Opinion ID: 2599663
Heading Depth: 1
Heading Rank: 3

Heading: Medicare Provisions

Text: The Medicare Program served as the primary payer for all services to Medicare beneficiaries for fifteen years. [7] See Social Security Amendments of 1965, Pub.L. No. 89-97, 79 Stat. 286 (1965); see also Oregon Ass'n of Hosps. v. Bowen, 708 F.Supp. 1135, 1139 (D.Or.1989); Robert L. Roth, The Medicare Secondary Payer Program: New and Continuing Issues, American Bar Ass'n. Center for Continuing Legal Educ. Nat'l Inst. (Oct. 2223 1998). Through a prospective payment system, medical providers who agree to accept primary payment from Medicare are paid a flat fee based on an average cost and length of stay for over 400 medical diagnoses, which are grouped together in diagnostic related groups (DRGs). See 42 U.S.C. § 1395ww (1999); 42 C.F.R. 412. If a provider's actual costs fall below the DRG amount, it keeps the difference; however, if a provider's actual costs are greater than the DRG amount, the provider must absorb the loss itself. Medical providers participating in the prospective payment system enter into an agreement with Medicare, in which they agree to accept payments limited to the DRG amount, and they agree not to charge . . . any individual or any other person for items or services for which such individual is entitled to have payment made under [subchapter 18]. 42 U.S.C. § 1395cc(a)(1)(A). In order to take advantage of the Medicare Primary Payer Program, most private third party payers drafted their Coordination of Benefits provisions to ensure that Medicare was the primary payer when an insured was also eligible for Medicare. See Dechene, supra note 7, at 203-04. Consequently, in 1980 Congress enacted the (MSP) statute in an effort to reduce the costs of the Medicare program by making Medicare the secondary payer in certain situations. See 42 U.S.C. § 1395y(b)(1) (1980). The MSP provisions prohibit Medicare from making payment when payment has been made, or can reasonably be expected to be made by a group health plan, workers' compensation plan, an automobile or liability insurance plan, or a no-fault insurance plan. See 42 U.S.C. § 1395y(b)(2)(A). However, under the MSP provisions and relevant to this case, Medicare will make a conditional payment as a secondary payer where prompt payment by an insurer is delayed. See 42 U.S.C. § 1395y(b)(2)(B) (1996); 42 C.F.R. § 411.53(a). Payment is conditioned on reimbursement to the appropriate Trust Fund established when notice or other information is received that payment for such item or service has been or could be made by an employer's insurance plan. 42 U.S.C. § 1395y(b)(2)(B)(i). In addition, the MSP statute furnishes the federal government with a direct and subrogated right to bring an action to recover conditional payments against any entity which is required or responsible. . . to pay . . . or against any other entity (including any physician or provider) that has received payment from that entity. 42 U.S.C. § 1395y(b)(2)(B)(ii).