Medicare Secondary Payer (MSP) Compliance: What PI Firms Must Know

When a personal injury law firm (PI firm) settles a case involving a Medicare beneficiary, compliance with the Medicare Secondary Payer (MSP) Act becomes a critical step in closing the case. 

These federal rules require that Medicare’s interests—both past and future—be considered before funds are disbursed. 

For law firms handling Medicare liens and settlements, understanding every step of Medicare Secondary Payer compliance is essential to protect client recoveries and avoid costly penalties.

The MSP Act affects nearly every personal injury settlement involving a Medicare-eligible client, yet it remains one of the most complicated areas of compliance.

Why Medicare Secondary Payer Compliance Matters for Law Firms

For personal injury firms, ensuring that all Medicare conditional payments are identified, verified, and repaid properly protects both the client’s benefits and the firm’s liability. Failing to do so can delay settlements or trigger government recovery actions.

At Compass, our mission is to navigate this process with precision and efficiency, helping firms and plaintiffs reach resolution confidently while meeting the requirements of the MSP statute.

For attorneys and their clients alike, ensuring full MSP compliance means protecting both the firm’s potential liability and the claimant’s long-term benefits. 

Understanding the Medicare Secondary Payer Act

The MSP Act (42 U.S.C. §1395y(b)(2)(A)) prevents Medicare from paying for medical treatment when another payer—like an auto insurer, liability carrier, or workers’ compensation plan—is legally responsible.

When Medicare has already covered injury-related expenses, those payments are considered conditional. Upon settlement, Medicare must be reimbursed for these costs.

In short:

• Medicare pays second, not first.

• Firms must confirm and reimburse conditional payments before disbursing settlement funds.

Failure to comply with these requirements can expose both firms and clients to repayment demands or settlement delays. Understanding these obligations is critical for MSP compliance in personal injury cases.

Medicare Advantage & Part D Liens: Hidden Compliance Risks to Watch

Compliance doesn’t end with Original Medicare (Parts A and B).

Medicare Advantage (Part C) and Prescription Drug (Part D) plans, administered by private insurers, may also have recovery rights under the MSP Act. These plans can pursue reimbursement directly and, in some cases, even seek double damages if their lien is ignored.

Because Medicare Advantage and Part D plans are administered by private insurers, they’re not included in traditional Medicare lien searches, making them one of the most common compliance blind spots.

Failure to proactively notify Medicare Advantage plans may result in unexpected liens after a case settles. 

Compass partners with law firms to ensure all plans are identified and resolved alongside Traditional Medicare liens. Our expertise in Medicare & Medicare Advantage lien resolution prevents unexpected claims from surfacing after disbursement, protecting both the firm and the plaintiff from post-settlement exposure.

Close Every Case with Confidence

Partner with Compass for Medicare Settlement Compliance

At Compass, our focus is simple: help personal injury firms and plaintiffs finalize their cases with full Medicare settlement compliance and peace of mind.

We handle the details, communication, and documentation—so you can focus on your clients. With precision, transparency, and experience, we make compliance simple and seamless. Partner with Compass to ensure every case meets the highest standard of Medicare Secondary Payer compliance. 

Explore our full range of lien resolution services to see how we simplify complex compliance challenges for personal injury law firms.