Auto, Medical, No-Fault and Liability Insurance
Medicare cannot make payment for covered items or services when payment has been made or can reasonably be expected to be made promptly by auto, medical, no-fault or liability insurance.
The Omnibus Budget Reconciliation Act of 1986 (OBRA 1986) provides that any claimant has the right to take legal action against an auto, medical, no-fault or liability insurer that fails to pay primary benefits for services covered by the insurer and to collect double damages.
Medicare processing guidelines include the following instructions for each type.
Auto, Medical and No-Fault Insurance
- "Auto, medical and no-fault" refers to insurance that pays medical expenses for injuries sustained on the property or premises of the insured, or in the use, occupancy or operation of an automobile regardless of who may have been responsible for causing the accident
- This insurance includes, but is not limited to, automobile, homeowner's and commercial plans
- It is sometimes called "medical payments coverage (med-pay)," "personal injury protection (PIP)" or "medical expense coverage"
- Services can be applied to Medicare's Part A and B deductible and any applicable coinsurance amounts
- Provides a contractual relationship between the third-party payer and the injured party providing the provider/supplier the right to bill the third party
- The provider/supplier is permitted to accept the full insurance payment, regardless if Medicare is billed
- The beneficiary or his/her representative is responsible for taking whatever action is necessary to obtain any payment that can reasonably be expected under auto medical/no-fault insurance
- Liability Insurance means insurance (including self-insured plans) that provides payment based on legal liability for injury, illness or damage to property. It includes, but is not limited to, automobile liability insurance, uninsured motorist insurance, underinsured motorist insurance, homeowner's liability insurance, malpractice insurance, product liability insurance and general casualty insurance.
- Note: When a beneficiary receives medical payment under his or her own homeowner's insurance, it should be reported under auto medical/no-fault
- Is not applied towards the Part A or B deductibles
- No direct or indirect contractual relationship between the third-party payer and the injured party, thus not providing the provider/supplier the right to bill the third party
- When a provider/supplier has reason to believe that services provided might be paid under liability insurance, there are two options available:
- The provider/supplier must bill only the liability insurer within a 120-day period after the service, unless the provider/supplier has evidence that the liability insurer will not pay. If this evidence is available, the provider/supplier may bill Medicare for conditional payment with documentation to support the fact that payment will not be made promptly by the liability carrier.
- After the 120-day period, the provider/supplier may, but is not required to, bill Medicare for payment if the liability insurance claim is not resolved. However, if the provider or supplier chooses to bill Medicare, he or she must withdraw claims against the liability insurer or any lien placed on the beneficiary's settlement.
In addition, Medicare guidelines state that providers (except reference labs) are required to ask Medicare patients, or their representatives, at admission or start of care, if the services are for treatment of an injury or illness which resulted from an automobile accident or other incident, including one that occurs on the provider's premises, for which he or she holds another party responsible.
CMS Regulation Reference: Publication 100-05, Chapter 1 (PDF, 191 KB).