CMS Guidance a “Win, Win” for Seniors, Businesses, Taxpayers

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For Immediate Release: December 16, 2011

Contact: Jennifer Fuson
American Association for Justice

CMS Guidance a “Win, Win” for Seniors, Businesses, Taxpayers   

New Medicare Secondary Payer guidance to quicken settlements and protect taxpayers

Washington, DC—New guidance issued by the Centers for Medicare and Medicaid Services (CMS) should significantly streamline the Medicare Secondary Payer (MSP) system, changes long advocated by a coalition of consumer and seniors groups, insurers and other businesses.  Assuming CMS expands the $25,000 claims threshold as indicated in today’s guidance, this will be a significant improvement to the MSP process. 

The MSP system 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 expenses.

The MSP system has cost taxpayers millions of dollars each year by not providing parties in a legal dispute – such as seniors, insurance companies, and businesses – the full amount Medicare is owed in a timely fashion.  Settlements have been delayed months or even years until CMS provided the final amount owed from medical bills Medicare has paid an injured party.

The new guidance states that a final payment letter will be sent within 60 days for all claims under $25,000, with the intent to increase this amount in the near future.  This will allow injured parties, insurers, and businesses to settle claims quicker, while reimbursing taxpayers and the Medicare Trust Fund in an expedited fashion.

“This new guidance from CMS is a ‘win, win’ for seniors, businesses, insurance companies and taxpayers,” said AAJ President Gary M. Paul.  “The current system is riddled with inefficiency, costing taxpayers and businesses millions of dollars each year.  Assuming CMS expands the program above the $25,000 threshold, this guidance will go a long way towards addressing these concerns.”

Groups ranging from the American Association for Justice (AAJ), to consumer and senior advocates, insurance companies like Allstate, and businesses such as Safeway and Wal-Mart have all urged reform of the MSP system, calling for greater efficiency, clarity, and finality in the payment request process.

In October, AAJ released a primer that highlighted 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.


Under the new guidelines, Mollie would be provided a final “bill” from Medicare within 60 days of a request to CMS, once the threshold is raised beyond the $25,000 limit.  This would allow all the parties in Millie’s case to settle.  The new guidelines would also prohibit Medicare from asking Mollie for additional funds years later after the case has concluded.

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