UPDATED: OCT. 31, 2019
If a Medicare or Medicaid beneficiary is injured and brings a Personal Injury case, their attorney must handle the case a little bit differently. In every case, an injured person is concerned about who will pay the medical bills after an accident. Most of the time, a Medicare or Medicaid beneficiary will gladly present their benefits card to their doctors. And the doctors will usually be happy to bill Medicare or Medicaid (assuming they accept that form of coverage).
But most people do not realize that Medicare and Medicaid are what’s called a “secondary payer” of medical benefits, when the treatments are for injuries caused by the negligence of a third party. This means that the negligent party (or more commonly, their insurance company) is the one who should be paying the bills. However, as a matter of logistics, the negligent person and/or their insurance company generally does not pay the medical expenses right away, if at all. And this is for a number of reasons. First and foremost, individuals and business owners don’t know that this is their responsibility. They usually feel that the accident is not their fault and they have no obligation. Second, it takes time for an insurance claim to be set up. Once a claim is set up, the at-fault party may or may not have insurance coverage that will pay for medical treatment on a no-fault basis (i.e. a Med Pay provision, or something similar). And in any case, there easily could be a dispute as to the responsibility of the bills, and whether the costs are reimbursable at the rate billed by the doctor. These issues take time to resolve, and may easily be resolved as a lump sum payment at the end of a law suit, which covers both the medical bills and the compensation for pain and suffering.
All the while, the injured person remains injured and needs medical care. Recognizing this, Medicare and Medicaid have a system whereby they will pay bills right away and assert a lien on the future lawsuit proceeds. At the end of the case, the attorney will have to contact Medicare and/or Medicaid and resolve this lien. In other words, the patient will essentially have to reimburse Medicare/Medicaid for the payments that they made.
The lawyer handling the case has a statutory obligation to protect the lien. But more importantly for the client, the lawyer needs to handle the case in a way that protects the client’s interests. The full extent of those liens must be investigated from the early stages of the case. And the lawyer must make sure that any settlement includes an additional amount of money that will satisfy the lien without lowering the amount that the client should receive. This is generally done with a combination of receiving insurance reimbursements (like in the case of a Med Pay provision) and tactful settlement negotiation.
