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Aggressive Enforcement of the MSP Act Is A Revenue Source That Can Sustain Medicare 

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The Office of Inspector General has repeatedly concluded in studies going back more than 30 years that Medicare is losing billions of dollars “due to unidentified primary insurers.” The OIG has recommended: 

  • Legislation to establish a “Voluntary Disclosure and Recovery Program”; 
  • “[A] national data system containing primary insurance information on all Medicare beneficiaries”;
  • “[A]ggressively enforce[ing] the secondary payer statute”;
  • “Recover[ing] [p]ast overpayments”; 
  • “[A]uthoriz[ing] and mandate[ing] additional data matching programs”;

None of these recommendations have ever actually been fully adopted. Instead, “billions of dollars” continue to be wasted “because the secondary payer statute” is not “being properly implemented.” 

What must be included in any upcoming legislation aimed at strengthening Medicare? Most of it is already in legislation for over three decades, but is rarely enforced.

  1. Historical Audit Rights

Medicare loses billions of dollars each year “due to unidentified primary insurers.”  Reporting under Section 111 (42 U.S.C. § 1395y(b)(8)) has not fixed the problem because auto insurers only report if they have all the necessary data elements. Litigation has revealed that some auto insurers only report 2% of the time. 

Medicare needs to close this loophole through historical audit rights that allow Medicare to engage in the data-matching programs contemplated by OIG. This audit right would require primary payers to submit claims data so that Medicare could audit compliance with Section 111 reporting and identify circumstances where the primary payer should have, but did not, reimburse Medicare. 

  1. Voluntary Disclosure and Recovery Program

Federal agencies often provide voluntary disclosure practices to those that may have violated federal laws. These are effective tools to encourage compliance without the threat of penalties. The OIG recommended a similar program for primary payers, where they cooperate with Medicare through data matching to identify historical unreimbursed secondary payments. 

Thus, a program to allow insurers, employers, and/or third-party administrators to identify instances of improper MSP payments must be established. It would also make restitution of the appropriate amounts without threat of government action overt those claims. It should also provide for a waiver of the current statue of limitations applicable to improper MSP payments. Any insurer that does not participate in the program would be subject to a civil penalty of treble damages plus costs.

Here, enactment of a voluntary disclosure program, combined with a historical audit right through data matching, would create a massive surge of cooperation by primary plans across the country that would uncover billions of dollars in unreimbursed secondary payments. 

  1. The Cost Savings of These Measures Would be Enormous and the Expense of Implementing Them Would be Minimal

Medicare paid $399.78 billion in Medicare benefits from the Medicare Trust Funds in 2023. Of that amount, $25.03 billion were improper payments, but improper payments include only those payments made based on insufficient documentation, medically unnecessary treatment, and incorrect coding. In other words, CMS does not track (because it cannot) what percent of the $399 billion involves Medicare as a secondary payer. The OIG has been flagging this issue for years. 

What we do know is that CMS identified for fiscal year 2021 that $1.04 billion in potential mistaken and conditional payments. However, Medicare identifies these secondary payment opportunities based only on data collected through the flawed Section 111 reporting. Accordingly, the $1.04 billion number accounts for only a fraction of the total secondary payment opportunities that exist and are never reported. If one assumes that the 2% reporting rate identified in footnote 8 is constant across the industry, then CMS is missing 98% of secondary payment opportunities. Even if the reporting rate 60% effective, the number of secondary payments that primary plans are not reimbursing is massive. And that problem compounds as we go back in time. 

The initiatives described above will strengthen Medicare by relying on the complete enforcement of a law that has existed for more than 40 years, and the activation of strengthening measures that the OIG has recommended for more than 30 years.

Edgar is political scientist and philosopher. He defends the Catholic intellectual tradition. Edgar writes about religion, ideology, culture, US politics, abortion, and the Supreme Court. Twitter: @edgarjbb_ // Edgar es politólogo y filósofo. Defiende la tradición intelectual católica. Edgar escribe sobre religión, ideología, cultura, política doméstica, aborto y la Corte Suprema. Twitter: @edgarjbb_