Recently the Medicare Trust Fund Board of Trustees released its 2019 annual report, showing the program in less than a decade away from insolvency. While revenues may have exceeded expenses this year, the hospital insurance trust fund—by far the most expensive portion of the program—is expected to run out of money by 2026.
After that, Medicare will only be able to meet 89 percent of expenses and may have to make cuts to benefits in order to meet its obligations.
It doesn’t have to end up this way. If policymakers can come together to enact common-sense solutions now, we can avoid having to make tough calls in the future. Thought leaders from the left, right and center have kicked around a lot of ideas to that end—and it’s likely the best solution lies somewhere between them.
Here’s an idea that should be part of any solution that comes forward: reforming the country’s Medicare Secondary Payer system.
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The Medicare Secondary Payer (MSP) program has been around since 1980 and is designed to ensure Medicare doesn’t have to pay for healthcare expenses when another party is responsible—such as when a Medicare beneficiary receives damages or a settlement from a tort, worker’s compensation, or civil liability case.
It’s a program that has been quite successful over the years and annually recuperates nearly $8 billion in direct savings to taxpayers.
But good isn’t perfect. While the MSP program has worked well for beneficiaries enrolled in traditional Medicare, the process has failed to serve those who have a Medicare Advantage (MA) or Medicare Part D prescription drug plan.
To understand how, take the example of Dolores, a hypothetical Medicare beneficiary with an MA plan who gets into a car accident where another party is at fault. Dolores’ immediate healthcare expenses are covered by her MA plan after she is rushed to the hospital following the incident. She then reaches a settlement with the liable party, which means the settling party, who together with Dolores may be responsible for reimbursing her Medicare plan for her treatment expenses.
But current law doesn’t require CMS to disclose the name of Delores’ MA plan—or even confirm that she is enrolled in one to begin with. As a result, the settling party doesn’t know who to pay and can’t close the claim on its books. Because of this the MA plan sponsor loses out on getting reimbursed for what it is owed, as does the Medicare program, and ultimately, taxpayers. Meanwhile, Dolores’ settlement is delayed as she is caught in the middle of all this. Dolores’ case isn’t an uncommon one; over 22 million Americans are enrolled in MA plans this year.
Now, if it sounds like the solution to this problem is simple, you’d be correct. Because it is! All that’s needed is a simple change to the law governing Medicare to require CMS to disclose the name and identity of the beneficiary’s MA plan and dates of coverage through the “Section 111” query process so settling parties can repay their MSP liabilities.
Bipartisan legislation to do just that has already been introduced in the House by Representatives Ron Kind (D-WI) and Gus Bilirakis (R-FL) and in the Senate by Senators Tim Scott (R-SC) and Ben Cardin (D-MD). The Provide Accurate Information Directly (PAID) Act (H.R. 1375/S. 1989) would create a fairer, smoother and more efficient MSP process by making just a few small changes to current law. It would also save taxpayers money by ensuring Medicare is able to get paid for what it’s owed.
Reforming our country’s broken MSP process won’t fix Medicare all on its own, but it will hopefully provide a common-sense bipartisan solution to this problem. I urge Congress to support this legislation and to make the Medicare system work better for beneficiaries, settling parties and taxpayers.
Greg McKenna is the immediate past Chair of the Medicare Advocacy Recovery Coalition. He serves as Senior Vice President, Director of Communication for Gallagher Bassett (GB), a global third-party administration firm based in the Chicago area.