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1993.06.01 :  Lawsuit -- Medicare Secondary Payer

Contact:  Anne Verano    
Tuesday, June 1, 1993                             (202) 690-6145
     
     HHS Secretary Donna E. Shalala today announced the
settlement of a lawsuit that will return $27 million in
overpayments to the Medicare trust fund and establish precedents
for how insurance companies respond to Medicare secondary payer
issues.
       The lawsuit involved recovery of Medicare payments that
were mistakenly made for services provided to beneficiaries whose
health care expenses should have been paid under employer group
plans insured or administered by the Provident Life and Accident
Insurance Company, a major health insurer.  The litigation was
based on federal laws, known as the Medicare secondary payer
provisions, that shift responsibility for payment of medical
expenses from Medicare to employer health plans.  
       "We are pleased that this four-year-old case is finally
settled," Secretary Shalala said.  "It underscores our commitment
to pursue all avenues to safeguard the Medicare trust funds."
       A federal court ruled in 1990 that Provident was liable
for these payments, but litigation continued as to the amount the
insurer owed the government.  The case has been handled by
lawyers from the Justice Department and the Health Care Financing
Administration, the federal agency that administers the Medicare
program.
       "This strengthens our foundation for dealing with MSP
claims and collecting mistaken payments Medicare made to other
insurers," said HCFA Administrator Bruce C. Vladeck.  "MSP is one
of our highest priorities."
       In addition to the monetary payment required by the
settlement, Provident also agreed to furnish Medicare with
information that would identify past duplicative payments to
health care providers, to maintain procedures that would
facilitate the proper payment of future MSP claims, and to inform
Medicare of situations where the company was the primary payer
for Medicare beneficiaries.
       HCFA has initiated an extensive program for recovering
mistaken payments by Medicare for claims by beneficiaries whose
employer-based or group plans should have paid for their health
care services.  Recent efforts included mailings to 12,000
employer group health plans and 750,000 employers to clarify
coverage of employees who are enrolled in Medicare and identify
situations where mistaken payments may have occurred.  HCFA also
is working to identify private coverage of beneficiaries through
a computer match of data from Medicare, Social Security and the
Internal Revenue Service.     

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