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1993.01.06 :  Medicare -- Secondary Payor

Contact: Anne Verano (202) 690-6145
January 6, 1993

       The federal Health Care Financing Administration is
sending letters seeking recovery of approximately $200 million
from 12,000 employer group health plans that should have paid
health care claims that were paid by Medicare.
       HHS Secretary Louis W. Sullivan, M.D., said there will be
future mailings to the health plans of other employers as HCFA
continues efforts to recover as much as $1 billion through fiscal
year 1995.
       He said the group health plans may be able to show that
they do not owe Medicare the full amounts being sought.  In some
cases, they may have paid claims that were also mistakenly paid
by Medicare. Under those circumstances, Medicare will seek
refunds from providers that received double payments.
       The current mailing seeks recoveries from major health 
insurers, from the health plans of some of the nation's major
corporations, and from group health plans covering employees of
various state, local and municipal government offices. 
       The health plans will have 60 days after receipt of the
letters to pay Medicare the sums requested or submit evidence
that they do not owe the funds.  Interest will begin to accrue
after that period. The law authorizes tax penalties on employers
with health plans that fail to pay the sums owed to Medicare, and
the government may sue the group health plans for double the
amount of their original debts to Medicare.
       The letters being sent to the group health plans identify
about 20,000 employed Medicare beneficiaries who received health
care services for which Medicare was mistakenly the primary
payer.
       Acting HCFA Administrator William Toby Jr. said these
beneficiaries had health insurance coverage associated with their
employment or their spouses' employment.  This coverage was
traced through a computer match of data from Medicare, Social
Security and Internal Revenue Service.
       The data match was authorized in a 1989 act of Congress. 
By early 1991, HCFA had identified employed beneficiaries and
sent letters asking 750,000 employers whether they had group
health plans.  Those that offered such plans were then sent
questionnaires asking for detailed information about the coverage
of specific employees who are enrolled in Medicare.
       When Medicare beneficiaries or their spouses are employed
and they are covered by employer group health plans, those plans
are generally required to be the primary payers of claims for
medical services to the beneficiaries.  As the secondary payer in
those cases, Medicare is responsible for deductibles, coinsurance
payments and charges not covered by the employer health plans,
but normally paid for by Medicare.
       In another development, a notice published in the Federal
Register tells group health plans that they are required to
report to HCFA when they learn that Medicare made primary
payments for claims that should have been the responsibility of
the employer plans. 

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EDITOR'S NOTE: HCFA, an agency of the U.S. Department of Health
and Human Services, directs the Medicare and Medicaid programs,
which help pay the medical bills of approximately 67 million
Americans. HCFA's estimated fiscal year 1993 expenditures are
$230 billion, the 12th largest government budget of any kind in
the world.