare ID number, most recent Medicare Part A/B entitlement dates, as well as Medicare Advantage (Part C) and Medicare Prescription Drug Plan (Part D) enrollment information for the past three years, as may be applicable.^[4] While the Query does not provide lien amounts, the information it does provide (e.g., the claimant’s Medicare program enrollment status) can be very useful as it identifies what entities may have potential lien rights, and who the parties may need to contact for lien information.

Medicare Part A/B recovery - CMS’s process

If the claimant is enrolled in Medicare Part A and/or B (“Original” Medicare), it is CMS that pursues recovery of any conditional payments. CMS uses two contractors to help them do this: the Benefits Coordination & Recovery Center (BCRC) and the Commercial Repayment Center (CRC).

In terms of “how” CMS pursues recovery, the agency largely uses its Section 111 reporting process to help drive its recovery process, including which contractor it uses and which party it pursues as the debtor. Very generally, as more fully detailed in the author’s recent article, when an insurer reports “ORM” (Ongoing Responsibility for Medicals) and/or a “TPOC” (Total Payment Obligation to the Claimant) through the Section 111 reporting process, CMS uses those reports to initiate recovery for conditional payments.

While a deep dive into CMS’s Section 111 reporting triggers is outside this article’s scope, ORM, in general, involves situations where an insurer accepts responsibility for a claimant’s injuries, which includes covering the claimant’s medical treatment.^[5] ORM reporting typically relates to workers’ compensation, no-fault, med-pay, and PIP claims.

When CMS receives an ORM report, CMS’s stated workflow is to initiate conditional payment recovery against the insurer using its CRC contractor.^[6]The CRC then utilizes the RRE’s Section 111 reporting data to identify medical treatment it believes is the insurer’s responsibility and seeks reimbursement against the insurer.^[7]

In contrast, under the TPOC trigger, reporting is required regarding settlements, judgments, awards, or other payments with Medicare beneficiaries as specifically defined by CMS under its Section 111 guidelines.^[8] The TPOC reporting trigger has particular applicability in liability claims (and other claims, such as workers’ compensation) where insurers settle claims with Medicare beneficiaries.

When CMS receives a TPOC report, CMS’s stated workflow is to use that information to seek reimbursement from the claimant using its BCRC contractor.^[9] The BCRC searches Medicare’s system for any medical treatment the BCRC believes to be related to the claim and then seeks reimbursement from the claimant for any identified conditional payments.^[10] Thus, in the typical liability settlement, CMS pursues the claimant for reimbursement.

In terms of CMS’s rights, CMS has strong recovery rights against primary payers (and other parties), which could result in significant liability.^[11]By way of example, CMS can seek recovery from the claimant, primary plan, claimant’s attorney, and other parties when the primary plan has “demonstrated responsibility” as defined under the MSP.^[12]Failure to properly address and resolve Medicare recovery claims can expose an insurer to significant liability, including interest accrual, Treasury claims (including “offsets”), U.S. Department of Justice actions, “double damages,” and other potential recourses.

Medicare Advantage recovery differs from CMS’s process

How Medicare Advantage Plans (MAPs) pursue recovery claims is completely different from CMS’s process. When it comes to MAP recovery, CMS, its contractors (the CRC and BRC), and Treasury are not involved at all. Rather, parties must deal with the individual plan(s), as applicable. Unlike CMS’s recovery process, there is no standardized process in the MAP context, with each MAP plan handling recovery differently using their own internal recovery process. Some MAPs may also contract with third-party vendors to handle recovery on their behalf. Thus, MAP lien information must be obtained directly from the MAP (or its third-party agent, if applicable), as CMS does not provide this information. Likewise, all challenges and disputes must be initiated with the applicable plan(s), or their third-party vendor, as applicable.

In terms of MAP recovery rights, under specific MAP statutes and regulations, MAPs may, in part, “bill” or “charge” their enrollees or insurers for reimbursement.^[13]In addition, in some jurisdictions, MAPs can also sue for “double damages” under the MSP’s private cause of action (PCA) statutes.^[14]For example, three United States Circuit Courts of Appeals have ruled that the MSP’s PCA statute applies to MAPs. Specifically, the Third, Eleventh, and Second Circuits have ruled that MAPs can sue insurers for “double damages” under the PCA statute.^[15]Of note, the 11^th and 2^nd Circuit Courts actually levied “double damages” against the defendant liability insurers as part of their rulings.^[16] In addition to the above U.S. Circuit Court decisions, several United States District Courts have also ruled that MAPs can bring “double damages” claims.^[17]

Medicare Part D recovery is similar to the MAP recovery process

The Part D recovery process is like MAP recovery in that the parties must deal directly with the Part D plan (or its third-party agent, if applicable) to obtain lien information and dispute any lien claims.

In terms of recovery, very generally, certain federal statutes and regulations reference that Part D plans have the same recovery rights as MAPs. For example, 42 U.S.C. § 1395w-102(4) states, in part, that the recovery rights afforded to MAPs “apply in the same manner” to Part D. Likewise, 42 CFR § 423.462 provides that the same “Medicare secondary payer procedures” that apply to MAPs under § 422.108 also apply to Part D plans.^[18]

While Part D plans have recovery rights, in the authors’ experience, Part D plans, in general, have not been as active in pursuing reimbursement in comparison to MAPs and, we have not seen the type of litigation and judicial activity (at least thus far) regarding Part D recovery issues.^[19]

Liability settlements – dealing with Medicare recovery claims

With a basic understanding of the different types of Medicare recovery claims under our belts, we can now examine some general points for liability insurers to consider when addressing Medicare recovery claims as follows:

Start early.

Determining a claimant’s Medicare beneficiary status early in the life of a claim gives the parties more time to obtain Medicare recovery information and address any Medicare conditional payment claim(s) as part of the settlement process and provide a more accurate picture of potential exposure. Starting early can help avoid any last-minute surprises or delays when trying to resolve Medicare lien claim(s).

Remember, there could be multiple Medicare lien claims.

It is important to remember that Medicare beneficiaries can switch their Medicare plans during annual open enrollment periods. Thus, it is possible that there could be multiple Medicare recovery actions that need to be addressed. As noted above, the Section 111 Query Process can be helpful here as it provides information regarding the claimant’s Medicare program enrollment. With this information, the parties can reach out to the applicable Medicare plan(s) to address and resolve any claim(s).

The role (and limitations) of settlement language.

A common question the authors receive is whether settlement language can provide iron-clad protection against potential liability when it comes to Medicare recovery claims. In this regard, it is a common practice for liability insurers to include settlement language making the claimant responsible for all Medicare liens, along with an indemnity and hold harmless agreement in favor of the insurer. However, unless Medicare (CMS, the Medicare Advantage Plan, and/or Part D plan) agrees to these types of provisions and is a signatory to the agreement, it would appear very unlikely that these provisions would shield the insurer from potential liability.^[20] Further, it is noted that CMS, per 42 C.F.R. § 411.24, retains the right to pursue the insurer for reimbursement in situations where the claimant fails to do so, notwithstanding that the insurer has already reimbursed the claimant as part of the settlement.^[21]

Addressing Medicare recovery claims – options and considerations.

Keeping the above points in mind, the focus turns to how a liability insurer can best address Medicare recovery claims and protect its interests. Exactly how Medicare recovery claims will be largely dealt with and addressed, and by whom, really become negotiation points as part of the litigation and settlement process. In this regard, from the authors’ experience, below are some commonly used options in the liability context, along with their limitations and consideration points as follows:

Option A – Making the claimant responsible: One option that is commonly used, as noted in the section immediately above, involves making the claimant responsible for reimbursing Medicare for any recovery claim(s) as part of the settlement agreement. While this is certainly an option, there are limitations to this approach as discussed above.

Option B – The insurer controls the process: Second, many claimant lawyers in the liability context either want to control the process, or have become accustomed to doing so, given the long-standing practice to make the claimant responsible for addressing and reimbursing any Medicare claim(s) as part of settling a liability claim. This option provides the insurer with control over the process from start to end. However, insurers desiring to go down this route often face some practical challenges, including:

First, it is noted that under the MSP there are no provisions that require the claimant to agree to this approach. Thus, to achieve this the insurer will need to prevail upon the claimant and the claimant’s lawyer that this course of action is how the issues will be handled – this can be more easily said than done.

Second, many claimant lawyers in the liability context either want to control the process, or have become accustomed to doing so, given long-standing practice to make the claimant responsible for addressing and reimbursing any Medicare claim(s) as part of settling a liability claim.

Third, the claimant or claimant's lawyer may be unwilling to provide the necessary authorization for the insurer to take control to address and resolve the Medicare recovery claim(s). For example, regarding CMS recovery claims initiated by the BCRC, the insurer cannot obtain CMS’s conditional payment information, dispute (if applicable), and resolve the claim without the claimant’s authorization. The stumbling block here typically involves the name of CMS’s authorization, which is titled “Proof of Representation.” Many claimants and their lawyers are reluctant to sign this document, as the title raises concerns that this document may somehow limit the claimant lawyer’s representative capacity. However, despite its title, the body of the document does not indicate that the authorized party (the insurer) is the claimant’s legal representative. Rather, the document simply allows the authorized party to engage with Medicare to obtain conditional payment correspondence, dispute (if applicable), and resolve the claim. Similar issues could arise regarding those MAP or Part D plans that require the claimant’s authorization.

Option C – Holding back settlement funds: A third possible option commonly used involves the insurer either holding back payment of the settlement funds or a certain portion of the settlement funds until the final lien amount is received from CMS, the MAP, or Part D plan. This option provides some degree of control over the process regarding the availability and release of the funds to reimburse any Medicare claim(s).

However, there are some potential challenges with this approach. First, insurers’ counsel should make sure that holding back release of the settlement funds (either in full or in part) will not potentially subject the insurer to liability per any applicable state-specific statutory or other local rules governing payout of the settlement (such as, by way of one example, any rules requiring the insurer to tender payment of the funds within a certain timeframe). Second, the claimant must be agreeable to this approach. Third, in situations where less than the full settlement amount is being held back, the parties should have a reasonable estimate of what the final Medicare lien is (or will likely be) to determine the appropriate amount to be held back and have a plan in the event the final amount exceeds what was held back.

Of note, this option discussed above contemplates the typical situation where the parties may not know (or are unable to get) Medicare’s “final” lien amount prior to settlement. However, where the “final” lien amount has been obtained, the focus would then shift to determining which party will be responsible for repayment and how that will be done. For a review of those limited instances where (and how) the parties may be able to obtain CMS’s “final” lien amount prior to settlement, see the discussion in the endnote to this sentence.^[22]

In assessing the above, what the authors mentioned at the beginning of the article quickly comes into view – there are no perfect or one-size-fits-all approaches to address Medicare recovery claims or protect against potential liability. This underscores the importance of starting the process early and working with the claimant and the claimant’s lawyer in developing a plan regarding how Medicare recovery claims will be handled, resolved, and reimbursed.

How Verisk can help

Verisk offers several different Medicare recovery services that can help you address CMS, Treasury, MAP, and Part D recovery claims. As part of our services, we also offer our popular CP Link^® program which provides a proactive approach to Medicare recovery claims that leverages your Section 111 data to initiate the conditional payment process. In general, CP Link helps speed up the conditional payment process by identifying potential conditional payment claims through Section 111 data, helps reduce adjuster time, and facilitates a holistic compliance approach to address conditional payment claims. By combining automation with our experienced team, we consistently deliver extraordinary savings for our customers. For example, in 2025, we saved our clients over $138 million in conditional payments and nearly $1.1 million in Treasury savings.

Questions?

Please do not hesitate to contact the authors if you have any questions regarding CMS recovery claims or Verisk’s Medicare conditional payment services, including CP Link.

[1] CMS’s Query Process is outlined in its Section 111 NGHP User Guide. See, CMS’s Section 111 NGHP User Guide (Version 8.4, April 13, 2026), Chapter IV, Chapter 8.

[2] In the Section 111 context, the party obligated to report under Section 111 is referred to as the “Responsible Reporting Entity (RRE).” Very generally, the RREs are insurers and self-insurers but could involve other risk-bearing entities such as self-insurance pools or assigned claims funds depending on the facts. See generally, CMS’s Section 111 NGHP User Guide, (Version 8.4, April 13, 2026), Chapter III, Chapter 6.

[3] See, CMS’s Section 111 NGHP User Guide (Version 8.4, April 13, 2026), Chapter IV, Chapter 8. Of note, as part of this process, if the full nine-digit SSN is not available, RREs can use a partial SSN by using spaces for the first four digits and entering the last five digits of the SSN. Id.

[4] CMS’s Section 111 NGHP User Guide (Version 8.4, April 13, 2026), Chapter IV, Chapter 8.

[5] “ORM” is the abbreviation for “on-going responsibility for medicals.” Very generally, CMS states that “the trigger for reporting ORM is the determination to assume ORM by the RRE, which is when the RRE learns, through normal due diligence, that the beneficiary has received (or is receiving) medical treatment related to the injury or illness sustained. Required reporting of ORM by the RRE does not necessarily require the RRE to have made payment for Medicare-covered items or services when the RRE assumed ORM, nor does a provider or supplier necessarily have to have submitted a claim for such items or services to the RRE for the RRE to assume ORM. The effective date for ORM is the DOI, regardless of when the beneficiary receives the first medical treatment or when ORM is reported.” See generally, CMS’s Section 111 NGHP User Guide (Version 8.4, April 13, 2026), Chapter III, Section 6.3.

[6] https://www.cms.gov/medicare/coordination-benefits-recovery/overview/reimbursing

[7] https://www.cms.gov/medicare/coordination-benefits-recovery/insurer-services/nghp-recovery

[8] “TPOC” is the abbreviation for “total payment obligation to the claimant.” Very generally, under CMS’s TPOC reporting trigger, reporting is required upon claim resolution (or partial resolution) through a settlement, judgment, award, or other payment for cases in which the claimant is/was a Medicare beneficiary as of the TPOC date and where medicals were claimed and/or released, or the settlement, judgment, award, or other payment has the effect of releasing medicals. Under CMS’s current thresholds, physical trauma-based liability, no-fault and workers’ compensation settlements greater than $750 are required to be reported under the Section 111 reporting process. The $750 threshold does not apply to settlements involving exposure, ingestion, or implantation cases. See generally, CMS’s Section 111 NGHP User Guide (Version 8.4, April 13, 2026), Chapter III and IV, Section 6.4.4.

[9] https://www.cms.gov/medicare/coordination-benefits-recovery/beneficiary-services/recovery-process

[10] Id.

[11] On this point, CMS’s recovery rights, in main part, are outlined in 42 U.S.C. § 1395y (b)(2)(B)(ii). This statutory section, states in full, as follows: “Subject to paragraph (9), a primary plan, and an entity that receives payment from a primary plan, shall reimburse the appropriate Trust Fund for any payment made by the Secretary under this subchapter with respect to an item or service if it is demonstrated that such primary plan has or had a responsibility to make payment with respect to such item or service. A primary plan’s responsibility for such payment may be demonstrated by a judgment, a payment conditioned upon the recipient’s compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan or the primary plan’s insured, or by other means. If reimbursement is not made to the appropriate Trust Fund before the expiration of the 60-day period that begins on the date notice of, or information related to, a primary plan’s responsibility for such payment or other information is received, the Secretary may charge interest (beginning with the date on which the notice or other information is received) on the amount of the reimbursement until reimbursement is made (at a rate determined by the Secretary in accordance with regulations of the Secretary of the Treasury applicable to charges for late payments).”

[12] 42 U.S.C. § 1395y (b)(2)(B)(ii). See also 42 C.F.R. § 411. 24 (e) which states as follows: “Recovery from primary payers. CMS has a direct right of action to recover from any primary payer.” Id. In addition, 42 C.F.R. § 411. 24 (g) states as follows: “Recovery from parties that receive primary payments. CMS has a right of action to recover its payments from any entity, including a beneficiary, provider, supplier, physician, attorney, State agency or private insurer that has received a primary payment.” Id.

Under the MSP, a “primary payer's responsibility for payment may be demonstrated by (1) A judgment; (2) A payment conditioned upon the recipient's compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary payer or the primary payer's insured; or (3) By other means, including but not limited to a settlement, award, or contractual obligation.” 42 U.S.C. § 1395y (b)(2)(B)(ii).

Of note, under the MSP, the term “primary payer” is defined as follows: “Primary payer means, when used in the context in which Medicare is the secondary payer, any entity that is or was required or responsible to make payment with respect to an item or service (or any portion thereof) under a primary plan. These entities include, but are not limited to, insurers or self-insurers, third party administrators, and all employers that sponsor or contribute to group health plans or large group health plans.” 42 C.F.R. § 411. 21. See also, 42 C.F.R. § 411. 24 (g) which states: “Recovery from parties that receive primary payments. CMS has a right of action to recover its payments from any entity, including a beneficiary, provider, supplier, physician, attorney, State agency or private insurer that has received a primary payment.” Id.

[13] The statutes on this point are 42 U.S.C. §1395mm(e)(4) and 42 U.S.C. § 1395w-22(a)(4) as follows:

42 U.S.C. §1395mm(e)(4) is entitled “Payments to health maintenance organizations and competitive medical plans” and states as follows: “Notwithstanding any other provision of law, the eligible organization may (in the case of the provision of services to a member enrolled under this section for an illness or injury for which the member is entitled to benefits under a workmen’s compensation law or plan of the United States or a State, under an automobile or liability insurance policy or plan, including a self-insured plan, or under no fault insurance) charge or authorize the provider of such services to charge, in accordance with the charges allowed under such law or policy— (A) the insurance carrier, employer, or other entity which under such law, plan, or policy is to pay for the provision of such services, or (B) such member to the extent that the member has been paid under such law, plan, or policy for such services.” Id.

Similar provisions are contained in 42 U.S.C. § 1395w-22(a)(4). This section is entitled “Organization as secondary payer” and provides that: “Notwithstanding any other provision of law, a Medicare+Choice organization [now called Medicare Advantage] may (in the case of the provision of items and services to an individual under a Medicare+Choice plan under circumstances in which payment under this subchapter is made secondary pursuant to section 1395y(b)(2) of this title) charge or authorize the provider of such services to charge, in accordance with the charges allowed under a law, plan, or policy described in such section— (A) the insurance carrier, employer, or other entity which under such law, plan, or policy is to pay for the provision of such services, or (B) such individual to the extent that the individual has been paid under such law, plan, or policy for such services.” Id.

Additional regulations for consideration are 42 C.F.R. § 422.108(f) and 42 C.F.R. § 417.528 (b) as follows:

42 C.F.R. § 422.108(f) states: “MSP rules and State laws. Consistent with § 422.402 concerning the Federal preemption of State law, the rules established under this section supersede any State laws, regulations, contract requirements, or other standards that would otherwise apply to MA plans. A State cannot take away an MA organization’s right under Federal law and the MSP regulations to bill, or to authorize providers and suppliers to bill, for services for which Medicare is not the primary payer. The MA organization will exercise the same rights to recover from a primary plan, entity, or individual that the Secretary exercises under the MSP regulations in subparts B through D of part 411 of this chapter.” Meanwhile, 42 C.F.R. § 417.528 (b) provides that: “Charge to other insurers or the enrollee. If a Medicare enrollee receives from an HMO or CMP covered services that are also covered under State or Federal worker’s compensation, automobile medical, or any no-fault insurance, or any liability insurance policy or plan, including a self-insured plan, the HMO or CMP may charge, or authorize a provider that furnished the service to charge— (1) The insurance carrier, employer, or other entity that is liable to pay for these services; or (2) The Medicare enrollee, to the extent that he or she has been paid by the carrier, employer, or other entity.” Id.

Of note, these provisions have been interpreted, in general, as permitting MAPs to establish contractual recovery rights as part of their underlying insurance agreements but not creating an implied federal private cause of action right. See, e.g., Nott v. Aetna, 303 F.Supp.2d 565, 571-572 (D. Pa. 2004). In Care Choice HMO v. Engstrom, 330 F.3d 786 (6th Cir. 2003), the court opined that “[i]f an [Medicare] HMO chooses to include such a provision in its insurance policy, its remedy would be based on a standard insurance contract claim and not on any federal statutory right.” Id. at p. 790. Similarly, in Parra v. PacifiCare, 2011 WL 13119115 (D. Arizona 2011), the court indicated that the MAP statutes do not create a federal private cause of action right and do “no more that protect [a MAP’s] right to charge and/or bill a beneficiary for reimbursement, notwithstanding [any] state law or regulation to the contrary.” Id. at *4.

[14] The MSP’s private cause of action statute is codified at 42 U.S.C. 1395y(b)(3)(A) which states, in full, as follows: “There is established a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with paragraphs (1) and (2)(A).” Id.

[15] See, In re Avandia, 685 F.3d 353 (3rd Cir. 2012), Humana v. Western Heritage Insurance Co., 832 F.3d 1229 (11^th Cir. 2016), and Aetna Life Insurance Company v. Big Y Foods, Inc., 52 F.4^th 66 (2^nd Cir. 2022).

[16] Humana v. Western Heritage Insurance Co., 832 F.3d 1229 (11^th Cir. 2016), and Aetna Life Insurance Company v. Big Y Foods, Inc., 52 F.4^th 66 (2^nd Cir. 2022).

[17] On this point, he following United States District courts have ruled that MAPs can sue for “double damages:” California: MAO-MSO Recovery II, LLC v. Mercury Insurance, 2018 WL 3357493 (C.D. Calif. 2018); MAO-MSO Recovery II, LLC v. Farmers Insurance Exchange, 2018 WL 2106467 (C.D. Calif. 2018); Connecticut: Aetna v. Guerrera, 300 F.Supp.3d 367 (D. Conn 2018); Illinois: MAO-MSO Recovery II, LLC v. State Farm, 2018 WL 340021 (C.D. Ill. 2018); MSP Recovery Claims, Series 44 v. Zurich, 2023 WL 5227396 (N.D. Illinois 2023); Louisiana: Collins v. Wellcare Healthcare Plans, Inc., 73 F.Supp.3d 653 (E.D. La. 2014); Maryland: MAO-MSP Recovery II, LLC v. Government Employers Ins. Co., 2024 WL 2924063 (D. Maryland 2024); Massachusetts: MSP Recovery Claims Series LLC v. Plymouth Rock Assurance Corporation, 404 F.Supp.3d 470 (D. Massachusetts 2019); Ohio: MSP Recovery Claims, Series LLC v. Phoenix Insurance Company, 426 F.Supp. 3d 458 (N.D. Ohio, 2019); MSP Recovery Claims, Series LLC v. Grange Insurance Company, 2019 WL 6770729 (N.D. Ohio 2019); and MSP Recovery Claims, Series LLC v. Progressive Corporation, 2019 WL 5448356 (N.D. Ohio 2019); South Carolina: Humana Ins. Co. v. Bi-Lo, LLC, 2019 WL 4643582 (D. South Carolina 2019); Tennessee: Cariten Health Plan, Inc. v. Mid-Century Ins. Co., No.: 2015 WL 5449221(E.D. Tenn. 2015); Texas: Humana Ins. Co. v. Farmers Tex. Cnty. Mut. Ins. Co., 95 F.Supp.3d 983 (W.D. Tex. 2014) and Humana v. Shrader, 584 B.R. 658 (S.D. Tex. 2018); and Virginia: Humana Ins. Co. v. Paris Blank LLP, 187 F. Supp.3d 676 (E.D. Va. 2016).

[18] Further, under 42 CFR § 422.108, MAPs may seek reimbursement from claims payers and other parties in workers’ compensation, liability, and no-fault cases. This regulation further gives MAPs the same recovery rights as traditional Medicare under the MSP. In addition, CMS in a 2011 policy memo states, in part, that Part D plans “have the same MSP rights and responsibilities as Medicare Advantage Plans, including collection of mistaken primary payment from insurers, group health plans, employer sponsors, enrollees, and other entities.” See, CMS memo, Medicare Secondary Payment Subrogation Rights, Medicare Advantage Organizations and Prescription Drug Plan Sponsors (December 5, 2011).

It is also noted that in 2018, CMS added language to its Medicare Prescription Drug Benefit Manual including, in part, that “Part D sponsors will have the same responsibilities under MSP requirements as [Medicare Advantage] plans, including collection of mistaken primary payment from insurers, group health plans, employer sponsors, enrollees, and other entities; and the relationship between MSP rules and State laws. Part D sponsors must properly apply MSP requirements and regulations to their payments (e.g. working aged, worker’s compensation).” See, CMS’s Prescription Drug Manual, Chapter 14, Coordination of Benefits (Revised, September 17, 2018). In addition, CMS added, in part, the following guidance to Part D providers: “Part D sponsors are responsible for identifying and recovering any Coordination of Benefits (e.g. where a Part D sponsor paid for a claim and another payer should have paid), MSP related mistaken payments and submitting associated adjustments to CMS. Recovery of payments when the sponsor determines no payment at all should have been made or the amount paid was more than it should have been should be sought from the responsible other party. Sponsors should implement processes to handle payment resolution in these situations directly with the primary payer or in limited cases with the beneficiary … [a] claim for a drug that should be paid as MSP may not be submitted or paid as a primary claim by the Medicare plan.” Id. Of note, this updated language supplemented existing manual provisions regarding Part D secondary payer concepts which stated, in part, that “Part D sponsors will have the same responsibilities under MSP requirements as [Medicare Advantage] plans, including collection of mistaken primary payment from insurers, group health plans, employer sponsors, enrollees, and other entities; and the relationship between MSP rules and State laws. Part D sponsors must properly apply MSP requirements and regulations to their payments (e.g. working aged, worker’s compensation).” Id.

[19] In this regard, an interesting question is whether the courts would find that Part D plans also have “double damages” rights under the MSP’s private cause of action statute. To the authors’ knowledge, this precise issue has not yet been directly litigated, although the 3^rd Circuit as part of its decision in Avandia, finding that MAPs could sue insurers for double damages, indicated that its ruling would also apply to Part D recovery claims. See, In re Avandia, 685 F.3d 353, at n.20. The court in this endnote stated “Our decision here unquestionably results in cost savings for the Medicare Trust Fund because our holding on the meaning of the private cause of action will apply equally to private entities that provide prescription drug benefits pursuant to Medicare Part D. See 42 U.S.C § 1395w-151(b) (requiring that provisions relating to the MA program and MAOs be read to include part D plans). Because Part D prescription drug plans explicitly share gains and losses with the federal government, 42 U.S.C. § 1395w-115(e), the Medicare Trust Fund unquestionably loses money if these private entities recover less from primary payers.” Id.

[20] While settlement language alone will not limit Medicare’s rights to pursue the insurer for recovery, hold harmless and indemnity language may potentially provide the insurer with some form of contractual or other rights against the claimant to recoup any payments the insurer ends up having to reimburse Medicare. A full examination into the potential applicability of hold harmless and indemnity language is outside the scope of this article, and the authors defer to the insurers’ counsel on this point, as well as determining more globally the appropriate settlement language to be utilized to best protect their insurers interests.

[21] In pertinent part, 42 C.F.R. § 411.24 (titled “Recovery of conditional payments) states as follows:

(g) Recovery from parties that receive primary payments. CMS has a right of action to recover its payments from any entity, including a beneficiary, provider, supplier, physician, attorney, State agency or private insurer that has received a primary payment.

(h) Reimbursement to Medicare. If the beneficiary or other party receives a primary payment, the beneficiary or other party must reimburse Medicare within 60 days.

(i) Special rules. In the case of liability insurance settlements and disputed claims under employer group health plans, workers’ compensation insurance or plan, and no-fault insurance, the following rule applies: If Medicare is not reimbursed as required by paragraph (h) of this section, the primary payer must reimburse Medicare even though it has already reimbursed the beneficiary or other party. The provisions of paragraph (i)(1) of this section also apply if a primary payer makes its payment to an entity other than Medicare when it is, or should be, aware that Medicare has made a conditional primary payment.

42 C.F.R. § 411.24 (authors emphasis).

[22] On this point, CMS has established three special policies where the parties may be able to obtain CMS’s final lien amount prior to settlement if its specific (and nuanced) criteria are met.

Medicare Secondary Payer Recovery Portal: Under CMS’s Final Conditional Payment Process, CMS’s “final” lien amount can be obtained through the use of the Medicare Secondary Payer Recovery Portal (MSPRP) following detailed steps within specified timeframes. Briefly, the BCRC must be notified that a claim is within 120 days of settlement, all disputes must be resolved within that 120 day period, a final conditional payment amount must be requested on the MSPRP within 120 calendar days of starting the process, the claim must settle within 3 business days of the final conditional payment request, and the settlement information must be provided on the MSPRP within 30 days of requesting the final conditional payment amount. As noted, the process has very strict requirements, anyone interested in using this process should review the detailed guidelines and requirements on CMS’s website. See also, 42 U.S.C. § 1395y(b)(2)(B)(vii).
Self-Calculation Method: CMS’s Self-Calculated Conditional Payment Amount option provides another opportunity to obtain CMS’s lien prior to settlement. Under this option, parties may be able to self-calculate the demand amount prior to settlement in specific situations if the claim meets specific requirements (the claim must be for physical trauma, the medical treatment must be completed, the total settlement cannot exceed $25,000 and the date of incident must be at least six months prior to submitting the self-calculated request to Medicare). As with the Final Conditional Payment Process, the full requirements of this process are beyond the scope of this article, but parties wishing to avail themselves of this process should review the materials on CMS’s website to ensure the case qualifies and the proper process is followed.
Fixed Percentage Option: In addition to the above, Medicare offers a Fixed Percentage Option where claimants or their attorneys can request that Medicare accept a fixed percentage of the settlement in satisfaction of CMS’s recovery interest in a claim presuming the claim meets specific criteria and the required process for requesting the Fixed Percentage Option is followed. Parties interested in the Fixed Percentage Option should review CMS’s website and published materials.

Overall, in the authors’ experience, while it may be possible to obtain CMS’s demand amount prior to settlement in some circumstances, the strict requirements and limited eligibility criteria mean that these options are not frequently applicable, and the traditional Final Demand process remains the primary avenue for obtaining Medicare’s Final Demand amount. It is also important to note that the three above options apply to recovery initiated by CMS for Original Medicare and not MAP or Part D recovery claims.