It is safe to assume, at least for the near future, yes.
Medicare considers medpay as primary insurance coverage and Medicare as secondary. See 42 USC 1395y(b)(2)(A). Medicare will be entitled to that portion of medpay at 100%. Once your liability case settles and you have your conditional payment list from Medicare, Medicare requests both the third party settlement information and the amount of medpay benefits available to your client. Although Medicare reduces its liens for attorney fees and costs, it only determines the reduction on the amount of the payments after medpay benefits have been subtracted out of the rest of the lien.
Neither the Medicare statutes nor accompanying federal regulations specifically address the issue as to the applicability of the Medicare super lien to med pay coverage. Indeed, the language of 42 C.F.R. 411.26 indicates that the lien (referred to as a subrogation interest) is directed to a “third party payor” suggesting that it is directed to tort feasors or their liability insurance. However, the comments to the 1980 amendments to the Medicare statute clearly reflect that the legislature intended Medicare to be the secondary payor, not the primary payor. If it cannot assert its lienagainst MPC payments, it becomes the primary payor, and MPC becomes the secondary payor.
While the courts have not directly addressed the issue with regards to MPC coverage, the general proposition that Medicare is to be the secondary payor is strongly reinforced in United States v. Grier, 816 F.Supp. 1313 (W.D. Wis. 1993), which concluded that to allow a health insurance company to have subrogation rights ahead of Medicare’s subrogation right would make Medicare the primary payor. In keeping with the legislative intent of the Medicare statutes, it is our opinion that Medicare liens should be protected on MPC payments until the courts direct otherwise.
For instance, assume the final payments from Medicare totaled $1,250.00. If you have no medpay coverage, Medicare may require you to pay back $800.00 after considering attorney fees and costs. However, if you have conditional payments of $1,250.00 and $1,000.00 worth of medpay received, then Medicare will consider only $250 to figure the reduction for attorney fees and costs. Once Medicare considers the reduction on only the $250.00, the reduced amount may be $150 based on your settlement. You would then owe Medicare $1,150.00 for its total lien.