Conflicting Claims by Medicare and Other Third Parties

140.5 - Conflicting Claims by Medicare and Other Third Parties (Rev. 30, 09-05-03) Situations may arise in which both Medicare and another insurer or State Medicaid Agency have conditionally or erroneously paid for services, and the amount payable by the third party payer is insufficient to reimburse both programs. Under §1862(b)(2)(B) of the Act, Medicare has the right to recover its benefits from the responsible third party before any other entity, including a State Medicaid Agency. Also, Medicare has the right to recover its benefits from any entity, including a State Medicaid Agency that has been paid by the responsible third party. In other words, Medicare's recovery rights when another third party is primary payer take precedence over the rights of any other entity. The superiority of Medicare's recovery right over those of other entities, including Medicaid, derives from the preceding cited statute. 17 If Medicare and Medicaid both have claims against the responsible third party, Medicare's right to recover its benefits from another insurer or from a beneficiary that has been paid by another third party is higher than Medicaid's, notwithstanding the fact that Medicaid is the payer of last resort, and therefore, does not pay its benefits until after Medicare has paid. Medicare's priority right of recovery from insurance plans that are primary to Medicare does not violate the concept of Medicaid being payer of last resort. Under §1862 (b) of the Act, Medicare's ultimate statutory authority is not to pay at all (with a concomitant right to recover any conditional benefits paid) when payment can reasonably be expected by a third party which is primary to Medicare. If a third party that is primary payer pays promptly, Medicare makes no payment to the extent of the third party payment. Delay of the other payment does not change Medicare's ultimate obligation to pay the correct amount, if any, regardless of any Medicare payments conditionally made. Thus, when a responsible third party pays the charges, or if it pays less and the provider is obligated to accept that amount as payment in full, Medicare may not pay at all. Pro rata or other sharing of recoveries with third parties would have the effect of creating a Medicare payment when none is authorized under the law, or improperly increasing the amount of any Medicare secondary payment. Moreover, the right of Medicaid agencies to recover their benefits derives from an assignment by Medicaid beneficiaries to the states of their rights to third party payment. Since the beneficiary can assign to the state a right no higher than his/her own, and since Medicare's statutory right is higher than the beneficiary's, Medicare's right is higher than that assigned to the state.