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Abstract

Laws governing Medicare have undergone tremendous change since the program was first implemented in 1965, one of the most significant of which was the 1980 Medicare Secondary Payer (“MSP”) statute. Pursuant to MSP, any entity that is also responsible for the cost of a beneficiary’s medical care must reimburse Medicare for any of these expenses. However, as Congress expanded Medicare to include Parts C and D between 1997 and 2003, identifying claims that were the responsibility of third parties became increasingly difficult as these two parts were provided and administered by private insurers.

To address inadequate reimbursing of MSP claims, in 2007 Congress passed the Medicare, Medicaid, and SCHIP Extension Act, requiring parties settling or paying personal injury claims of Medicare beneficiaries to report the settlement or payment to the Centers for Medicare and Medicaid Services (“CMS”). In theory, CMS could then use this information as a check and balance to ensure proper reimbursement by primary payers. However, because secondary payers were often not sure if a party receiving benefits was enrolled in Medicare, Congress passed the Medicare IVIG Access and Strengthening Medicare and Repaying Taxpayers (“SMART”) Act in 2012. This statute created a query system whereby parties could determine the Medicare enrollment status of a claimant to facilitate reimbursing Medicare when required. While these two statutes were intended to clarify and streamline MSP claims processing, an ongoing concern was that the query system established by the SMART Act did not allow queries into Medicare Part C or D enrollment.

The lack of functionality allowing Part C and D queries, coupled with significant penalties for failure to comply with MSP reimbursement rules resulted in an imperfect system where those settling or paying personal injury settlements of Medicare beneficiaries were at risk for penalties even when they attempted to comply with the law. The uncertainty of obligations led to enactment of the Provide Accurate Information Directly (“PAID”) Act on December 11, 2020. The goal of the PAID Act is to increase transparency and certainty for parties to determine their secondary payer reimbursement and reporting obligations. This article delves into the statutory and case law history creating these obligations while describing the limitations that necessitated the PAID Act’s passage as well as the path the Act followed to enactment.

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