Did you know that Section 1862(b) of the Social Security Act establishes that Medicare does not pay for health items or services when another insurance carrier has primary payment responsibility?
So, what happens when the patient has Medicare secondary payer (MSP) status, but you bill Medicare first? It results in automatic claim denial, straining your revenue cycle.
This guide explains everything you need to know about MSP billing, from core data elements to key requirements and best practices. Thus, continue reading!
- Medicare Secondary Payer Rules for Providers
- Medicare Secondary Payer Codes, Type Codes & Value Codes
- How to Bill Medicare as a Secondary Payer?
- Medicare Secondary Payer Recovery
- Medicare Secondary Payer Reporting Requirements
- Medicare Secondary Payer Compliance Checklist for Providers
- Best Practices for Medicare Secondary Payer Billing
- Conclusion
Medicare Secondary Payer Rules for Providers
Always remember that whether to treat Medicare as primary or secondary insurance depends on several factors. These include beneficiary age, disability status, employer size, and whether coverage involves non-liability.
Depending on these factors, here is how the payment responsibility shifts:
Primary Payer Responsibility
The primary insurance payer is responsible for reimbursing first up to its policy limits. Additionally, it applies its standard fee schedules, deductibles, and coinsurance.
Secondary Payer Responsibility
The secondary payer is responsible for reimbursing the remaining balance, including copays and deductibles. However, note that the secondary carrier will only pay up to the plan’s maximum limit. This means the secondary insurance plan does not guarantee 100% payment of the balance/unpaid amount.
Conditional Payments
What happens when a primary insurance carrier, such as Workers’ Compensation, delays payment? Then Medicare, as a secondary payer, may make a conditional payment to protect the patient from financial distress.
However, Medicare has the right to recover this conditional payment amount once the primary payer pays.
Why Should You Never Default to Billing Medicare First?
One common insurance billing error is assuming that if a patient is a Medicare beneficiary, Medicare is the primary payer. This assumption is wrong!
So, instead of assuming, use an MSP questionnaire or equivalent to obtain and verify coordination of benefits (COB) details at the time of intake.
How does it help? It safeguards your practice from post-payment audits, recoupments, and financial penalties.
Why Does Accurate COB Data Collection Matter?
Practices must strive to maintain updated COB data because it can help prevent administrative friction and financial risk:
What happens when you bill Medicare as primary when MSP records show an active primary employer group plan or liability case? It triggers automatic claim denial with COB error codes.
When your COB data is up-to-date, you don’t have to waste time on claim rework and administrative overhead. How? Assume you get a COB error code denial. Now, to reverse this denial, you must spend time billing the primary payer, waiting for an explanation of benefits (EOB) statement, and resubmitting claims with proper condition codes.
Moreover, with upfront identification of COB details, you can correctly bill copays and deductibles to the relevant payer. This avoids patient billing disputes and longer billing cycles.
Medicare Secondary Payer Codes, Type Codes & Value Codes
Note that you require specific billing codes when submitting Medicare secondary payer claims. These codes are integral to communicating why Medicare is a secondary payer and provide details related to the primary insurance carrier’s payment or denial.
Accurate code selection can help practices avoid automated claim denials, return-to-provider (RTP) errors, and improper Medicare primary payments.
Core Data Elements in MSP Billing
Discussed below are the core elements in Medicare secondary payer billing:
1. Payer Codes & Value Codes
These codes help identify the specific MSP situation, such as Workers’ Compensation. Besides, they indicate the exact primary paid amount, or primary deductibles and applied coinsurance.
Institutional (UB-04) and professional secondary claims use specific value codes paired with the dollar amount paid by the primary payer.
The table below discusses some MSP value codes:
| Value Codes | Description |
|---|---|
| 12 | Beneficiary 65+ or spouse covered under an Employer Group Health Plan (EGHP). |
| 13 | End-stage renal disease (ESRD) beneficiary covered by an EGHP during the 30-month coordination period. |
| 14 | Automobile or non-fault policy coverage; requires Occurrence Code 01 or 02. |
| 15 | Job-related injury coverage; requires Occurrence Code 04 for injury date. |
| 16 | Services covered under Public Health Service or non-Medicare federal agency. |
| 41 | Care covered under the Federal Black Lung Program. |
| 42 | Care authorized or covered by the Department of Veterans Affairs (VA). |
| 47 | Any liability coverage; requires Occurrence Code 02 with date of the accident/injury. |
Here are the payer codes:
| Payer Codes | Description |
|---|---|
| A | Working-age |
| B | ESRD |
| D | No-fault |
| E | Workers’ Compensation |
| H | Federal Black Lung program |
| G | Disability |
| L | Liability |
2. Occurrence Codes & Dates
These MSP codes are used to indicate the specific event date that led to the secondary responsibility. These include an automobile accident, work injury, or the start of an ESRD coordination period.
Simply put, occurrence codes link the secondary claim to a specific timeline or incident:
The following table lists some of the common occurrence codes:
| Occurrence Code | Description |
|---|---|
| 01 | Automobile accident date. |
| 02 | Other no-fault accident date. |
| 03 | Liability accident date. |
| 04 | Employment-related accident or injury date. |
| 18 | Date of beneficiary’s retirement. |
| 24 | Date when a higher priority payer denied coverage. |
| 33 | First day of ESRD 30-month coordination period. |
3. Condition Codes
Condition codes in MSP billing offer claim-level context. That is, these codes define statutory exceptions or billing statuses.
Some of the condition codes are listed below:
| Condition Code | Description |
|---|---|
| 02 | The medical condition or injury causing care is employment-related. |
| 06 | ESRD beneficiary in the first 30 months of eligibility covered by an EGHP. |
| 08 | The beneficiary refused to provide information regarding other potential insurance coverage. |
| 63 | Services provided to a beneficiary in state or local custody meeting 42 CFR 411.4(b) requirements. |
| D8 | Code used to indicate a change to make Medicare the primary payer. |
How to Bill Medicare as a Secondary Payer?
If you want to ensure seamless reimbursement from Medicare as a secondary payer, then follow the steps below for billing:
Step # 1: Complete MSP Intake & Verification Upfront
Your first step should always be to collect current employer, GHP, liability, or accident details before rendering services.
Also, do not forget to validate active MSP records in the Common Working File (CWF) via the HIPAA Eligibility Transaction System (HETS) or your Medicare Administrative Contractor (MAC) portal.
Step # 2: Always Bill the Primary Payer First
Once you render the service, submit the medical claim directly to the private payer with primary insurer status.
The reason? If Medicare is the secondary payer, it will immediately deny payment against any claims submitted as primary.
Step # 3: Review Primary EOB/ERA
As soon as you receive an explanation of benefits (EOB) or electronic 835 ERA from the primary payer, review it carefully.
Your goal here should remain to collect essential data points. These include:
- Total billed amount.
- Allowed amount.
- Primary paid amount.
- Contractual adjustments.
- Patient responsibility, i.e., coinsurance and deductibles.
- Claim adjustment reason codes (CARC).
Step # 4: Submit Secondary Claim to MSP
Now that you have the data, submit the secondary claim electronically using 837P for professional, 837I for institutional, or Direct Data Entry (DDE/FISS).
Medicare Secondary Payer Recovery
Are you aware that Medicare is legally prohibited from paying for items or services when another primary insurance plan or program has primary responsibility?
So, what happens when Medicare, despite being a secondary payer, mistakenly reimburses a claim due to missing, inaccurate, or outdated primary insurance records? It results in overpayment.
As a result, Medicare is legally eligible to seek recovery of these funds to protect the Medicare Trust Fund. This process is called MSP recovery.
Besides, it ensures that primary insurance carriers uphold their contractual obligations.
Types of Medicare Secondary Payer Recovery
There are two types of recovery when it comes to MSP billing. It depends entirely on what type of primary payer was supposed to pay first, i.e., workplace health plans or accident or injury insurance.
Refer to the table below to learn the key differences between the two types of recoveries:
| Non-Group Health Plans (NGHP) | Group Health Plans (GHP) | |
|---|---|---|
| Insurance Type | Auto insurance, Workers’ Compensation, or liability insurance for work-related injuries or accidents. | Standard employer health plans from that patient’s current job. |
| Why Does Medicare Want Money Back? | Medicare paid the bills for an injury while the patient waited for a lawsuit or insurance settlement. | Medicare paid a clinician’s bill that the patient’s employer health plan should have covered first. |
| Who Owes Medicare? | Medicare places a priority hold (lien) on the lawsuit or settlement money the patient receives. | Medicare demands payment directly from the company that failed to pay its bill. |
| Which Medicare contractor handles the recovery? | Benefits Coordination & Recovery Center (BCRC). | Commercial Repayment Center (CRC). |
Medicare Secondary Payer Reporting Requirements
The following are the key Medicare secondary payer reporting requirements as mandated by Section 111 of the Medicare, Medicaid, and SCHIP Extension Act (MMSEA):
Who are the Responsible Reporting Entities (RREs)?
MMSEA defines no-fault insurers, liability carriers, Workers’ Compensation plans, and GHP insurers as RREs.
When to Submit Electronic Data?
All RREs are required to submit electronic coverage details directly to CMS using the Coordination of Benefits Secure Website (COBSW). This data helps identify Medicare beneficiaries with primary coverage.
What are GHP Reporting Requirements?
Under Section 111 of the MMSEA, GHP RREs must submit quarterly files containing information about active employees and dependents with eligible employer GHP coverage.
What are NGHP Reporting Requirements?
Workers’ Compensation, no-fault, and liability RREs must report ongoing responsibility for medicals (ORM), claim settlements, judgments, or awards involving Medicare beneficiaries.
Consequence of Not Reporting Accurately?
What happens when RREs fail to report accurate data? It results in substantial daily financial penalties per beneficiary for non-compliance under CMS enforcement rules.
Why Does Section 111 Matter to Healthcare Providers?
Note that medical practices are not RREs and do not submit Section 111 reports. Still, understanding Section 111 is integral for providers to streamline their clinical and administrative processes.
Here is how knowledge of Section 111 of the MMSEA helps clinicians:
- It ensures real-time data alignment with CWF. How? Section 111 mandates that practices obtain accurate primary payer details during patient intake. This ultimately helps align MSP coding with primary records logged in the CWF.
- It also protects your practice from automatic claim denials since you bill the primary commercial payer first.
- Additionally, it mitigates the risk of post-payment recovery and audits.
- Besides, it helps front-desk staff educate injured or working-age beneficiaries on why their primary payer must be billed first and why an MSP questionnaire is legally required at intake.
Medicare Secondary Payer Compliance Checklist for Providers
The following MSP compliance checklist will help you streamline your revenue cycle with timely secondary payments:
| Patient Intake & Screening |
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| Claim Submission & Billing Rules |
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| Post-Payment & Record Retention |
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Best Practices for Medicare Secondary Payer Billing
Discussed below are some of the proven MSP billing best practices:
- Always screen patients at admission or every 90 days for recurring care. Also, query the CWF via HETS or MAC portals before rendering care.
- Additionally, you should proactively check beneficiaries for active employment, group health plans, auto accidents, or work injuries upfront.
- You must hold Medicare billing until the primary payer reimburses the medical claim. Once you receive payment, accurately map primary EOB data to electronic 837 secondary claims.
- Try to return improper Medicare primary payments within 60 days of discovery.
- Conduct regular audits to review BCRC and CRC conditional payment notices immediately. This will help you dispute unrelated charges within statutory windows.
Conclusion
To summarize, navigating Medicare secondary payer billing is complex. That is, front-desk staff must accurately identify primary coverage, verify statutory coordination rules, and map primary EOB data onto secondary 837 claim forms.
Failure to ensure accuracy at any stage of MSP billing can trigger immediate claim denial, resulting in unsteady cash flow.
But here is some good news! You can rise above all these administrative bottlenecks by outsourcing revenue cycle management to experts at MediBillMD.
Our specialized team streamlines complex MSP workflows, resolves denials, and ensures compliant, optimized Medicare reimbursement so practices can focus on patient care.
