Reimbursing a Medicare Advantage Plan from a Personal Injury Settlement
Many plaintiff lawyers don't realize there are two kinds of Medicare - public and private. Public Medicare (Parts A & B) are what most refer to as traditional Medicare, or original Medicare. It's the one most people sign up for when they turn 65.
Private Medicare (Part C) is referred to as a Medicare Advantage plan. Private health care companies like United Health Care, Aetna, Humana, and others sell Medicare Advantage plans. These companies cover what Medicare does, and a bit more. The government gives them a set amount of money for each person they sell one of these plans to, and it's up to the companies how that money is spent. They make a profit because they don't have to give back any money they don't use, and Medicare likes having a static amount to rely on in its budget.
When it comes time to repay the health plan, you don't contact the Medicare office. Remember, Medicare has given the money to the private plan company - it's them you contact about repayment. Most of those private plan companies hire the same vendors to collect those reimbursements as they use with their non-Medicare private plans - Rawlings, Optum, Equian, etc. You work with them and pay them back much the way you would with a non-Medicare private plan. There is no need to report anything to CMS or the BCRC (Public Medicare's recovery office). Medicare Advantage plan reimbursement is handled completely by the private plan.
There are two potential pitfalls plaintiff's attorneys need to be aware of when a Medicare Advantage plan is involved: 1) Claims from private health plan companies that they don't have to reduce by a pro rata share of fees and costs (Common Fund) because their contract controls, and 2) The 'double damages' penalty if reimbursements are not paid on time.
42 CFR 422.108(f) states in pertinent part: "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." That means, the private health plan company gets to use the Medicare statutes to its advantage. But much to the company's chagrin, it also means it must comply with Medicare's duties. This is where their recovery vendors go off the rails. These people will argue that the benefits company's contract preempts any duty under the Medicare statute, unless those duties benefit the plan. It is clear, however, that if the company wants to rely on the statute, it must rely on the whole statute.
When it comes time to pay the plan, delaying payment is never a good idea. Once notice of a settlement is given to a Medicare Advantage plan, they can require repayment within 60 days. That is the requirement under the statute. If the plan is not reimbursed within 60 days, the statute says the plan has a private right of action against the primary payer - or anyone who received money from the primary payer. That includes the Medicare beneficiary, and it includes their attorney if that attorney held (or was paid from) the funds recovered. If suit is brought by the plan, the statute requires they sue to collect double damages - what was owed...twice. That can result in some big dollars, so be vigilant about paying them on time.
Medicare Advantage plans are on the rise, so brush up on the differences between them and traditional Medicare.