Medicare Advantage liens are not traditional Medicare liens, even though they look similar on the demand letter. Medicare Advantage plans are private insurance carriers that contract with CMS to administer Part C benefits, and they operate under a different procedural framework. Plaintiff firms that treat Medicare Advantage liens the same way they treat conditional payments from the BCRC end up leaving money on the table, and in some cases create real exposure for the firm itself.
Two different recovery frameworks
Traditional Medicare (Parts A and B) operates under the Medicare Secondary Payer Act at 42 U.S.C. § 1395y(b). The BCRC and the Commercial Repayment Center handle recovery directly. The process is centralized and predictable. Conditional payment letters and final demands follow a defined sequence, and procurement cost reduction under 42 C.F.R. § 411.37 is mandatory.
Medicare Advantage (Part C) operates under 42 U.S.C. § 1395w-22(a)(4) and 42 C.F.R. § 422.108(f), which provide that Medicare Advantage Organizations “exercise the same rights to recover from a primary plan, entity, or individual that the Secretary exercises under the MSP regulations.” That language is what MA plans cite when they assert parity with traditional Medicare.
Why MA plans claim broader rights
In 2012, the Third Circuit held in In re Avandia Marketing, 685 F.3d 353 (3d Cir. 2012), that the private cause of action in 42 U.S.C. § 1395y(b)(3)(A) extends to Medicare Advantage Organizations. The Eleventh Circuit reached the same conclusion in Humana Medical Plan, Inc. v. Western Heritage Insurance Co., 832 F.3d 1229 (11th Cir. 2016), and confirmed that the private cause of action carries double damages exposure for primary plans, including liability insurers and the attorneys who handle the settlement funds.
The Ninth Circuit went the other direction on different facts in Parra v. PacifiCare of Arizona, Inc., 715 F.3d 1146 (9th Cir. 2013), declining to extend the private cause of action under that fact pattern. The result is a circuit split, with most jurisdictions following Avandia and Western Heritage.
MA plans now routinely send demand letters asserting full parity with traditional Medicare. The parity argument helps them on damages. It does not always hold up on procedure.
How MA plans actually behave
No central portal exists for MA enrollment. The BCRC will confirm whether your client has traditional Medicare. It will not tell you whether your client is also enrolled in an MA plan, and it will not coordinate with the MA carrier. The duty to identify MA enrollment falls entirely on the firm.
MA plans frequently resist procurement cost reduction. Traditional Medicare applies the formula automatically. MA plans and their subrogation vendors often take the position that they are not required to apply it, even though the same regulation that gives them recovery rights also imports the Secretary’s procedural framework. This is one of the more common points of leverage in MA negotiation.
MA appeal processes are inconsistent. Traditional Medicare provides a five level administrative appeal under 42 C.F.R. Part 405. MA plans technically have a parallel internal process, but it is often poorly documented and inconsistently applied. Courts have confirmed that MA enrollees must still exhaust administrative remedies before challenging recovery in federal court, which makes early procedural engagement important.
How to evaluate a Medicare Advantage lien
Work through this before negotiating the demand:
- Confirm the carrier is actually a Medicare Advantage Organization, not an assignee, an MSO, or a downstream entity. Courts have rejected standing for entities that are not properly listed MAOs.
- Identify which injury related charges the plan actually paid, and which ones relate to your case. An itemization audit almost always finds unrelated treatment.
- Pin down the legal authority the plan cites for the amount demanded. A demand citing the MSP private cause of action asserts one thing. A demand citing the plan’s contract with the enrollee asserts something different.
- Check which circuit governs, and what that circuit’s law says about MAO standing, double damages, and procurement reduction.
- Preserve the procedural posture necessary to challenge the claim if negotiation fails.
Firms that recognize Medicare Advantage liens as a separate problem, rather than a variant of traditional Medicare, consistently get better results for their clients.
If your firm wants a second look at a Medicare Advantage lien before settlement, Clayton handles MA evaluation and negotiation nationwide. Contact us at office@merschbrocklaw.com.
Clayton Merschbrock is the founder of Merschbrock Law, a national lien resolution practice serving plaintiff personal injury firms. Before transitioning to the plaintiff side in 2019, Clayton served as a Subrogation and Litigation Attorney at the nation’s largest post-payment healthcare recovery vendor.
Contact: office@merschbrocklaw.com | (502) 215-0778 | merschbrocklaw.com