Does Medicare Cover Auto Accident Injuries Under New Law?

Reposted with permission from: Michigan Auto Law
Written by: Steven Gursten, Auto Accident Attorney, Michigan Auto Law

Also read the associated blogs below:
Does Health Insurance Cover Car Accident Injuries in Michigan?
Qualified Health Coverage (QHC) and Michigan No Fault Insurance: What You Need to Know
Does Medicaid Cover Auto Accident Injuries Under New Law?
Michigan Auto Insurance Reform Savings Debunked
What is PIP Insurance in Michigan?

Does Medicare Cover Auto Accident Injuries Under New Law?

Yes, under certain circumstances, Medicare will cover auto accident-related injuries in Michigan. But unlike No-Fault auto insurance, it will want to be reimbursed and it will not cover all of the vital medical care services that a car accident victim needs.

The interplay between Medicare and No-Fault auto insurance for car accident victims has always been complicated. Frankly, even most auto accident lawyers do not understand this area of law.

But with the new Michigan No-Fault law, it is more important than ever for you to understand what Medicare covers for auto accidents, the limitations of its coverage versus being covered under No-Fault insurance, and how selecting lower PIP cap amounts after July 1, 2020 will impact you if you are injured in a car accident.

Under what circumstances does Medicare cover auto accident injuries?

Theoretically, Medicare would cover auto accident-related injuries – without seeking reimbursement – only if the person had no No-Fault auto insurance (or other auto insurance) to provide coverage.

But that’s not how things have worked out in Michigan because we do have No-Fault, which became mandatory for all drivers in 1973.

In practice, Medicare has generally not covered or been the “primary” payer on auto accident-related injuries in Michigan because auto No-Fault insurance has been expected to provide all medical care and coverage.

That is consistent with the federal law known as the “Secondary Payer” rule, which says they will not pay for “any item or service to the extent that . . . payment has been made or can reasonably be expected to be made . . . under an automobile . . . insurance policy . . . or under no fault insurance.” (42 U.S. Code § 1395y(b)(2)(A)(ii); 42 CFR Part 411.50(c)(1))

However, on those unexpected occasions when the federal health insurance program has ended up paying for something that No-Fault should have covered (such as when a medical biller gets confused or lazy about whom to bill or when a doctor or care provider bills them because they want to get paid right away), then those payments would be considered “conditional payments.”

The danger with “conditional payments” is that they will expect to be reimbursed . . . unconditionally.

Medicare can – and will – and does – seek reimbursement. This includes asserting a lien on a car accident victim’s third-party tort recovery for pain and suffering compensation. This will also include asserting a lien on all “excess” medical and economic damages that a car accident victim can now claim in a car accident lawsuit in tort after July 1, 2020 when these provisions of the new auto law take effect.

Does Medicare cover auto accident injuries under the new No-Fault law?

Yes. According to Insurance Bulletin 2020-05-INS, which the Michigan Insurance Commissioner issued Monday, February 10, 2020. In the Bulletin, the Insurance Commissioner addresses the following questions regarding Medicare and No-Fault in Michigan:

• Will Medicare cover auto accident-related injuries for a crash victim who opted out of No-Fault PIP medical benefits coverage under MCL 500.3107d?
• Will Medicare cover auto accident-related injuries for a crash victim who has reached his or her selected coverage limit for No-Fault PIP medical benefits under MCL 500.3107c?

To both questions, the Insurance Commissioner answered “yes”:

• “Medicare will pay for Medicare-covered services to enrollees who opt out of PIP medical benefits, are injured in an automobile accident, and have no other available coverage.”
• “The new law also allows Medicare enrollees to purchase lower than unlimited levels of PIP medical coverage: $500,000 or $250,000 per person per accident. If a Medicare enrollee is injured in an accident and exhausts his or her PIP medical limits, and has no other available coverage, Medicare will pay for Medicare-covered services . . .”

However, I just want to raise a note of caution here. I’ve specialized for the last 26 years in auto accident litigation, and I’ve seen firsthand how the “Medicare Secondary Payer” rule is used to get money back through reimbursements from auto accident settlement recoveries. If I were speaking at a legal seminar to my fellow Michigan auto accident attorneys, I would advise taking more of a “wait and see” approach when it comes to how Medicare covers auto accident-related injuries – even after the Insurance Commissioner’s statement on Medicare coverage.

In other words, it wouldn’t be a complete surprise to me to see Medicare try at some future date to assert the federal “Medicare Secondary Payer” law to prevent being made a “primary” payer under the new No-Fault law. I say this because auto accident attorneys have seen Medicare do this before, successfully, with No-Fault coordination. In the coordination context, the Michigan courts concluded that the “Medicare Secondary Payer” law prevented a driver from coordinating No-Fault with Medicare to make it the “primary” payer on all car accident-related medical expenses.

It will be interesting to see how the following observations by the Michigan Supreme Court in John Hancock Property & Casualty Insurance v. Blue Cross Blue Shield (1991) play out under the provisions of the new No-Fault law:

• “Because Medicare no longer pays for medical expenses arising out of an automobile accident where there is automobile insurance coverage of such expense, a person eligible for Medicare benefits who owns an automobile is obliged to pay the premium cost of providing for medical expense arising out of an automobile accident either to an automobile . . .” (Section IV)
• The federal “Medicare Secondary Payer” law “explicitly mak[es] Medicare secondary to automobile insurance where it is available.” (Footnote 4)

Will Medicare argue that No-Fault auto insurance doesn’t cease to be “available” just because a driver chooses to opt out of and/or limit his or her No-Fault coverage? The Insurance Commissioner Bulletin is better to have than not to have. But the Bulletin is not dispositive. Medicare will have the last word. Auto accident lawyers in Michigan will have to wait and see how this plays out over the next few years.

Does Medicare cover auto accident injuries the same as No-Fault?

No, medicare covers auto accident-related injuries differently. This is very important. If you are a consumer reading this blog and you are trying to decide on what level of No-Fault PIP coverage to choose, this is a big reason why you need to be very careful about the idea of giving up auto No-Fault PIP medical benefits coverage in exchange for a reduced car insurance premium.

There are many critical medical services and treatment areas that car accident victims may desperately need for their care, recovery and rehabilitation. These are all routinely covered by No-Fault.

But not by Medicare.

In fact, Medicare covers auto accident-related injuries in a limited capacity. Below are some of the important medical services that it does not cover:

• In-home attendant care
• Transportation to and from medical appointments
• Vehicle modifications
• Home modifications
• Case management services
• Residential treatment programs
• Long-term and custodial care
• Replacement services
• Skilled nursing facility care
• Long-term comprehensive rehabilitation
• Electric wheelchairs
• Occupational therapy
• Executive functioning therapy for post-traumatic brain injuries

Does Medicare cover rehabilitation after a car accident?

Medicare will NOT cover rehabilitation services after a car accident in Michigan as comprehensively as No-Fault auto insurance.

Medicare may not provide coverage at all, or may only provide limited coverage, for many areas of injury rehabilitation. Compare this with auto No-Fault, under which rehabilitation services are covered as long as they are “reasonably necessary” to a car accident victim’s care, recovery or rehabilitation under Michigan’s auto law.

Does Medicare provide coordinated coverage for car accidents?

No. Drivers cannot coordinate their No-Fault PIP medical benefits coverage with Medicare because it is prohibited by the “Medicare Secondary Payer” law, which provides that Medicare won’t cover auto accident-related injuries when payment can reasonably be expected to be made by No-Fault insurance.

How long does Medicare cover rehab from a car accident in Michigan?

The answer to this question depends on whether Medicare covers the rehabilitation services in question at all, and whether Medicare has a limit on such coverage.

How does Medicare affect car accident settlements in Michigan?

If Medicare covers auto accident-related injuries that Michigan No-Fault insurance should have paid, then they will seek reimbursement for its “conditional payments” through a lien on the pain and suffering portion of any car accident settlement that the victim obtains in his or her case.

Additionally, once the No-Fault PIP medical benefits coverage levels become available in policies issued or renewed after July 1, 2020, it’s possible that Medicare may seek reimbursement of its “conditional payments” through a lien on a victim’s third-party tort recovery for “excess” medical benefits.

What are Medicare liens for pain and suffering?

A Medicare lien on a car accident victim’s recovery of pain and suffering compensation is usually how Medicare ensures that it will be reimbursed for any “conditional payments” made on the injury victim’s behalf for car accident-related medical expenses.

Lawyers refer to these as “Medicare super-liens.”

Here’s why:
If Medicare covers auto accident-related injuries for a car accident victim and that victim, ultimately, obtains a settlement or jury verdict for pain and suffering compensation as a result of his or her injuries from the car accident, then the victim must use as much of that money as is necessary to repay Medicare for what it paid out in medical expenses.

Federal law gives Medicare full legal subrogation rights to use its “super-lien” powers to make sure the victim repays whatever he or she owes .

Realistically, a Medicare super-lien for a car accident victim who has opted out of No-Fault insurance (or chosen a coverage level or than “unlimited”) could leave the car accident victim with a vastly reduced settlement recovery, or with nothing at all for all the pain and all the injuries he or she has suffered.

This would not be the case if medical care is covered by No-Fault insurance.

The new auto law in Michigan dangles the possibility of savings on No-Fault for people who opt for Medicare. But Medicare covers auto accident-related injuries differently from No-Fault insurance and comes with many of its own unique risks for car accident victims.

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