Haris Ashley
Medicare Secondary Payer (MSP) is the term used when another entity has the responsibility for paying before Medicare. In 1980, Congress passed legislation that made Medicare the secondary payer to certain primary plans to shift costs from Medicare to appropriate private sources. Medicare may make a conditional payment for services another payer may be responsible for, and this amount must be repaid to Medicare when a settlement is made. When billing Medicare as a secondary insurer, it is important to determine whether Medicare is the primary payer for the services rendered. If not, the primary payer pays up to the limits of its coverage, and the remaining balance is sent to the secondary payer.
| Characteristics | Values |
|---|---|
| When Medicare is the secondary payer | When another entity has the responsibility for paying before Medicare |
| When Medicare is the primary payer | When beneficiaries are not covered by other types of health insurance or coverage |
| When Medicare makes a conditional payment | When there is evidence that the no-fault insurer, liability insurer, or workers' compensation plan will not pay promptly |
| When Medicare doesn't pay | When the service provided is not covered by Medicare |
| When to contact the Benefits Coordination & Recovery Center (BCRC) | When you take legal action for a medical claim, are involved in an automobile accident, or are involved in a workers' compensation case |
| How to bill Medicare as the primary payer | Use modifier -GY when billing for Medicare primary and a secondary insurer |
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What You'll Learn
Understanding primary and secondary insurance
When an individual has both primary and secondary insurance, each plan pays a portion of their medical bills. The primary insurer is responsible for paying first, up to the limits of its coverage. The secondary insurer then covers any remaining costs. This order of payment is called "coordination of benefits".
Having more than one insurer can provide financial protection in the event of an accident or illness. However, it can also lead to higher costs, as the policyholder may need to pay two premiums and two deductibles.
Determining which insurance plan is primary is usually straightforward. If an individual has employer-based insurance, this is typically their primary insurance. Other types of primary insurance include commercial plans, Medicare, and medical assistance.
Secondary insurance is a plan that covers an individual in addition to their primary insurance. It is typically billed when the primary insurance plan is exhausted and may help cover additional healthcare costs. For example, if an individual already has insurance through their employer and enrols in their spouse's insurance plan, the latter would be their secondary insurance.
It is important to understand the terms and conditions of both primary and secondary insurance policies to maximize coverage and minimize out-of-pocket expenses. Both types of insurance may have limitations, exclusions, deductibles, and copayments that can affect the extent of coverage and potential costs. When filing a claim, it is crucial to follow the rules and requirements of the primary insurance policy, such as submitting within a specific timeframe and providing accurate and detailed information.
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Conditional payments
The Medicare Secondary Payer (MSP) term is used when Medicare does not have primary payment responsibility. This means that another entity is responsible for paying before Medicare. For example, when Medicare began in 1966, it was the primary payer for all claims except for those covered by Workers' Compensation, Federal Black Lung benefits, and Veteran's Administration (VA) benefits.
If you are a provider who has been approved to submit paper claims, you must attach a copy of the primary payer's Explanation of Benefits (EOB) statement or other supporting documentation that clearly shows the reason for non-payment or payment delay. You must also complete the following fields for a conditional Medicare payment request:
- Enter six zeroes in the syntax of the 2320 loop AMT segment for the Coordination of Benefits (COB) Allowed Amount.
- Enter the date the claim was adjudicated by the primary payer in the syntax of the 2330B loop DTP segment for Adjudication Date.
- Enter the reason code and adjustment amount for the services not paid by the primary payer in the syntax of the 2430 loop CAS segment for Line Adjustment Information.
If you are a beneficiary or your attorney or other representative believes any claims included on the CPL or CPN should be removed from Medicare's conditional payment amount, you must send supporting documentation to the Benefits Coordination & Recovery Center (BCRC). This documentation should establish that the claims are not related to what was claimed or were released by the beneficiary. Upon completion of its dispute review process, the BCRC will notify all authorized parties of the resolution of the dispute.
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Medicare Secondary Payer (MSP)
The MSP provisions ensure that Medicare does not pay for items and services that certain health insurance or coverage is primarily responsible for. These provisions apply when Medicare is not the beneficiary's primary health insurance coverage. Medicare remains the primary payer for beneficiaries without other types of health insurance or coverage.
In situations where Medicare is the secondary payer, the primary payer pays up to the limits of its coverage and then sends the remaining balance to the secondary payer. If the secondary payer doesn't cover the remaining balance, the individual may be responsible for the remaining costs. It's important to note that federal law takes precedence over state laws and private contracts when applying the MSP provisions.
To ensure proper billing and payment, individuals should inform their doctors, providers, and the Benefits Coordination & Recovery Center (BCRC) about any changes in their health insurance due to employment, retirement, or coverage changes for themselves, their spouses, or family members. Additionally, specific forms, such as the CMS1490S Form, may be required when dealing with Medicare as the secondary payer.
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Medicare as primary insurance
When Medicare was introduced in 1966, it was the primary payer for all claims except those covered by Workers' Compensation, Federal Black Lung benefits, and Veteran's Administration (VA) benefits. However, in 1980, Congress passed legislation that made Medicare the secondary payer to specific primary plans, shifting costs from Medicare to appropriate private sources of payment.
The Medicare Secondary Payer (MSP) term is used when the Medicare program does not have primary payment responsibility. In such cases, another entity has the responsibility for paying before Medicare. The MSP provisions protect the Medicare Trust Funds by ensuring Medicare does not pay for items and services that certain health insurance or coverage is primarily responsible for.
Medicare remains the primary payer for beneficiaries not covered by other types of health insurance or coverage. When Medicare is the primary payer, it pays up to the limits of its coverage and then sends the remaining balance to the secondary payer. If the secondary payer doesn't cover the remaining balance, the patient may be responsible for the remaining costs.
If you have Medicare and other health insurance, it is essential to inform your doctor and other healthcare providers. This helps them send your bills to the correct payer and avoid delays. Additionally, your insurers must report to Medicare when they are the primary payer on your medical claims. Medicare may make a conditional payment if the primary payer does not pay promptly, but it will later recover any payments the primary payer should have made.
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Secondary insurance billing process
The billing process for secondary insurance can be a complex one, with many variables to consider. Firstly, it is important to understand the difference between primary and secondary insurance. The ""primary payer"" is the insurance that has the primary responsibility for paying a claim. The "secondary payer" is the insurance that pays if there are any costs that the primary payer did not cover. Medicare is usually the primary payer for beneficiaries who are not covered by other types of health insurance or coverage. However, in certain situations, such as when the beneficiary has other insurance, Medicare may be the secondary payer.
In the case of Medicare being the secondary payer, the healthcare provider must first send the bill to the primary insurance. Once the primary insurance has paid its share, the provider can then bill Medicare for any remaining balance. It is important to note that Medicare may make a conditional payment if the primary insurance company does not pay promptly. A conditional payment is a payment made by Medicare for services that another payer may be responsible for, to ensure the beneficiary does not have to use their own money. However, this conditional payment must be repaid to Medicare once a settlement or payment is made by the primary payer.
There are specific forms that may be required when billing Medicare as the secondary payer. For example, the CMS-1500 form or the CMS1490S form. It is also important to use the correct modifiers, such as the -GY modifier when billing for Medicare primary and a secondary insurer. Additionally, providers must ensure they are eligible to enroll with Medicare to be able to bill them.
Other factors that can impact the billing process include the type of insurance, such as worker's compensation, no-fault insurance, or liability insurance, and whether the beneficiary has dual coverage, such as Medicare and Medicaid. In the case of dual coverage, Medicare typically pays first, and then the secondary insurer pays any remaining balance. However, it is always important to check with each insurance company to determine the correct billing order.
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Frequently asked questions
It is when another entity has the responsibility for paying before Medicare. When Medicare began in 1966, it was the primary payer for all claims except for those covered by Workers' Compensation, Federal Black Lung benefits, and Veteran’s Administration (VA) benefits.
The primary payer pays up to the limits of its coverage, then sends the rest of the balance to the secondary payer. If the secondary payer doesn’t cover the remaining balance, the patient may be responsible for the rest of the costs.
A conditional payment is a payment Medicare makes for services another payer may be responsible for. Medicare makes this conditional payment so that the beneficiary won’t have to use their own money to pay the bill. The payment is “conditional” because it must be repaid to Medicare when a settlement, judgment, award or other payment is made.
In such cases, it is best to contact the Benefits Coordination & Recovery Center (BCRC) for clarification.
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