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Medicare Secondary Payer and You
Medicare Secondary 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 in the regulations discussed 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.
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 your or your spouse’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. It is considered a group health plan when an individual has health care coverage through their or their spouse’s employment. 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 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) Claims Investigation
Effective January 8, 2001, the COB Contractor assumed responsibility for virtually all initial MSP development activities formerly performed by Medicare intermediaries and carriers. This means the COB Contractor is charged with ensuring the accuracy and timely update of data populated on Medicare’s eligibility database regarding other health insurance that is primary to Medicare. The COB Contractor also handles MSP-related inquiries, including those seeking general MSP information, but not those related to specific claims or recoveries.
The COB Contractor is primarily an information gathering entity. A variety of methods and programs are used to identify situations in which Medicare beneficiaries have other health insurance that is primary to Medicare:
| Process | Description |
|---|---|
| Secondary Claim Development | When a claim is submitted with an explanation of benefits (EOB) attached from an insurer other than Medicare, a questionnaire is sent to the beneficiary to collect information on the existence of other insurance that may be primary to Medicare. |
| Self-Report Development | A self-report covers the full spectrum of MSP situations. Any source that contacts the COB Contractor initiates this type of development process in order to address these inquiries and to assure that the information provided is accurate. |
| Trauma Development | When a diagnosis appears on a claim that information is received through correspondence or on a claim that indicates a traumatic accident, injury, or illness, which might form the basis of MSP, a questionnaire is sent to collect information on the existence of other insurance that may be primary to Medicare. This questionnaire may be sent to the beneficiary, provider, attorney, or insurer. |
| CFR 411.25 | This process confirms MSP information received from a third party payer. |
The goal of these MSP information-gathering activities is to identify MSP situations rapidly, thus ensuring correct primary and secondary payments by the responsible party. Providers, physicians, and other suppliers benefit from this activity because the total payments received for services provided to Medicare beneficiaries are greater when Medicare is a secondary payer to a GHP than when Medicare is the primary payer.
If you have any questions regarding the COB MSP Claims Investigation process, please contact the COB Customer Service Department toll-free at 1-800-999-1118 or TTY/TDD: 1-800-318-8782 for the hearing and speech impaired. Customer Service Representatives are available to assist you Monday through Friday, from 8:00 a.m. to 8:00 p.m., Eastern Time, except holidays.
