Medicare Secondary Payer Liability Insurance Situation

Question: I have a question regarding treatment provided to my client at Mt. Carmel.

The injury occurred in Dec. 2004; case was recently settled and we are waiting for Medicare claim. I recently contacted the US Attorney and they are working with us. While we are waiting, a rep from Mt. Carmel calls to tell me that they have learned that the injury was due to an automobile accident and for that reason they cannot bill Medicare. (My client has had several surgeries over a period of years, the last being fall 2008 to remove hardware from her lumbar spine.) The Mt. Carmel rep stated that they were compelled to return the payment they had received and apparently they have; my client has received a bill for $35,000. I have not yet seen the bill or asked for any explanation.

I have seen references regarding Mt. Carmel being a Medicare HMO, but I am not sure that is the source of the problem. Apparently Mt. Carmel billed Medicare and was paid but has refunded the payment and is billing my client. Any suggestions or insight would be appreciated.

Answer: Take a look at MSP Manual § 40.2 - Billing in MSP Liability Insurance Situations. If I understand the info below, Mt. Carmel is the provider of service and assuming they are a Medicare provider, then once they submitted their claim to Medicare they are bound by their assignment agreement, therefore they lose all rights to pursue the settlement for actual charges. Since they returned the payment received they can only go after the beneficiary for the Medicare amount plus any coinsurance and deductibles.

The MSP Manual States as follows:
Physician and Other Supplier Charges to Beneficiaries for Services Covered By Medicare

The following applies to physicians and other suppliers who participate in Medicare:

• if the physician or other supplier bills Medicare, the physician or other supplier must accept the Medicare approved amount as payment in full and may charge beneficiaries only deductibles and coinsurance.
• if the physician or other supplier pursues liability insurance, the physician or other supplier may charge beneficiaries actual charges, up to the amount of the proceeds of the liability insurance less applicable procurement costs but may not collect payment from the beneficiary until after the proceeds of the liability insurance are available to the beneficiary.

Provider, Physician, or Other Supplier Bills Medicare and Maintains Claim/Lien Against the Liability Insurance/Beneficiary’s Liability Insurance Settlement

As cited above in B, providers, physicians, and other suppliers must withdraw all claims/liens against liability insurance/beneficiary’s liability insurance settlement (except for claims related to services not covered by Medicare and for Medicare deductibles and coinsurance) when they bill Medicare. You may learn of a situation where the provider, physician, or other supplier billed Medicare but did not withdraw the claim/lien. In such situations you must:

• Advise the provider, physician, or other supplier and beneficiary that the act of billing Medicare limits the payment that the provider, physician, or other supplier may receive for the services billed to the Medicare approved amount. This applies even if Medicare did not pay the claim or the provider, physician, or other supplier refunded the Medicare payment to Medicare.