Medicare & The Upside Down (Case)

Sometimes we refer to a case where fees and costs exceed settlement as “upside down.” An Indianapolis firm asked us: can a Medicare Plan (meaning Medicare Advantage or Medicare Supplemental Plan) claim a lien in the upside down world?

No.

Medicare Advantage Plan liens claim their rights exist from the same laws that allow Medicare liens. Their use of the Medicare Secondary Payer Act means that they are bound by the same rules. In this case we look to 42 CFR 411.37 (a) and 42 CFR 411.37 (d):

42 CFR 411.37(a) Recovery against the party that received payment –

(1) General rule. Medicare reduces its recovery to take account of the cost of procuring the judgment or settlement, as provided in this section, if –

(i) Procurement costs are incurred because the claim is disputed; and

(ii) Those costs are borne by the party against which CMS seeks to recover.

42 CFR 411.37(d) Medicare payments equal or exceed the judgment or settlement amount. If Medicare payments equal or exceed the judgment or settlement amount, the recovery amount is the total judgment or settlement payment minus the total procurement costs.

These two regulations taken together give us a simple result: if costs plus fees exceed settlement then Medicare has no right to its lien. Essentially, Medicare can only take from the portion of the case that is going to the plaintiff(s). For help with Medicare Liens or Medicare Advantage Liens please contact us at 844.633.5436!