The Provide Accurate Information Directly (PAID) Act is designed to help insurers comply with Medicare’s mandatory reporting requirements and foster the completion of settlement agreements. Congress passed the PAID Act in December 2020 and it became effective on December 11, 2021. The PAID Act was enacted to deal with a persistent issue involving the inability to confirm if an injured party is enrolled in a Medicare Part C or Part D plan. Read on and contact our team to learn more.
How did the PAID Act come to be?
The Medicare Secondary Payer (MSP) laws, first codified in 1980, have evolved over the years. In 1996 an MSP program was created for Medicare Advantage programs and in 2003 it was expanded to the Part D prescription drug benefit. Unfortunately, these programs did not function well for non-group health plans (NGHP) such as liability, workers compensation and no fault (auto) insurers due to a lack of information – the insurers did not know if they were settling with a Medicare beneficiary and Medicare did not know of the settlement.
When a Medicare beneficiary is injured and another party is required to pay for their medical expenses, MSP laws are designed to ensure that the Medicare program does not waste taxpayer money by paying for medical expenses for which another party is legally responsible. However, prior to the PAID Act the process by which Centers for Medicare & Medicaid Services (CMS) would recapture payment for claims that were not its responsibility to pay was highly ineffective. CMS failure to share data would lead to inappropriate coverage denials, costly pursuits of miniscule recoveries and uncertainty for parties to medical liability settlements.
In an effort to remedy this problem, in 2007 Congress enacted §111 of the Medicare, Medicaid, and SCHIP Extension Act (MMSEA), creating a system where settling parties could notify Medicare of settlements, determine if a settling party was a Medicare beneficiary and coordinate benefits to repay Medicare what was owed under the MSP laws. MMSEA §111 added mandatory reporting requirements for Medicare beneficiaries who receive settlements, judgements, awards or other payment from liability insurance, no-fault insurance and workers’ compensation.
The system has mostly worked for Medicare Part A and Part B. However, Congress missed the chance to address the issue, comprehensively, and never addressed beneficiaries covered under Medicare Part C and D plans.
Prior to the implementation of the PAID Act a common scenario would be as follows: John, who is a Medicare Part C & D beneficiary, would suffer an injury at work or in a car accident and Medicare would pay for the medical treatment. John then settles the case with Bob, the party liable for his injuries, the settlement covers medical treatment plus damages, and the amount to reimburse Medicare. Under the MSP policy, Bob is responsible for reimbursing Medicare for John’s medical treatment.
However, since CMS did not disclose the name of the Medicare plan John is enrolled in, Bob would have to rely on John to deal with the plan, possibly subjecting Bob to double damages if John does not reimburse Medicare. In the alternative, the settlement is delayed because Bob has to deal with reimbursing Medicare. Or if Medicare is never reimbursed, they may be out the funds paid to cover Bob’s medical treatment.
With the passage of the PAID Act, CMS, in response to a query under MMSEA §111 reporting system, will provide an inquiring party with information about whether the person subject to query is or is not a Medicare beneficiary under all four plans and the name of the plan the individual has been enrolled in for the past three years.
What should you know about the PAID Act?
Technically, the PAID Act does not require the inquiring party, typically the liability/workers compensation insurer, to do anything with the information CMS will provide. However, from a practical standpoint the insurer can use the information to address the outstanding monies owed to Medicare Part C & D plans and avoid their recovery claims.
It should be noted that the PAID Act was prompted in large part by the increasing number of lawsuits filed by Medicare Advantage Plans for recovery of medical expenses, including claims for double damages. Now parties can resolve issues with regard to reimbursing Medicare with greater successes streamlining settlements while protecting the Medicare system.
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