Is the PAID Act the Solution for Locating Hidden Medicare Advantage Liens?

April 14, 2022

Teresa Kenyon, Esq.

It is well established that Medicare has a right of reimbursement for payments it made on behalf of a Medicare beneficiary when that beneficiary obtains a settlement from a responsible party. Medicare’s right of recovery is found in the Medicare Secondary Payer Act (MSP).^[1] Those payments are considered conditional because they are required to be paid back to Medicare once the other funds are received.

In general, under the MSP statute, Medicare does not pay for any services for which payment has been made or can be expected to be made by a primary plan.^[2] A primary plan’s definition has expanded over time and now includes group health plans, workers’ compensation coverage, automobile or liability insurance coverage and no-fault insurance.^[3] Medicare is the secondary payor and the primary plan is the primary payor. Medicare’s right to collect has expanded to include “any entity, including a beneficiary, provider, supplier, physician, attorney, State agency or private insurer that has received a primary payment.”^[4]

In 1997, Congress enacted Medicare Part C to provide an alternative to traditional Medicare. A Part C plan, also known as a Medicare Advantage plan, is another health plan option that a Medicare beneficiary may choose instead of traditional Medicare. These plans are offered by private insurance companies and approved by Medicare. They preempt state law.^[5] These plans also assert a right of recovery, and it is generally accepted that their right is similar to traditional Medicare. Medicare Advantage Plans arguably have a private cause of action for double damages in the case of where a primary plan fails to reimburse.^[6]

As case law has developed in various circuits, most have favored the Medicare Advantage plan. The Third Circuit case, In re Avandia Marketing Sales Practices and Products Liability Litigation, provided that Medicare Advantage plans do have a private right of action under the MSP.^[7] Specifically, the court noted that the language of 42 U.S.C. §1395y(b)(3)(a) included the right to seek double damages for not reimbursing the conditional payments made under any part of the MSP Act and not just the payments made by traditional Medicare.^[8] It is noteworthy that there has not been a court since Avandia to find that the Medicare Advantage plan does not have a private cause of action. The Ninth Circuit, in Parra v. PacifiCare of Ariz., Inc., found that the Medicare Advantage plan could not seek reimbursement, but it was a limited holding as the insurance carrier was seeking reimbursement from the beneficiaries of the deceased injured party.^[9]

One of the biggest concerns surrounding these Medicare Advantage plans and their right of recovery is finding them! For a plaintiff attorney trying to do the right thing and resolve traditional Medicare’s interest, this is an easy task. Using the Medicare portal or sending a fax, confirmation can be obtained as to whether traditional Medicare has made conditional payments. But Medicare Advantage plans could ultimately have “liens” that are hidden in plain sight since Medicare doesn’t provide Medicare Advantage lien information to plaintiff counsel. For a plaintiff attorney, he must rely on his client to provide information about Medicare Advantage plans that she has had over the course of her related medical treatment. In a protracted case, there is a possibility that the plaintiff had many different health coverages. For example, a Medicare beneficiary could choose traditional Medicare for one year and switch to an Aetna Medicare Advantage Plan the next and back to traditional Medicare at some other date in the future. And then possibly even have a different Medicare Advantage carrier, like Humana, the next year.  This makes it extremely difficult for a plaintiff attorney to track down all of the liens and ensure that the universe of potential Medicare recovery rights are being addressed at the time settlement.

Until recently, there was not a centralized place to search whether a settling claimant had a Medicare Advantage plan. Both plaintiff and defense had no way to know which private insurance carrier may have provided Medicare Advantage coverage to a particular claimant. A plaintiff attorney or defense entity could check with traditional Medicare and confirm that Medicare does or does not have a Conditional Payment claim, but the same has not been true for private Medicare Advantage plans. With the possibility of these plans having the same rights as traditional Medicare and the further risk of double damages, this has created a very uneven playing field.

MSP industry stakeholders pushed for the changes created with the Provide Accurate Information Directly (PAID) Act as a means of helping them obtain data for Medicare Part C and D plans. The PAID Act was initiated by the responsible parties because lawsuits were being filed by Medicare Advantage Plans asserting recovery rights. These suits included claims for double damages under Medicare’s private cause of action provision.^[10] This was found to be unfair due to the insurer’s (and equally plaintiff counsel’s) inability to proactively identify claimants who are Medicare Advantage or Part D enrollees. 

The PAID Act, which became effective December 11, 2021, should help even the playing field at least partially.  It will help Non-Group Health Plan (NGHP) Responsible Reporting Entities (RRE) better coordinate benefits by providing beneficiary Part C and Part D enrollment information via updates to the Section 111 Query Response File. CMS will provide up to 3 years of enrollment data for both Part C and Part D plans. The data will be provided to the RREs as part of the NGHP Query Response File. The information that will be available will now provide RREs the contract number, contract name, plan number, coordination of benefits (COB) address, entitlement dates for the last three years of Part C (Medicare Advantage) and Part D coverage, and the most recent Part A and Part B entitlement dates.

The intention of the PAID Act was not to help plaintiff attorneys and Medicare beneficiaries but rather to help the RREs.  It is presumed that this will allow the RREs to make active outreach to address Part C and Part D plans’ recovery rights, thereby ensuring they are not subject to any double damages. In turn, plaintiff attorneys should be able to obtain this information and know that they are protected as well. So, although not specifically meant to benefit plaintiff attorneys, the fact that RREs now has access to this information should allow an information share between the plaintiff attorney and the RRE so that the plaintiff attorney can have knowledge of the existence of these hidden liens.  That will require some proactive collaboration with the other side over Medicare Secondary Payer issues.  We do recommend being collaborative with the other side when it comes to Medicare compliance related issues since all parties have skin in the game.