The Medicare Secondary Payer Act (MSP Act) was first enacted in 1980; however, it is the recent Section 111 reporting requirements (that become effective Jan. 1, 2011, for settlements entered into on or after Oct. 1, 2010) that have brought that statute to the forefront of personal injury and insurance defense litigation. Because liability settlements that include Medicare beneficiaries now have to be reported to the Centers for Medicare and Medicaid Services (CMS), all parties must ensure that any settlement has satisfied the MSP Act’s requirements or risk penalties.
Overview
Initially, the Medicare program was the primary payer for covered medical services furnished to its beneficiaries, with the exception of those who were also covered by workers’ compensation (WC), whether or not the beneficiary had any other insurance available. In an attempt to reduce spending and preserve the fiscal integrity of the Medicare program, Congress enacted the MSP Act, 42 U.S.C. § 1395y(b), which amended the Social Security Act to make Medicare the "secondary" payer in situations where a "primary plan" exists.
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