Determine if Medicare will Make an MSP Payment

Table of Contents

• Step 1: Determine if Medicare Will Make an MSP Payment
  • MSP Payment May be Made If:
  • No MSP Payment is Made by Medicare If:
• Step 2: Determine the Amount of Secondary Benefits
• Billing Reminders Which Can Affect your Medicare Payment
• Related Content

This information applies when you have filed a proper claim (one that meets all filing requirements specified by the primary payer) with the primary payer before submitting the claim to Medicare as secondary.

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Step 1: Determine if Medicare Will Make an MSP Payment

MSP Payment May be Made If:

• Primary payer’s payment for Medicare covered charges is less than your charges for those services and less than the total amount payable by Medicare in the absence of the primary payer’s payment, and
• You do not accept and are not obligated to accept the primary payer’s payment as full payment for the services

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No MSP Payment is Made by Medicare If:

• Primary payer’s payment for Medicare covered charges equals or exceeds your charges for those services or the total amount payable by Medicare (without regard to Medicare deductible or coinsurance), or
• You accept, or are obligated to accept, the primary payer’s payment as full payment for the services, and you receive this amount

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Step 2: Determine the Amount of Secondary Benefits

The amount of secondary benefits payable to you is the lowest of the following:

1. Total payable by Medicare minus the applicable Medicare deductible and/or coinsurance amount.
2. Total payable by Medicare minus the amount paid by the primary payer for Medicare covered charges.
3. Provider's charges (or an amount less than the charges that you are obligated to accept as payment in full (OTAF) – also known as the VC 44 amount) minus the amount paid by the primary payer for Medicare covered charges.
4. Provider's charges (or an amount less than the charges that you are obligated to accept in full (OTAF) – also known as the VC 44 amount) minus the applicable Medicare deductible and/or coinsurance amounts.

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Billing Reminders Which Can Affect your Medicare Payment

1. You must report VC 44 with the OTAF amount on your MSP claim when
   • The primary payer pays you less than your actual charges (e.g., under the terms of a contractual arrangement or obligation under law), and
   • Less than the amount you are obligated to accept as payment in full (e.g., because of the imposition of a primary payer's deductible and/or co-payment, but not because of your failure to file a proper claim).

Medicare uses the OTAF amount in our payment calculation (we consider this amount to be your charges).

2. You must report CC 77 on your MSP when you have accepted, due to a contractual arrangement or obligation under law, the primary payer’s payment as full payment (no Medicare secondary payment is due). Do not report CC 77 on the same claim on which you reported a VC 44 and the OTAF amount.
3. For electronic claim submissions (837I claims) of MSP (and conditional) claims, you must report the claim adjustment reason codes (CARCs) and claim adjustment group codes from the primary payer’s remittance advice. Medicare uses this information to determine the amount, if any, of Medicare’s secondary payment.
4. To ensure consistent MSP payment calculations, Medicare uses the Part A MSPPAY modules software to calculate MSP claim payment. Depending on the facility and claim type, there are various MSPPAY sub-modules that may apply.

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Related Content

• CMS IOM Publication 100-05, Medicare Secondary Payer Manual, Chapter 5, Contractor Prepayment Processing Requirements, Sections 40.8, 40.8.2, 40.8.7, 50.2.1, and 50.2.2

Reviewed 10/25/2023