Fundamentals of Medicare

Section 2: Medicare Basics

Medicare Secondary Payer

Table of Contents

[Return to Top]

Medicare Secondary Payer

From the time Medicare was instituted, providers commonly billed Medicare first in almost all cases for services rendered to Medicare beneficiaries, even when the beneficiary may have had other insurance coverage.

Beginning in 1980, legislative provisions were enacted to shift costs from the Medicare program to certain other payers. This resulted in more situations where Medicare is no longer the primary payer but rather the secondary payer. These provisions are now known as the MSP provisions. When Medicare is secondary because of an MSP provision, the order of payment is the reverse of what it is when Medicare is primary.

Generally, the MSP provisions make Medicare the secondary payer for beneficiaries who have coverage through another plan once that plan has met its payment obligation. But, Medicare is not secondary to all types of other insurance plans. In fact, there are only specific situations in which Medicare is the secondary payer to another insurance plan and those situations are reviewed in the MSP Provisions section below.

By being more informed about MSP guidelines, providers can assist National Government Services in assuring that all beneficiaries’ claims are processed in an efficient and timely manner. Paying claims correctly the first time saves money and time for all involved and avoids the expense and time associated with overpayment recovery actions and possible litigation.

[Return to Top]

MSP Provisions

The following MSP provisions, also known as MSP categories, summarize the situations in which Medicare is secondary. Each MSP provision has specific conditions or criteria that must be met in order for the MSP provision to apply to the beneficiary’s claims. If such conditions or criteria are not met, then Medicare is primary for the beneficiary’s claim. The first three provisions, Working Aged, Disability and ESRD are considered to be categorized as GHP provisions whereas the other provisions are considered non-GHP provisions. For more detailed information about each MSP provision, refer to CMS IOM, Publication 100-05, Medicare Secondary Payer Manual, Chapters 1 – 8 and Publication 100-02, Medicare Benefit Policy Manual, Chapter 16.

Working Aged (MSP value code 12) – Medicare is secondary to the GHP when the beneficiary:

  • Is age 65 or over
  • Has current employment status or has a spouse (of any age) with current employment status through an employer that employs 20 or more employees
  • Has GHP coverage through that employer

Disability (MSP value code 43) – Medicare is secondary to the LGHP when the beneficiary:

  • Is under age 65 and entitled to Medicare on the basis of a disability
  • Has current employment status or has a family member with current employment status through an employer that employs 100 or more employees
  • Has LGHP coverage through that employer

End-Stage Renal Disease (MSP value code 13) – Medicare is secondary to the GHP when the beneficiary:

  • Is entitled to or eligible for Medicare on the basis of ESRD
  • Has GHP coverage through a current or former employer or that of a spouse or of a parent
  • Is in the 30-month ESRD MSP coordination period

Workers’ Compensation (MSP value code 15) – Medicare is secondary for items or services covered under a workers’ compensation law or plan of a state or the United States.

Federal Black Lung Program (MSP value code 41) – Medicare is secondary for items or services covered under Federal Black Lung coverage. This coverage was initiated by the Federal Coal Mine Act of 1969 and provides medical benefits to coal miners, regardless of age, who are disabled as a result of lung disease or other illnesses attributable to coal mining.

Veteran’s Affairs (MSP value code 42) – Medicare is secondary for items or services covered by the VA. The VA may authorize services at federal expense to certain veterans with service-connected disabilities and, in certain circumstances, with non-service connected disabilities. Note: The beneficiary may choose to use Medicare instead of VA coverage as primary.

Other Federal Agencies and Public Health Services (MSP value code 16) – Medicare is secondary for items and services covered by other Federal agencies. For example, for services covered by Federal research grants, Public Health Services or for beneficiaries in the custody of a State or local entity.

Automobile/No Fault (MSP value code 14) – Medicare is secondary for items and services to the extent that payment has been made or can reasonably be expected to be made under automobile no-fault insurance, no-fault insurance such as automobile medical-payment coverage, premises medical-payment coverage or personal injury protection.

Liability (MSP value code 47) – Medicare is secondary for items and services to the extent that payment has been made or can reasonably be expected to be made under automobile liability insurance, uninsured motorist insurance, underinsured motorist insurance, homeowner’s liability insurance, malpractice insurance, product liability insurance and general casualty insurance.

[Return to Top]

MSP Billing - General

When Medicare is the secondary payer as a result of an MSP provision, the provider must submit the claim to the appropriate primary payer first. The primary payer is required to process and make primary payment on the claim in accordance with the coverage provisions of its contract.

Billing after the primary payer processes the claim depends on the situation. In most cases, after the primary payer processes a claim, the provider must submit the claim to Medicare as secondary unless it is determined that Medicare is truly primary and a Medicare primary claim is most appropriate. Once the primary payer makes their decision on a claim, the provider submits claims to Medicare as follows:

If the primary payer made partial payment, the provider submits an MSP claim and Medicare may make a secondary payment.

If the primary payer made full payment (or an amount considered to be full payment), in certain situations the provider must submit an MSP claim (known as an MSP no-payment claim) to Medicare, even though the provider is not seeking secondary payment from Medicare. This is the case when the services are inpatient services. This is also the case when the services are outpatient services and the beneficiary has not met his/her annual Medicare Part B deductible.

If the primary payer does not make a payment at all, Medicare may make a conditional payment. This includes certain situations in which the appropriate primary payer did not make payment for a valid reason or when the appropriate primary payer did not make payment promptly (within 120 days). These claims are considered to be conditional claims and payment is equal to the same amount Medicare would have paid had we been the primary payer.

Once Medicare processes an MSP claim, the beneficiary would only be responsible for:

  • Any Medicare noncovered items or services
  • Any applicable Medicare deductible and/or coinsurance that has not been satisfied by the primary payer’s payment

For more information on MSP and MSP billing, refer to the CMS IOM, Publication 100-05, Medicare Secondary Payer Manual, Chapter 3. In addition, you can find MSP information on our website, by selecting the Medicare Secondary Payer link under the Claims tab.

[Return to Top]

Benefits Coordination & Recovery Center

If a beneficiary has Medicare and other health insurance, COB rules decide which entity pays first. There are a variety of methods and programs used to identify situations in which Medicare beneficiaries have other insurance that is primary to Medicare. Activities related to the collection, management, and reporting of other insurance coverage for beneficiaries is performed by the BCRC.

The BCRC consolidates the activities that support the collection, management, and reporting of other insurance coverage for beneficiaries. The BCRC takes actions to identify the health benefits available to a beneficiary and coordinates the payment process to prevent mistaken payment of Medicare benefits. The BCRC does not process claims, nor does it handle any GHP related mistaken payment recoveries or claims specific inquiries. MACs are responsible for processing claims submitted for primary or secondary payment.

[Return to Top]

Contacting the BCRC

Submit all payments, forms, documents and/or correspondence to the return mailing address indicated on recovery correspondence you have received.

For information on how the BCRC can assist you, please see the Coordination of Benefits and Non-Group Health Plan Recovery pages on the CMS website.

Correspondence Related to Reporting a case, Coordination of Benefits, etc.:

Medicare Data Collections
P.O. Box 138897
Oklahoma City, OK 73113-8897

Fax: 405-869-3307

Non-Group Health Plan Inquiries and Checks:

The following addresses and fax are for information relative to NGHP Recoveries (e.g. all NGHP checks and inquiries including liability, no-fault, workers’ compensation, Congressional, FOIA, Bankruptcy, Liquidation Notices and QIC/ALJ.

NGHP
P.O. Box 138832
Oklahoma City, OK 73113

Special Projects: (E.G. All product liability case inquiries and special project checks)

Special Projects
P.O. Box 138868
Oklahoma City, OK 73113

Self-Calculated Conditional Payment Amount Option and Fixed Percentage Option:

Self-Calculated Conditional Payment Amount/Fixed Percentage Option
P.O. Box 138880
Oklahoma City, OK 73113

Fax: 405-869-3309

Voluntary Data Sharing Agreement & Workers’ Compensation Set-Aside Arrangement

Voluntary Data Sharing Agreement Program
P.O. Box 660
New York, NY 10274-0660

Workers’ Compensation Set-Aside Arrangement Proposal/Final Settlement

WCMSA Proposal/Final Settlement
P.O. Box 138899
Oklahoma City, OK 73113-8899

Fax: 405-869-3306

Additional information including information for beneficiaries, employers, insurers and other entities can be found on the CMS website Coordination of Benefits & Recovery Overview page.

 

Reviewed 6/4/2024