The problem generally arises when a Medicare beneficiary believes he or she was harmed because of another party’s negligence: getting hit by a car while crossing the street, for example, or suffering lasting injury because of a careless surgical error.
The Medicare beneficiary typically hires a lawyer, who contacts the legal representative for the other side. Often the parties try to reach a financial settlement rather than go to court.
In such cases, Medicare has generally paid the injured person’s medical bills. But if there’s a settlement or a judgment in the victim’s favor, the other party’s liability insurer typically becomes what’s known as the “primary payer” — i.e., the party responsible for the medical bills. Medicare becomes the “secondary payer” and is then entitled to reimbursement for the money it has already spent on the victim’s medical care.
That’s where it gets sticky. To settle a case, lawyers generally want to know the amount of the medical bills that have been incurred. An $80,000 settlement doesn’t make sense if Medicare is owed $60,000 for bills it has already paid. After the plaintiff’s attorney takes his fee, usually one-third of the settlement amount, there would be nothing left to compensate the victim for pain and suffering, inability to work, etc.
“At a mediation, if you don’t have solid numbers it’s impossible to settle a case,” says Mary Alice McLarty, a plaintiff’s lawyer who is president of the American Association for Justice, a trial lawyers’ group.
CMS frequently doesn’t make details available about the expenses it has incurred for several months after litigants inform the agency that a case is pending, defense and plaintiff’s attorneys say. Without that information, the case stalls and Medicare beneficiaries are left in limbo.
In one case involving an 80-year-old man who was injured in a car accident in Kentucky in November 2011, it took more than a year to get a final figure from CMS detailing how much the agency was owed, says Linda Magruder, an attorney in Louisville who was the victim’s co-counsel in the case. That amount, for treatment for soft-tissue injuries to the man’s right hip, left foot, back and neck, was $2,640. But the agency first claimed it was owed more than $26,000, she says, because it included bills for care not related to the accident.
Until the discrepancies were addressed, the man was unable to receive his share — roughly $30,000 — of the $50,000 insurance settlement.