General

40.1 – General (Rev. 12438; Issued: 01-04-24; Effective: 02-06-24; Implementation: 02-06-24) Section 1862(b) of the Act grants Medicare a priority right of recovery. Section 1862(b) also gives the Medicare program the right of subrogation for any amounts payable to the Medicare under Section 1862 of the Act. To recover any conditional payments it has made, Medicare may bring a direct cause of action in its own right against the entity responsible or required to pay Medicare for the items and/or services Medicare conditionally paid, or against any other entity that has received payment. In addition, Medicare has, under subrogation law, a right to recover its payment from an individual or other entity that received payment from a third-party payer. Medicare has a priority right of recovery regarding its benefits, which takes precedence over the claims of any other party, including Medicaid. MSP Contractors should focus on Medicare’s priority right of recovery when corresponding with the beneficiary and/or the beneficiary’s attorney. Medicare may employ various statutory authorities to waive, compromise, terminate, or suspend its right of recovery. Section 1862(b)(2)(B)(v) of the Act provides for waiver of an MSP overpayment when it is in the best interests of the Medicare program. Section 1870(c) of the Act also permits Medicare to waive its right to recovery when the beneficiary meets certain criteria. See 42 C.F.R. § 411.28. The Federal Claims Collection Act (FCCA) of 1966 (31 U.S.C. § 3711) gives Medicare the right to compromise claims for less than the full amount on behalf of the Government of the United States, or to suspend or terminate collection action. MSP Contractors have authority to resolve claims under Section 1870(c) of the Act, but not under the FCCA nor Section 1862(b) of the Act. It is common for insurance companies to settle claims without admitting liability. Therefore, any payment by a liability insurer, except payments under a no-fault clause in a non-automobile policy, constitutes a liability insurance payment whether there has been a determination of liability. In addition, regardless of how amounts may be designated in a liability award or settlement, e.g., loss of consortium, special damages or pain and suffering, Medicare is entitled to be reimbursed for its payments from the proceeds of the award or settlement. If a negligent party who carries liability insurance decides to pay a liability claim with his/her own funds rather than submit the claim to the liability insurer, Medicare recovers its benefits for such a payment because it is deemed to be a liability insurance payment (which includes self-insured entities). See 42 C.F.R. § 411.50.