Senate Bill Will Streamline Broken Medicare Repayment Bureaucracy

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For Immediate Release: October 18, 2011

Contact: Jennifer Fuson
202-965-3500 x8369


Senate Bill Will Streamline Broken Medicare Repayment Bureaucracy

AAJ Primer Highlights Problems with Medicare Secondary Payer System

Washington, DC—In order to steamline the broken Medicare Secondary Payer (MSP) system to better serve America’s seniors and taxpayers, Sens. Ron Wyden (D-OR), Rob Portman (R-OH), Ben Nelson (D-NE) and Richard Burr (R-NC) have introduced the bipartisan Strengthening Medicare and Repaying Taxpayers (SMART) Act (S. 1718). 

“Taxpayers, seniors, businesses, insurers are all hurt by the inefficiency of Medicare Secondary Payer, a system designed to repay taxpayers millions of dollars,” said American Association for Justice (AAJ) President Gary M. Paul.  “This bill is called the SMART Act for a reason: it is a practical solution to help streamline a system that is currently denying seniors benefits they are entitled to while costing taxpayers millions of dollars every year.”

The MSP process is supposed to ensure Medicare is reimbursed for medical bills that are the responsibility of another party – such as an insurer or negligent party. A senior who has been injured – and later obtains recourse through the legal system – often cannot access their settlement until Medicare is reimbursed for any medical costs.

Unfortunately, the current MSP system is inefficient and slow to return dollars to the Medicare Trust Fund. Seniors can wait years for Medicare to report reimbursement amounts to beneficiaries and can even seek multiple reimbursement amounts over time, providing further delay and uncertainty to seniors.

Groups ranging from AAJ, to consumer and senior advocates, insurance companies like Allstate, and businesses such as Safeway and Wal-Mart have all called for reforming the MSP system.

AAJ is also releasing a new primer to highlight the lengthy delays and inconsistencies of the current system, which has even resulted in seniors losing their medical coverage because of Medicare’s bureaucracy.  In one example, 81-year-old Mollie Coury was involved in a car accident and hospitalized for weeks.  Seven years later, Medicare demanded reimbursement for her treatment, and when she could not pay, the agency took her Social Security check for three years to cover their medical expenses. Then thirteen years after the accident, Medicare demanded Mollie pay an additional $66,000 after the agency made an “administrative error.”  When Mollie did not pay, Medicare cut off her medical coverage.


The SMART Act would address Mollie’s situation by requiring Medicare repayment amounts to be fully disclosed to beneficiaries prior to insurers and attorneys entering into final settlements, allowing the full repayment amount to be factored into the final settlement.  The legislation would also put a three year time limit on claims and stop Medicare from pursuing amounts so small it costs the agency more to administer than is repaid.

“Unfortunately, it is the nation’s most vulnerable seniors that are hurt by this bureaucratic nightmare Medicare has created,” said Paul.  “This legislation is a commonsense, bipartisan response with support from the senior advocate and business community.”

Similar legislation has been introduced in the House of Representatives by Reps. Tim Murphy (R-PA) and Ronald Kind (D-WI), H.R. 1063, which currently has 55 bipartisan cosponsors. 

AAJ’s new primer, “Medicare Secondary Payer: How Streamlining a Broken Bureaucracy Will Protect Seniors and Taxpayers,” can be found at

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