medicare secondary payer act is the short name people use for a federal law that decides who pays your medical bills after an injury. The formal citation is 42 U.S.C. § 1395y(b). In plain words, it says Medicare is not supposed to be the first payer when someone else is liable. If a car insurer, a workers’ compensation carrier, or a property owner’s liability policy is responsible for your treatment, that policy pays first. Medicare pays second.
- Why a Medicare Secondary Payer Act Exists
- How Much a Medicare Secondary Payer Act Takes
- The Timeline From Injury to Final Demand
- How to Reduce What You Repay
- What Happens If You Get It Wrong
- Questions to Ask Your Attorney
- Frequently Asked Questions
- Key Takeaways: Medicare Secondary Payer Act
- What to Do Next
- Official Sources & Resources
- Related Guides
When the other insurer has not paid yet, Medicare may still cover your care up front. Those are called conditional payments. The medicare secondary payer act then requires that money to be paid back out of your settlement. This guide explains the process, the forms, and the deadlines. It does not give legal advice.
Why a Medicare Secondary Payer Act Exists
Before 1980, Medicare often paid injury bills that an insurance company should have covered. Congress changed that. The rule now treats Medicare as a backup, not a primary insurer.
Here is the practical problem the medicare secondary payer act solves. Liability cases take years. Your surgery cannot wait that long. So Medicare pays the hospital now and keeps a running list.
That list is the conditional payment file. It holds every claim Medicare believes is related to your injury. When your case settles, Medicare asks for that money back.
CMS explains the basic structure on its Medicare Secondary Payer overview page. The agency does not do the collecting itself. It uses a contractor called the Benefits Coordination and Recovery Center, or BCRC.
The BCRC opens a file once it learns about your claim. Insurers report settlements to CMS under Section 111 of the MMSEA. Your attorney can also report the case directly.
How Much a Medicare Secondary Payer Act Takes
Medicare does not simply take back every dollar it spent. The regulation at 42 CFR 411.37 requires a reduction for procurement costs. Procurement costs are your attorney’s fees plus case expenses.
The formula works in three steps. First, divide total procurement costs by the total settlement. That gives a ratio. Second, apply that ratio to Medicare’s conditional payment total. Third, subtract that share from the conditional payment total.
The result is what you actually repay. Below is a worked example using round numbers.
Example only. These figures are illustrative and are not a prediction about any real case.
| Item | Amount |
|---|---|
| Gross settlement | $100,000 |
| Attorney fee (33.33%) | $33,333 |
| Case costs | $6,667 |
| Total procurement costs | $40,000 |
| Procurement ratio ($40,000 ÷ $100,000) | 40% |
| Medicare conditional payments | $20,000 |
| Medicare’s share of procurement (40% × $20,000) | $8,000 |
| Amount repaid to Medicare | $12,000 |
There is a second rule worth knowing. If Medicare’s payments equal or exceed the settlement, recovery is capped. In that situation Medicare takes the settlement minus total procurement costs.
So the medicare secondary payer act cannot leave you owing more than you received. Your own share may still be small. That is why the conditional payment number matters early, not late.
There is also a low-dollar threshold. For 2026, CMS kept the recovery threshold at $750 for physical-trauma liability, no-fault, and workers’ compensation settlements. See the CMS alert on the Non-Group Health Plan Recovery page. Settlements at or below that figure generally are not pursued. Confirm the current figure with the BCRC before relying on it.
The Timeline From Injury to Final Demand
The sequence is fairly consistent. Knowing it helps you tell whether your case is on track.
1. Report the case. Your attorney reports the injury and the insurer to the BCRC. This can be done by phone, by mail, or through the MSPRP portal.
2. Rights and Responsibilities Letter. The BCRC sends this first. It confirms the file is open and explains the process.
3. Conditional Payment Letter. Roughly 65 days later, the BCRC issues the Conditional Payment Letter. It includes a Payment Summary Form listing every claim Medicare considers related.
4. Dispute unrelated charges. Your attorney reviews the Payment Summary Form line by line. Unrelated treatment gets challenged in writing.
5. Settle the case. The Conditional Payment Letter amount is always interim. It can change while treatment continues.
6. Send settlement details. The BCRC needs the settlement amount, date, and attorney fee information.
7. Final Demand. The BCRC issues the Final Demand letter with the exact repayment figure. Payment is due within 60 days of the date on that letter.
The Medicare Secondary Payer Recovery Portal (MSPRP) lets your attorney track all of this online. It shows updated conditional payment amounts and accepts electronic payment. CMS describes the full sequence on its Medicare’s Recovery Process page.
How to Reduce What You Repay
There are several legitimate paths. Each has its own paperwork.
Procurement cost reduction. This applies automatically under 42 CFR 411.37. Your attorney must report fees and costs accurately for the math to come out right.
Disputing unrelated charges. This is often the largest reduction. Medicare’s list sometimes captures diabetes visits or old back treatment. Those charges can be removed with medical records.
Fixed Percentage Option. If the settlement is $10,000 or less and involves physical trauma, you may pay a flat 25% instead. Details are on the CMS Demand Calculation Options page.
❤️ Get Free Medicare Guides
Free · No spam · Unsubscribe anytime
Self-Calculated Conditional Payment Amount. Available when the settlement is $25,000 or less, the injury is physical trauma, and treatment ended at least 90 days earlier with none expected.
Waiver of recovery. A beneficiary may request a waiver on hardship or equity grounds using form SSA-632, Request for Waiver of Overpayment Recovery. Waiver is discretionary. No one can promise it will be granted.
Appeal. A debtor who believes the amount is wrong may appeal. The request must be filed within 120 days of receiving the demand letter. The first level is a redetermination, requested on form CMS-20027.
A compromise request is separate from a waiver and is handled by CMS. Ask the BCRC which route fits your facts.
What Happens If You Get It Wrong
Ignoring the Final Demand is expensive. Interest accrues from the date of the demand letter if payment is not received within 60 days.
The government also has stronger tools. Under 42 U.S.C. § 1395y(b)(2)(B)(iii), the United States may bring an action and recover double damages from a party that received the settlement funds.
Referral to Treasury for offset is another consequence. Federal payments, including Social Security benefits, can be intercepted.
The exposure is not limited to the injured person. Under the medicare secondary payer act, an attorney who distributes settlement funds without resolving the debt can be pursued personally. Insurers face reporting penalties as well. That shared risk is why most firms treat this as a mandatory closing step.
Questions to Ask Your Attorney
In nearly every case, the attorney handling the claim manages this process. You should not be calling the BCRC yourself unless your attorney asks you to. Still, you are entitled to know where things stand.
1. Have you reported this case to the Benefits Coordination and Recovery Center, and on what date?
2. Have we received the Conditional Payment Letter, and may I see the Payment Summary Form?
3. Which charges on that list are you disputing as unrelated to my injury?
4. What is my estimated repayment after the procurement cost reduction under 42 CFR 411.37?
5. Will the Final Demand be resolved before my settlement funds are disbursed, and who pays if it is not?
Ask for the answers in writing. A good file will have all of it documented.
Frequently Asked Questions
Does the medicare secondary payer act apply if I only have Medicare Advantage?
Medicare Advantage plans and Part D plans pursue their own recovery separately from the BCRC. Those claims are handled by the plan, not through the MSPRP portal. Ask your attorney whether a plan-level lien also exists.
How long does the process take?
The Conditional Payment Letter typically arrives around 65 days after the file opens. The Final Demand comes after settlement documents are submitted. Total time varies widely, so ask the BCRC for the status on your specific case.
Can I keep my settlement money while the medicare secondary payer act claim is pending?
Most firms hold the disputed portion in trust until the Final Demand is resolved. Releasing everything early creates real exposure. The rest of your settlement is usually disbursed normally.
What if I disagree with the Final Demand amount?
You may appeal within 120 days of receiving the letter. You may also request a waiver using form SSA-632. These are different requests with different standards, and neither outcome is guaranteed.
Key Takeaways: Medicare Secondary Payer Act
- Medicare pays first, then asks. A medicare secondary payer act is repayment for bills Medicare covered while the case was pending.
- Attorney fees reduce it. The procurement-cost rule lowers a medicare secondary payer act in proportion to what it cost to win the money.
- The 60-day clock is real. Repayment after a medicare secondary payer act demand is due within 60 days, with interest after that.
- Unrelated charges can be disputed. A medicare secondary payer act often lists treatment that has nothing to do with the injury; those come off.
- Advantage plans recover too. A medicare secondary payer act is not limited to Original Medicare; private plans pursue repayment as well.
- Ignoring it is expensive. The government can pursue double damages when a medicare secondary payer act goes unpaid.
What to Do Next
A medicare secondary payer act is normally managed by the attorney handling the injury case. Ask the firm in writing who is contacting the Benefits Coordination and Recovery Center, what is being held in escrow, and when you will see the final demand. If you have no attorney, your state bar’s referral service is the neutral place to start.
Official Sources & Resources
- Medicare Secondary Payer (CMS): https://www.cms.gov/medicare/coordination-benefits-recovery
- MSPRP portal: https://www.cob.cms.hhs.gov/MSPRP/
- Medicare.gov: https://www.medicare.gov
- CMS.gov: https://www.cms.gov
- Find your SHIP counselor: https://www.medicare.gov/talk-to-someone
Checked against the official sources above in September 2026. Rules and dollar figures change; if a notice you received disagrees with this page, the notice wins — and please tell us. General information, not legal, financial or medical advice.