1. History

Medicare, enacted in 1965, was packaged as an insurance program and was the primary payer of health benefits for its participants with one exception. The Act provided that where the Secretary found that the expense was payable under workers’ compensation, then any payment by Medicare was conditioned upon reimbursement by the workers’ compensation insurer. FN 1. In 1980, the conditional nature of any payment was extended to automobile and liability insurance claims, as well as no-fault insurance claims. FN 2.

The MSP was then gradually expanded to cover group health plans. Plans covering end-stage renal decease were made primary in 1981. FN 3. A year later active employees covered by group health plans were made primary relative to Medicare coverage. FN 4. In 1986, large group health plans were made primary as well. FN 5. Through this period, the focus remained exclusively on the insurance industry, referred to as "primary plans".

In the late 1990s, Medicare began filing lawsuits against tortfeasors who had settled high profile mass tort cases (i.e. tobacco, breast implants, pharma, etc.). FN 6. Before too long, Medicare tried its theory of recovery against individual plaintiff cases as well. FN 7. The theory was that self-insured tortfeasors were "self-insured plans". Because the statutory language did not support such claims, court after court rejected the effort, often in terms not flattering to the Government.

In 2003, the President signed the Medicare Prescription Drug, Improvement and Modernization Act of 2003, FN 8, often referred to as the MMA. The MMA is best known for adding a prescription drug benefit. But under the guise of “technical amendments”, Congress essentially wrote the Government’s theory into the law. A definition of self-insured plan was added, which included a person or entity which "carries its own risk". The MMA also added a provision defining when a primary plan’s responsibility was determined, introducing the idea that settlements, without an admission of fault, could be targeted. A subrogation type right was added, allowing Medicare to recover from a plaintiff who had received a payment.

In 2007, the current version was completed when Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA) FN 9 was enacted and signed into law. It was in § 111 that Congress authorized the reporting regimen that has imposed a significant burden on the insurance industry.

FN 1. Blue Cross and Blue Shield Ass’n v. Sullivan, 794 F. Supp. 1166, 1168 (D.D.C. 1992).

FN 2.Omnibus Reconciliation Act of 1980, Pub. L. No. 96-499, 94 Stat. 2599 (1980).

FN 3.See Omnibus Budget Reconciliation Act of 1981, Pub.L. No. 97–35, § 2146(a), 95 Stat. 357.

FN 4.Tax Equity and Fiscal Responsibility Act of 1982, Pub.L. No. 97–248, § 116(b), 96 Stat. 324.

FN 5.Omnibus Budget Reconciliation Act of 1986, Pub.L. No. 99–509, § 9319(a), 100 Stat. 1874.

FN 6.Mason v. Am. Tobacco Co., 212 F. Supp. 2d 88 (E.D.N.Y. 2002), aff’d 346 F.3d 36 (2d Cir. 2003) (tobacco); In re Silicone Gel Breast Implants Prods. Liab. Litig., 174 F. Supp. 2d 1242 (N.D. Ala. 2001), rev’d sub nom United States v. Baxter Int’l Inc., 345 F.3d 866 (11th Cir. 2003); In re Orthopedic Bone Screw Prods. Liab. Litig., 202 F.R.D. 154 (E.D. Pa. 2001); In re Diet Drugs Prods. Liab. Litig., 2001 WL 283163 (E.D. Pa. 2001).

FN 7.Thompson v. Goetzmann, 337 F.3d 489 (5th Cir. 2003).

FN 8.Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub. L. No. 108-173, §301, 117 Stat. 2066 (2003)

FN 9.Medicare, Medicaid and SCHIP Extension Act, Pub.L. No. 110–173, 121 Stat. 2492 (2007)