Medicare Secondary Payer Fact Sheet

Posted on August 2, 2011 by admin

(Original article PDF by David Campbell MDPA)

Background

Maintaining the viability and integrity of the Medicare Trust Fund becomes critical as the Medicare Program matures and the “baby boomer” generation moves toward retirement. Providers, physicians. and other suppliers can contribute to the appropriate use of Medicare by complying with all Medicare requirements, including those applicable to the Medicare Secondary Payer (MSP) provisions. The purpose of this fact sheet is to provide a general overview of the MSP provisions for individuals involved in the admission and billing procedures at provider, physician, and other supplier settings.

What Is Medicare Secondary Payer (MSP)?

Since 1980, the MSP provisions have protected Medicare funds by ensuring that Medicare does not pay for services and items that certain health insurance or coverage has primary responsibilities for paying. The MSP provisions apply to situations when Medicare is not the beneficiary’s primary insurance. It provides the following benefits for both the Medicare Program and providers, physicians, and other suppliers:

  • National program savings – Medicare saves more than $6 billion annually on claims processed by insurances that are primary to Medicare.
  • Increased provider, physician, and other supplier revenue – Providers, physicians, and other suppliers that bill a primary plan before billing Medicare may receive more favorable payment rates. Providers, physicians, and other suppliers can also reduce administrative costs when health insurance or coverage is properly coordinated.
  • Avoidance of Medicare recovery efforts- Providers. physicians, and other suppliers that file claims correctly the first time may prevent future Medicare recovery efforts on that claim.

To realize these benefits, providers. physicians, and other suppliers must have access to accurate, up-to-date information about all health insurance or coverage that Medicare beneficiaries may have. Medicare statute and regulations require that all entities that bill Medicare for services or items rendered to Medicare beneficiaries must determine whether Medicare is the primary payer for those services or items.

When Does Medicare Pay First?

Primary payers are those that 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.

Medicare is also the primary payer in other instances, provided several conditions are met. Table 1 lists some common situations when Medicare may be the primary or secondary payer for a patient’s claims.

Are There Any Exceptions to the MSP Requirements?

Federal law takes precedence over state laws and private contracts. Even if a state law or insurance policy states that they are a secondary payer to Medicare, the MSP provisions should be followed when billing for services.

What Happens if the Primary Payer Denies a Claim?

In the following situations, Medicare may make payment assuming the services are covered and a proper claim has been filed.

  • The Group Health Plan (GHP) denies payment for services because the beneficiary is not covered by the health plan;
  • The no-fault or liability insurer does not pay, or denies the medical bill;
  • The Workers’ Compensation (WC) program denies payment, as in situations where WC is not required to pay for a given medical condition; or
  • The WC Medicare Set-aside Arrangement (WCMSA) is exhausted.

In these situations, providers, physicians, and other suppliers should include documentation from the other payer stating that the claim has been denied and/or benefits have been exhausted when submitting the claim to Medicare.

When May Medicare Make a Conditional Payment?

Medicare may make a conditional payment for Medicare covered services in liability, no-fault, and we situations where another payer is responsible for payment and the claim is not expected to be paid within the promptly period. However. Medicare has the right to recover any conditional payments.

How Is Beneficiary Health Insurance or Coverage Information Collected and Coordinated?

The Centers for Medicare & Medicaid Services (CMS) established the Coordination of Benefits Contractor (COBC) to collect. manage, and maintain information on Medicare’s Common Working File (CWF) regarding other health insurance or coverage for Medicare beneficiaries. Providers, physicians. and other suppliers must collect accurate MSP beneficiary information for the COBC to coordinate the information.

To support the goals of the MSP provisions, the COBC manages several data gathering programs. These programs were implemented in three phases, as discussed in the next section.

What Are Some of the Activities Managed by the COBC?

Activities that the COBC performs to collect MSP data include:

  • Initial Enrollment Questionnaire (IEQ) -The COBC sends out the IEQ approximately three months before an individual is eligible for Medicare. This questionnaire asks the beneficiary if he or she has other health insurance or coverage (including prescription drug coverage) that may be primary to Medicare.
  • Internal Revenue Service/Social Security Administratlon/CMS (IRS/SSA/CMS) Data Match Project Coordination- The Omnibus Budget Reconciliation Act of 1989 requires each of the above agencies to share information they have regarding employment of Medicare beneficiaries or their spouses. This information helps determine whether a beneficiary may be covered by a GHP that pays primary to Medicare. This in formation is sent to the COBC, and is used by the contractor to send the IRS/SSA/CMS Data Match Questionnaire notification to employers. This notification requests the employers to go to the COBC secure website to complete the questionnaire and identify employees and family members where the health plan may be primary to Medicare.
  • Data Match Project- The Voluntary Data Sharing Agreemet (VDSA) program allows for the electronic data exchange of GHP eligibility and Medicare information between CMS, employers, and prescription drug plans. Employers, to meet the mandatory reporting requirements, can sign a VDSA in lieu of completing and submitting the IRS/SSA/CMS Data Match Questionnaire. CMS has also developed a new data exchange, similar to the VDSA program, for Supplemental Drug Plans [Non-Qualified State Pharmaceutical Assistance Programs (SPAPs)] to coordinate with Medicare Part D.
  • MSP Claims Investigation Process -The COBC is responsible for all initial MSP development activities previously performed by Medicare contractors. The COBC provides a one-stop customer service approach for all MSP-related inquiries. However, the COBC does not process claims, nor does it handle any mistaken payment recoveries or claim-specific inquiries. Each provider, physician, or other supplier should continue to call the Medicare contractor that processes their claims regarding specific claim-based issues.
  • MSP Mandatory Reporting Process- Section 111 of the Medicare, Medicaid, State Children’s Health Insurance Program (SCHIP) Extension Act of2007 (MMSEA) adds new mandatory reporting requirements for GHP arrangements and for liability insurance (including self-insurance), no-fault insurance, and WC (Non-Group Health Plans [NGHPs]). Res-ponsible Reporting Entities (RREs) are now mandated to submit GHP and Non-Group Health Plan information to strengthen the MSP coordination of benefits process.

What Is Section 111 MSP Mandatory Reporting?

Section 111 of MMSEAadds to existing MSP provisions ofthe SocialSecurity Act to provide for mandatory reporting for GHP arrangements, liability insurance (including self-insurance). no-fault insurance, and we· (NGHPs). The provisions were implemented January 1, 2009, for information about GHP arrangements and July 1, 2009. for liability insurance (including self-insurance), no-fault insurance, and WC. The purpose of the reporting process is to enable CMS to correctly pay for the health insurance of Medicare beneficiaries by determining primary versus secondary payer. Under the new Section 111 requirements, enrollment and settlement data will be submitted electronically to the COBC. These requirements do not change or eliminate any existing obligations under the MSP statutory provisions or regulations. The new Section 111 requirements add reporting rules to the existing MSP requirements.

For more information and official instructions for Section 111 MSP reporting, please visit the Mandatory Insurer Reporting web page on the CMS website.

What Is the Provider’s, Physician’s, or Other Supplier’s Role in the MSP Provisions?

Providers, physicians, and other suppliers must aid in the collection and coordination of beneficiary health insurance or coverage information by:

  • Asking the patient or his/her representative questions concerning the patient’s MSP status. Providers, physicians, and other suppliers may use a model questionnaire published by CMS to collect patient information. This tool is available online in the MSP Manual in Chapter 3, Section 20.2.1, on the CMS website. A commonly used method is to incorporate an MSP questionnaire into all patient health records.
  • Billing the primary payer before billing Medicare, as required by the Social Security Act.

How Do Providers, Physicians, and Other Suppliers Gather Accurate Data from the Beneficiary?

Providers, physicians, and other suppliers can save time and money by collecting patient health insurance or coverage information at each patient visit. Some questions that providers, physicians. and other suppliers should ask include, but are not limited to:

  • Is the patient covered by any GHP through his or her current or former employment? If so, how many employees work for the employer providing coverage?
  • Is the patient covered by a GHP through his or her spouse or other family member’s current or former employment? If so, how many employees work for the employer providing the GHP?
  • Is the patient receiving WC benefits?
  • Does the patient have a WCMSA?
  • Is the patient filing a claim with the no-fault insurance or liability insurance?
  • Is the patient being treated for an injury or Illness for which another party has be.en found responsible?

If the provider, physician, or other supplier does not furnish Medicare with a record of other health insurance or coverage that may be primary to Medicare on any claim and there is an indication of possible MSP considerations, the COBC may request that the provider, physician. or other supplier complete a Development Questionnaire.

Why Gather Additional Beneficiary Health Insurance or Coverage Information?

The goal of MSP information-gathering activities is to quickly identify possible MSP situations, thus ensuring correct primary and secondary payments by the responsible parties.This effort may require that providers, physicians, and other suppliers complete Development Questionnaires to collect accurate beneficiary health insurance or coverage information. Many of the questions on the Development Questionnaires are similar to the questions that providers, physicians, and other suppliers might ask a beneficiary during a routine visit. This similarity provides another good reason to routinely ask patients about their health insurance or coverage. If a provider, physician, or other supplier gathers information about a beneficiary’s other health insurance or coverage and uses that information to complete the claim property, a Development Questionnaire may not be necessary. Accurate submittal of claims may accelerate the processing of the provider’s, physician’s, or other supplier’s claim.

The COBC may submit a Secondary Claim Development (SCO) Questionnaire to providers, physicians, and other suppliers.

What Is a Secondary Claim Development (SCD) Questionnaire?

An SCD Questionnaire may be sent to the provider, physician, or other supplier when a claim is submitted with an Explanation of Benefits (EOB) attached from an insurer other than Medicare, and relevant information was not submitted to properly adjudicate the submitted claim. The COBC provides the names and Health Insurance Claim Number (HICN) of each individualfor which the provider, physician, or other supplier must complete an SCD Questionnaire. The provider, physician, or other supplier must complete and submit the SCD Questionnaire to the COBC.

What Happens if the Provider, Physician, or Other Supplier Submits a Claim to Medicare Without Providing the Other Insurer’s Information?

The claim may be paid if it meets all Medicare requirements, including Medicare coverage and medical necessity guidelines. However, if the beneficiary’s Medicare record indicates that another insurer should have paid primary to Medicare, the claim will be either returned unprocessed to the provider or denied or suspended for development. If the Medicare contractor has enough information, they may forward the information to the COBC and the COBC may send the provider, physician, or other supplier a SCD Questionnaire to complete for additional information if they were the informant. Medicare will review the information on the questionnaire and determine the proper action to take.

What Happens if the Provider, Physician, or Other Supplier Fails to File Correct and Accurate Claims with Medicare?

Federal law permits Medicare to recover its conditional payments. Providers, physicians, and other suppliers can be fined up to $2,000 for knowingly, willfully, and repeatedly providing inaccurate information relating to the existence of other health insurance or coverage.

How Does the Provider, Physician, or Other Supplier Contact the COBC?

Providers, physicians, and other suppliers may contact the COBC at 1-800-999-1118 (TTY/TDD: 1-800-318 8782), Monday – Friday, 8 a.m. to 8 p.m. Eastern Time (excluding holidays). Providers, physicians, and other suppliers may contact the COBC to:

  • Report potential MSP situations;
  • Report incorrect insurance information; or
  • Address general MSP questions/concerns.

Specific claim-based issues (including claim processing) should still be addressed to the provider’s, physician’s, or other supplier’s Medicare claims processing contractor.

Where Can I Find More Information on the Provider’s, Physician’s, or Other Supplier’s Role in MSP and Coordination of Benefits (COB)?

CMS offers several online references for information about MSP, COB, and the Medicare Program:

This fact sheet was current at the time it was published or uploaded onto the web. Medicare policy changes frequently so links to the source documents have been provided within the document for your reference.

This fact sheet was prepared as a tool to assist providers and is not intended to grant rights or impose obligations. Although every reasonable effort has been made to assure the accuracy of the information within these pages. the ultimate responsibility tor the correct submission of claims and response to any remittance advice lies with the provider of services. The Centers for Medicare & Medicaid Services (CMS) employees, agents, and staff make no representation, warranty, or guarantee that this compilation of Medicare information is error-free and will bear no responsibility or liability for the results or consequences of the use of this guide. This publication is a general summary that explains certain aspects of the Medicare Program, but is not a legal document. The official Medicare Program provisions are contained in the relevant laws, regulations, and rulings.

MSP Provider, Physician, and Other Supplier Billing Requirements

Table of Contents (Rev.57, 10-17-06)

Transmittals for Chapter 3

Crosswalk to Old Manuals

10 – General
10.1 – Limitation on Right to Charge a Beneficiary Where Services Are Covered by a GHP
1 0.1.1 – Right of Providers to Charge Beneficiary Who Has Received Primary Payment from a GHP
10.1.2 – Right of Physicians and Other Suppliers to Charge Beneficiary Who Has Received Primary Payment from a GHP
10.1.3 – Payment When Proper Claim Not Filed
10.2 – Situations in Which MSP Billing Applies
10.3 – Provider, Physician, and Other Supplier Responsibility When a Request is Received From an Insurance Company or Attorney

(Rev.37, Issued: 10-14-05, Effective: N/A, Implementation: N/A)

Contractors are required in professional and public relations activities to inform providers, physicians, other suppliers, and beneficiaries about the MSP provisions and that claims for services to beneficiaries for which Medicare is the secondary payer must be directed first to the primary plan where there is primary coverage for the services involved. The Medicare law and/or provider agreement require the submitter to identify on the claim all known payers obligated to pay primary to Medicare.

10.1 – Limitation on Right to Charge a Beneficiary Where Services Are Covered by a GHP

(Rev.37, Issued: 10-14-05, Effective: N/A, Implementation: N/A)

A provider, physician, or other supplier that receives direct payment from the Medicare program may not charge a beneficiary if the provider, physician, or other supplier has been paid or could have been paid by a GHP an amount which equals or exceeds any applicable deductible or coinsurance amount.

EXAMPLE

A Medicare beneficiary who had GHP coverage was hospitalized for 20 days. The hospital’s charges for covered services were $5000. The inpatient deductible had not been met. The gross amount payable by Medicare (as defined jn Chapter 2, §50.2) for the stay ifthere had been no GHP coverage is $4,000. The GHP paid $4,500 ($840 of which was credited to the Medicare deductible). Medicare will make no payment, since the plan’s payment was greater than Medicare’s gross amount payable of$4,000. No part of the $500 difference between the hospital’s charges and the GHP’s payment can be billed to the beneficiary since the beneficiary’s obligation, the deductible, was met by the GHP payment. The provider submits a bill to Medicare reflecting the appropriate amount paid by the primary payer.

10.1.1 – Right of Providers to Charge Beneficiary Who Has Received Primary Payment from a GHP

(Rev. 37, Issued: 10-14-05, Effective: N/A, Implementation: N/A)

When a primary plan has paid a beneficiary, the amounts the provider (including renal dialysis facilities or facilities that receive direct payment from the Medicare program) may collect for Medicare covered services from the beneficiary are limited to the following:

  • The amount paid or payable by the primary plan to the beneficiary. If this amount exceeds the amount which would have been payable by Medicare as primary payer (without regard to deductible or coinsurance), the provider may retain the primary payment in full without violating the terms of the provider agreement;
  • The amount, if any, by which the applicable Medicare deductible and coinsurance amounts exceed any primary payment made or due the beneficiary or due the provider for medical services; and
  • The amount of any charges made to the beneficiary for the noncovered
    component of a partially covered service, e.g., the charge differential for a private room that is not medically necessary but that is requested by the beneficiary. However, such a charge may not be collected from the beneficiary to the extent that the primary plan pays it directly to the provider.

EXAMPLE

A Medicare beneficiary with GHP coverage was a hospital inpatient for 20 days. The hospital’s charges for Medicare covered services were $16,000. The inpatient deductible had not been met. The gross amount payable by Medicare for the stay in the absence of GHP coverage is $11,500. The GHP paid $14,000, a portion ofwhich was credited to the entire inpatient deductible. Medicare makes no secondary payment, since the GHP’s payment was greater than the gross amount payable by Medicare of $11,500. No part of the $2,000 difference between the hospital’s charges and the GHP’s payment can be billed to the beneficiary, since the beneficiary’s obligation, the deductible, was met by the GHP’s payment. The provider files a nonpayment bill reflecting the applicable deductible for purposes of crediting the deductible.

10.1.2 – Right of Physicians and Other Suppliers to Charge Beneficiary Who Has Received Primary Payment from a GHP

(Rev. 37, Issued: 10-14-05, Effective: N/A, Implementation: N/A)

When a beneficiary has been paid by a primary plan, the amount a physician or other supplier who accepts assignment may collect for Medicare covered services from the beneficiary is limited to the following:

  • The amount paid or payable by the primary plan to the beneficiary. (If this amount exceeds the amount that would be payable by Medicare as primary payer (without regard to deductible or coinsurance), the physician or other supplier may retain the primary payment in full without violating the conditions of assignment.); or
  • If the primary payment is less than the applicable Medicare deductible and coinsurance amounts, the difference between the fee schedule amount (or the amount the physician is obligated to accept as payment in full, if less) and the sum ofthe primary plan’s payment and the Medicare secondary payment.

EXAMPLE

A physician charges $262 for a service. The GHP allows $262 but pays a primary payment of only $112 because of a $150 plan deductible. The Medicare fee schedule amount is $200. The amount that Medicare pays as secondary payer is $80 since the Medicare secondary payment amount cannot exceed the amount Medicare would pay primary payer ($200 fee schedule amount minus the $100 Part B deductible equals $100 x 80 percent= $80). The combined primary payment and Medicare secondary payment is $192 ($112 + $80).

The physician may charge the beneficiary $8, the difference between the Medicare fee schedule amount ($200) and the sum of the primary payment ($112) plus the Medicare secondary payment ($80). The $8 charge to the beneficiary represents the portion of the Part B deductible and coinsurance amounts in excess of the GHP’s payment. The $100 Part B deductible is credited in full. The remaining $12 of the GHP’s payment is applied to the beneficiary’s Part B coinsurance obligation of $20. leaving the beneficiary responsible for the remaining coinsurance obligation of $8.

In the case of non-inpatient and institutional psychiatric services. the amount the beneficiary can be charged is the difference between the Medicare fee schedule amount and a lesser primary payment amount. (The 50-percent cost-sharing rule applies.) The beneficiary is responsible for that portion of the fee schedule amount not paid by Medicare (i.e., no less than 50 percent). (See Chapter 1, §40.)

10.1.3 – Payment When Proper Claim Not Filed

(Rev. 37, Issued: 10-14-05, Effective: N/A,Implementation: N/A)

If a provider, physician, or other supplier receives from a payer that is primary to Medicare a payment that is reduced because the provider, physician, or other supplier failed to file a proper claim, the provider, physician, or other supplier must include this information on the claim for secondary payment that is submitted to Medicare. Medicare’s secondary payment will be based on the full payment amount (before the reduction for failure to file a proper claim) unless the provider, physician, or other supplier demonstrates that the failure to file a proper claim is attributable to a physical or mental incapacity of the beneficiary that precluded the beneficiary from being able to provide other payer infonnation. For example, a physician’s charges are $1,000. The primary plan’s allowable charges without reduction for failure to file a proper claim are $800.00. The Medicare allowable was $700.00. The primary plan would have paid $640.00 if a proper claim had been filed. The primary plan reduced its payment to $500.00 because the physician had not filed a proper claim. Medicare’s secondary payment would be based on a primary plan payment of$640.00 rather than the reduced amount of$500.00. The beneficiary may not be billed for the reduction in the primary plan’s payment due to the physician’s failure to file a proper claim.

10.2 – Situations in Which MSP Billing Applies

(Rev. 37, Issued:10-14 05, Effective: N/A, Implementation: N/A)

Medicare secondary billing procedures apply in the following situations:

  • Where the VA authorized services, Medicare does not make payment for items or services furnished by a non-Federal provider pursuant to such an authorization. Although certain MSP billing procedures apply, VA is not an MSP provision.
  • Where services are payable under WC, no-fault, or liability insurance, Medicare does not make payment for otherwise covered items or services to the extent that payment has been made, or can reasonably be expected to be made. Under certain circumstances, Medicare may make conditional payments, subject to reimbursement, if the WC, no-fault, or liability insurer has not paid or will not pay promptly. ty1edicare is secondary to WC, no-fault, and liability insurance even if State law ru:.a private contract of insurance Stfpulat that its benefits are secondary to Medicare benefits or otherwise limits
    Eayments to Medicare beneficiaries.
  • Medicare benefits are secondary to benefits payable under a GHP for individuals eligible for or entitled to Medicare based on ESRD during a Medicare coordination period as described in Chapter 1, § 1 0.2.
  • Medicare benefits are secondary to benefits payable under a GHP for individuals age 65 or over who have GHP coverage as a result of their own current employment status or the current employment status of a spouse of any age. (See Chapter 1, § l 0.1, for an explanation of this provision.)
  • Medicare benefits are secondary to benefits provided by GHPs for certain disabled individuals under age 65 (entitled to Medicare on the basis of disability) who have coverage based on their own current employment status or the current employment status of a family member, e.g., a spouse or other family member of a disabled beneficiary. (See Chapter 1, §10.3, for an explanation of this provision.)

Payment made by any of these primary payers can be used to satisfY unmet deductibles and the individual’s coinsurance. Inpatient, psychiatric hospital, SNF, or Religious Non­ medical Institution care that is paid for by a primary payer is not counted against the number of lifetime psychiatric days available to the beneficiary.

10.3 – Provider, Physician, and Other Supplier Responsibility When a Request is Received From an Insurance Company or Attorney

(Rev.37, Issued:10-14-05, l?.ffective: N/A, lmplelnentation: N/A)

The provider, physician, or other supplier notifies the Coordination of Benefits Contractor (COBC) promptly if a request is received from an attorney or an insurance company for a copy of a medical record or a bill concerning a Medicare patient. The COBC is given a copy of the request or, if it is unavailable, details of the request, including:

  • The name and Medicare number of the patient;
  • Name and address of the insurance company and/or attorney; and,
  • Date(s) of services for which Medicar¥ has been or will be billed.

Contractors receiving MSP information from providers, physicians, and other suppliers should follow the procedures outlined in Chapter 4, “Coordination of Benefits Contractor (COBC) Requirements,” §70.2.

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