A. Definitions

1. Automobile medical or no-fault insurance

Insurance coverage (including a self-insured plan) that pays for all or part of the medical expenses for injuries sustained in the use of, or occupancy of, an automobile, regardless of who may have been responsible for causing the accident. This insurance is sometimes called “personal injury protection,” “medical payments coverage” or “medical expense coverage.”

2. Liability insurance

Insurance (including a self-insured plan) that provides payment based on legal liability for injuries or illness or damages to property. It includes, but is not limited to, automobile liability insurance, uninsured and underinsured motorist insurance, homeowners liability insurance, malpractice insurance, product liability insurance, and general casualty insurance. It also includes payments under State “wrongful death” statutes that provide payment for medical damages.

3. Self-insured plan

A plan under which an entity (or an individual) is authorized by State law to carry its own risk instead of insuring itself with a carrier. “Authorized by State law” means not prohibited by State law. The plan established for the Federal government under the Federal Tort Claims Act is also a self-insured plan.

4. Uninsured motorist insurance

Insurance under which the policy holder's insurer will pay for damages caused by a motorist who has no automobile liability insurance or who carries less than the amount of insurance required by law, or is underinsured.

5. Underinsured motorist insurance

Optional liability insurance available in some jurisdictions under which the policyholder's level of protection against losses caused by another is extended to compensate for inadequate coverage in the other party's policy or plan.

6. Accident

Any occurrence or activity that the individual believes resulted in injury or illness for which he or she holds another party liable.

B. Services covered under automobile medical or no fault insurance

1. General provisions

Medicare does not pay for items or services to the extent that payment has been made, or can reasonably be expected to be made promptly, for items or services under an automobile medical or no-fault insurance policy or plan (including a self-insured plan). This means that if a Medicare beneficiary is injured in an automobile accident and benefits are available under an automobile insurance policy to pay for hospital or medical services, Medicare does not pay for the services, except where the automobile insurer does not pay the entire bill. (See 2.) This provision is effective with respect to services related to injuries occurring on or after December 5, 1980.

This provision applies to services necessitated by an automobile accident even if the State no-fault law or private insurance contract stipulates that the automobile benefits are secondary to Medicare's. Therefore, beneficiaries, providers, physicians, and suppliers should file claims with the automobile insurer first whenever there is coverage under an automobile medical or no-fault policy. However, if the automobile insurer contests the claim or there will be substantial delay in its decision, Medicare may pay conditional benefits subject to recoupment if the automobile insurer pays the claim.

If Medicare payments have been made but should not have been because Medicare is secondary under this provision, or if payments were made on a conditional basis, they are subject to recovery.

2. Automobile insurer doesn't pay for all services

If the automobile insurer pays in part for the services, e.g., where the amount of benefits available under the insurance policy is exhausted, Medicare secondary payments can be made; that is, Medicare may pay for covered services not paid for by the automobile insurer. The Medicare intermediary or carrier determines the amount of Medicare secondary payment to the provider, physician, supplier, or beneficiary.

Medicare is the primary payer only if the services cannot be reimbursed at all under an individual's automobile medical or no-fault insurance; e.g., the individual's automobile insurance coverage expired or automobile benefits are totally exhausted.

3. Effect on deductibles and utilization

Expenses for which Medicare payment may not be made, because payment has been made or can reasonably be expected to be made under automobile insurance are not counted toward the Part A or Part B deductible amounts or against the number of inpatient care days available to the beneficiary.

4. Duplicate payments by medicare and automobile insurance

Medicare providers, physicians, suppliers or beneficiaries, receiving duplicate payments from Medicare and an automobile insurer must refund the Medicare payment, regardless of which payment was received first and even if the provider has already refunded the automobile insurance payments to the insurer or the beneficiary. If a provider, physician or supplier receives the Medicare payment and the beneficiary is paid for the same services by an automobile insurer, the beneficiary must refund the Medicare payment up to the amount of the insurance payment.

C. Services reimbursable under liability insurance

If a Medicare beneficiary has filed or plans to file a liability claim (a claim for damages) against a party that allegedly caused an injury or illness, Medicare initially pays for services related to that injury or illness (if they are covered) subject to recovery from the beneficiary, if the beneficiary later receives payment from a liability insurer or a self-insured party as a result of a judgment on, or settlement of, the liability claim. Since liability claims are usually not settled or adjudicated until after protracted negotiations and possible litigation, Medicare pays first where a liability claim is pending and recovers only after the beneficiary receives payment from the liability insurer.

The beneficiary's obligation to refund the Medicare payment is reduced by a portion of the cost (including attorney fees) the beneficiary incurred in procuring the total settlement or judgment. The Medicare intermediary or carrier determines the amount the beneficiary must refund based on the Medicare regulations.

If Medicare is not reimbursed after the beneficiary receives an insurance payment, the amount due Medicare (up to the amount of the insurance payment) may be withheld from any social security benefits to which the beneficiary is entitled.

A provider of services or a physician or supplier that accepts assignment may not bill a liability insurer since payment to a provider, physician or supplier by the liability insurer directly reduces the amount the beneficiary recovers from that insurer. That is a violation of the provider agreement in Section 1866 of the Act and the assignment agreement in Section 1842(b)(3)(B)(ii).

A Medicare provider or a physician or supplier that accepts assignment may not bill a beneficiary for covered services even though the beneficiary has received payment from a liability insurer for the injury or illness for which the services were furnished. This rule applies whether or not the provider has claimed or accepted conditional primary Medicare benefits. Since these are covered services, the beneficiary is protected by the provider and assignment agreements, i.e., a provider of services may not bill a beneficiary for such services, except for deductible and coinsurance amounts. Medicare providers or a physician or supplier who accepts assignment may not file a lien against a beneficiary's liability insurance proceeds. To do so is tantamount to billing the beneficiary and is a violation of the provider or assignment agreement.

Effective for items and services rendered on or after January 1, 1987, if a liability insurer fails to make appropriate reimbursement to Medicare when Medicare has paid for services reimbursable under liability insurance, the claimant has the right to take legal action against the insurer and to collect double damages.