Medicare Second Payer
Medicare Secondary Payer (MSP) is the term used by Medicare when Medicare is not responsible for paying first. (The private insurance industry generally talks about “Coordination of Benefits” when assigning responsibility for first and second payment.)
The term “Medicare Secondary Payer” is sometimes confused with Medicare supplement. A Medicare supplement (Medigap) policy is a private health insurance policy designed specifically to fill in some of the “gaps” in Medicare’s coverage when Medicare is the primary payer. Medicare supplement policies typically pay for expenses that Medicare does not pay because of deductible or coinsurance amounts or other limits under the Medicare program.
Precedence of Federal Law
Federal law takes precedence over State law and private contracts. Thus, for the categories of people described below, Medicare is the secondary payer regardless of state law or plan provisions. These Federal requirements are found in Section 1862(b) of the Social Security Act {42 USC Section 1395y(b)(5)}. Applicable regulations are found at 42 CFR Part 411 (1990).
More information on MSP laws and regulations is available through the CMS Laws and Regulations Portal. The link to the CMS Laws and Regulations Portal is located below.
Responsibilities of Beneficiaries Under MSP
As a beneficiary, we advise you to:
- Respond to Initial Enrollment Questionnaire (IEQ) and MSP claims development letters in a timely manner to ensure correct payment of your Medicare claims,
- Be aware that changes in employment, including retirement and changes in health insurance companies may affect your claims payment,
- When you receive health care services, tell your doctor and other providers and the Coordination of Benefits (COB) Contractor about any changes in your health insurance due to you, your spouse, or a family member’s current employment or coverage changes,
- Contact the COB Contractor if you take legal action or an attorney takes legal action on your behalf for a medical claim,
- Contact the COB Contractor if you are involved in an automobile accident, and
- Contact the COB Contractor if you are involved in a workers’ compensation case.
Responsibilities of Providers Under MSP
As a Part A institutional provider (i.e. hospitals), you should:
- Obtain billing information prior to providing hospital services. It is recommended that you use the Centers for Medicare & Medicaid Services’ (CMS’) questionnaire, or a questionnaire that asks similar types of questions; and
- Submit any MSP information to the intermediary using condition and occurrence codes on the claim.
As a Part B provider (i.e. physicians and suppliers)
- Follow the proper claim rules to obtain MSP information such as group health coverage through employment or non-group health coverage resulting from an injury or illness;
- Inquire with the beneficiary at the time of the visit if he/she is taking legal action in conjunction with the services performed; and,
- Submit an Explanation of Benefits (EOB) form with all appropriate MSP information to the designated carrier. If submitting an electronic claim, provide the necessary fields, loops, and segments needed to process an MSP claim.
Responsibilities of Employers Under MSP
As an employer, you must:
- Assure that your plans identify those individuals to whom the MSP requirement applies;
- Assure that your plans provide for proper primary payments where by law Medicare is the secondary payer;
- Assure that your plans do not discriminate against employees and employees’ spouses age 65 or over, people who suffer from permanent kidney failure, and disabled Medicare beneficiaries for whom Medicare is secondary payer; and,
- Accurately complete and submit Data Match reports timely on identified employees.
Group Health Plans (GHP)
An employer cannot offer, subsidize, or be involved in the arrangement of a Medicare supplement policy where the law makes Medicare the secondary payer. Even if the employer does not contribute to the premium, but merely collects it and forwards it to the appropriate individual’s insurance company, the GHP policy is the primary payer to Medicare.
Responsibilities of Attorneys Under MSP
As an Attorney, you must:
- Immediately, upon taking a case, that involves a Medicare beneficiary, inform the COB Contractor about a potential liability lawsuit, and
- Contact the assigned lead contractor regarding Medicare’s interest in a liability, auto/no-fault, or workers’ compensation lawsuit.
Responsibilities of Insurers Under MSP
As a GHP insurer, you must:
- Report to the COB Contractor if you find that CMS has paid primary when you are primary to Medicare (i.e. 411.25).
As a Non-GHP Auto/Liability Insurer, you must:
- Contact the COB Contractor immediately when the individual you insure is a Medicare beneficiary.
MEDICARE SECONDARY PAYER (MSP) summary list
Until 1980, Medicare was the primary payor for all Medicare covered services except for services covered by Workers Compensation or Black Lung benefits or paid for by the Department of Veterans Affairs or Other Government Entities. Since 1980, a series of changes in the Medicare law has shifted costs from the Medicare program to private sources of payment.
Federal regulations require healthcare providers to know when they can bill Medicare as the primary or secondary payer. Failure to properly determine the primary payer is a violation of the provider agreement with Medicare. Medicare considers it a fraudulent and abusive practice when a provider regularly submits claims that are the responsibility of another insurer under the MSP provision
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Presently, Medicare is the secondary payer for individuals
Ø Who are aged 65 or older and currently working with coverage under an employer-sponsored or employee organization group health plan,
Who are aged 65 or older and are covered by a working spouse’s EGHP or employee organization group health plan,
Ø Who are under age 65, disabled, and are covered by a LGHP due to their own or other family members current employment status,
Ø Who receive services covered under Workers Compensation, Federal Black Lung, Automobile, No-Fault, or Liability insurance plans
Ø Who receive services covered under the Veteran Administration
Beneficiaries entitled to Medicare solely on the basis of ESRD, during a 30 month coordination period
Ø Working Aged