Medicare Secondary Payer (MSP) Overview

Below article provides a general overview about Medicare Secondary Payer and related issues.

Medicare Secondary Payer (MSP) is the term generally used when the Medicare program does not have primary payment responsibility and other entities are responsible for paying before Medicare. When Medicare started its function in 1966, it was the primary payer for all claims excluding those which are covered by Workers' Compensation, Federal Black Lung benefits, and Veteran’s Administration benefits. The decision as to who is responsible for paying first on a claim and who pays second is recognized in the insurance industry as “coordination of benefits.

In 1980, Congress passed legislation and made Medicare the secondary payer to certain primary plans in order to reallocate costs from Medicare to the appropriate private sources of payment. The Medicare Secondary Payer provisions have confined Medicare Trust Funds by ensuring that Medicare does not pay for items and services that certain health insurance or coverage are responsible to pay primarily. The MSP provisions apply to circumstances when Medicare is not a primary health insurance coverage of the beneficiaries. Medicare law and policy entails that all entity that bill Medicare for items or services provided to Medicare beneficiaries must verify whether Medicare is the primary payer for those services or items.

Primary payers have the primary responsibility for paying a claim. Medicare remains the primary payer for beneficiaries who are not covered by other types of health insurance or coverage. In certain occasions Medicare is also the primary payer, provided some conditions are met.

Situations of Medicare as Secondary Payer

The below list identifies some common situations when Medicare and other health insurance or coverage may be present, and Medicare is responsible as secondary payer.

Medicare beneficiaries aged 65 or older

In case when Medicare beneficiary of Working Aged 65 or older is a member of Employee Group Health Plan through current employment or spouse’s current employment AND the employer has 20 or more employees Group Health Plan pays Primary and Medicare pays secondary.

Disability and Employer Group Health Plan

Medicare is the secondary payer and GHP is primary payer for an active individual, under age 65, who is entitled to Medicare on the basis of disability and is covered by a Large Group Health Plan as a current employee or family member of such employee.

End-Stage Renal Disease (ESRD)

Individual having ESRD (End-Stage Renal Disease), is in the first 30 months of eligibility or entitlement to Medicare and is covered by a GHP. Under this, Group Health Plan pays Primary. during 30-month coordination period for ESRD Medicare pays secondary.

Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)

COBRA pays Primary, Individuals with ESDR when covered by COBRA, the law that provides continuing coverage of group health benefits to employees and their families upon the occurrence of certain qualifying events. Medicare pays secondary through 30-month synchronization period for ESRD.

No-fault Insurance and Liability Insurance

In an accident or other situation where no-fault or liability insurance is involved and Individual is entitled to Medicare. No-fault or Liability Insurance pays Primary for accident or other situation related health care services claimed or released and Medicare pays secondary

Workers’ Compensation Insurance

When Individual is entitled to Medicare is covered under Workers’ Compensation because of a job-related illness or injury. Here Workers’ Compensation pays Primary for health care items or services related to job-related illness or injury claims. The medicare pays secondary.

Responsibilities of Beneficiaries Under MSP (Medicare Secondary Payer)

Beneficiaries are advised to Respond to MSP claims to ensure correct payment of your Medicare claims. Your claim payment may be affected in case of changes in employment, including retirement and changes in health insurance companies. So in any case inform your doctor, other providers, and the Benefits Coordination & Recovery Center (BCRC) about any changes in your health insurance due to you, your spouse, or a family member's current employment or coverage changes.

Responsibilities of Providers Under MSP (Medicare Secondary Payer)

As a Part A institutional provider (i.e., hospitals), individual should Obtain billing information prior to providing hospital services. Submit any Medicare Secondary Payer information to the intermediary using condition and occurrence codes on the claim.
As a Part B provider (i.e., physicians and suppliers), one should 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.
Submit an Explanation of Benefits (EOB) form with all appropriate MSP information to the designated carrier provided with the necessary fields, loops, and segments needed to process an MSP claim.