How Do You Determine if Medicare Is the Secondary Payer (MSP)?

By Mary R. Daulong, PT, CHC, CHP

Medicare Secondary Payer (MSP) is the term generally used when the Medicare program does not have primary payment responsibility; that is, when another entity has the responsibility for paying before Medicare. Over the years, Congress has made an effort to shift costs from Medicare to the appropriate private sources of payment, which has resulted in significant savings to the Medicare Trust Fund.

In addition to complying with Medicare statute and regulation, providers and entities contribute to the Medicare Trust Fund’s sustainability by determining, and then billing the responsible payer first. While Medicare does have an MSP Questionnaire, providers are not required to use it. However, they must question the patient about situations in which Medicare could be the secondary payer prior to the initial billing. Sample questions to ask the Medicare patient are:

• Do you have coverage through a large group health plan (20 plus employees) through your current or former employer, or the current or former employer of a spouse or family member? If so, how many employees work for the employer providing coverage?
• Are you receiving workers’ compensation (WC) benefits or have a claim pending?
• Is this condition a result of an accident? If so, are you filing a claim with a no-fault or liability carrier?
• Are you receiving treatment for an illness or injury for which another party has been found responsible?
• Do you have Veteran Affairs (VA) benefits?
• Do you have black lung benefits?
• Do you have end stage renal disease benefits?
• Do you have funds set aside secondary to a WC settlement?

The MSP Questionnaire or the intake MSP questions should be retained for 10 years. The MSP Questionnaire Form can be found at: www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/ProviderServices/Downloads/CMS-Questionnaire.pdf.

Please remember that there may be situations where more than one payer is primary to Medicare (e.g., liability insurer and group health plan [GHP]). The provider must identify all possible payers.

Participating Medicare providers must not accept any copayment, co-insurance, or other payments, upon services rendered from a beneficiary when the primary payer is an employer managed care organization (MCO) insurance or any other type of primary insurance such as an employer GHP. Providers must follow the Medicare secondary payer rules and bill Medicare as the secondary payer after the primary payer has made payment. Medicare will inform you on its remittance and advise the amount you may collect from the beneficiary, if anything, after Medicare makes its payment.

Many providers rely on their Medicare patients to relate whether Medicare is primary or secondary, but this is not always a foolproof method of determining if Medicare should pay first. Often patients are encouraged by others, such as insurance agents and employers, to file Medicare first because they believe filing a claim with a commercial or liability carrier may impact their future premium or coverage status.

A safer method to verify the patient’s status (including MSP) is by accessing the Centers for Medicare and Medicaid Services’ (CMS’) Health Insurance Portability and Accountability Act (HIPAA) Eligibility Transaction System (HETS), previously the Common Working File. This access is provided by connectivity vendors, clearinghouses, software applications, and the Medicare Administrative Contractor’s (MAC’s) Interactive Voice Response System. Direct HETS access is available through the CMS Extranet, but it does require a Trading Partner Agreement and an (Internet Protocol) IP connection to be executed by an approved vendor. More information on how to get connected to HETS may be found on the CMS website at: www.cms.gov/Research-Statistics-Data-and-Systems/CMS-Information-Technology/HETSHelp/HowtoGetConnectedHETS270271.html.

Medicare collects beneficiary health insurance or coverage via its Benefits Coordination and Recovery Center (BCRC); which is a one-stop shop as it relates any MSP issue with the exception of addressing specific claims or funds recoupment matters. BCRC collects data via several programs:

• Initial Enrollment of a Beneficiary Questionnaire executed online or by phone
• Internal Revenue Service (IRS) & Social Security Administration (SSA) Data Match Program—data reveals employment of beneficiaries
• Voluntary Data Sharing Agreement (VDSA)—Employers electronically exchange GHP eligibility
• MSP Mandatory Reporting Process—
  • Group Health Insurance arrangements
  • Liability Insurance (including self-insurance)
  • No-fault Insurance
  • Workers’ Compensation
• MSP Claims Investigation
• Electronic Correspondence Referral System

Please note: Federal law takes precedence over state laws and private contracts. Even if an entity believes that it is the secondary payer to Medicare due to state law or the contents of its insurance policy, the MSP provisions would apply when billing for services.

Medicare is the primary payer when a beneficiary does not have other primary insurance as well as in other situations, which are listed in the table.

So you ask, “What happens if the primary payer denies a claim?” Medicare may pay the claim if the service or item is covered by Medicare and a clean claim, which includes the reason for the denial, is filed by the provider and the following is factual:

• The GHP denies payment due to lack of coverage.
• A no-fault or liability insurer does not pay the claims.
• A WC program denies the WC claim.
• A WC Medicare Set-aside Arrangement is exhausted.

If a primary payer reduces payment to a provider because he/she failed to file a clean claim the provider must include this information on the claim for secondary payment that is submitted to Medicare. Medicare’s secondary payment will be based on the full payment amount (before the reduction for failure to file a proper claim) unless the provider demonstrates that the failure to file a proper claim is attributable to a physical or mental incapacity of the beneficiary that precluded the beneficiary from being able to provide other payer information.

If a provider has received a primary payment from Medicare and a duplicate primary payment from a primary plan, the provider must refund the beneficiary any Medicare deductible and co-insurance amounts paid by the beneficiary that were duplicated by the primary payment. If the primary payment exceeds the deductible and co-insurance amounts, the excess constitutes a debt to Medicare because it duplicates all or part of the amount Medicare has paid and, therefore, must be collected from the provider. Medicare must be reimbursed within 60 days of the receipt of the duplicate payment. Medicare sends a copy of the letter that was sent to the provider to the beneficiary. Interest is applicable if repayment is not made to Medicare within 60 days.

Most of us have all seen the remark “payment is conditional” on a remittance advice; what does that actually mean? Medicare recognizes that in certain circumstances payment from a liability payer, no-fault insurer or workers’ compensation carrier may be delayed due to controversy over the claim and/or the amount of compensation. In certain cases, Medicare will make a conditional payment contingent on reimbursement to Medicare. Medicare will not, however, make a conditional payment when the beneficiary has coverage under a GHP; Medicare would always be secondary in this situation.

It is important to understand that for Medicare to pay conditionally, the “Prompt Pay” definition and terms must be an issue. Prompt payment in the above situation means payment within 120 days. The starting time of the 120 days varies by payer type as follows:

• Payment by a no-fault insurer and WC carrier begins the day they receive the claim; i.e., the claim date
• Liability payers prompt payment clock starts within 120 days after the earlier of:
  • The date the liability claim is filed with an insurer or a lien is filed against a potential liability settlement; and
  • The date the service was furnished

If the beneficiary’s Medicare record indicates that another insurer should have paid primary to Medicare, Medicare will deny the claim, unless it may rightly pay conditionally. If the MAC does not have enough information, it may forward the information to the coordinator of billing contractor and he/she may send the beneficiary, employer, insurer, or attorney a Secondary Claim Development (SCD) Questionnaire to complete for additional information. Medicare will review the information on the questionnaire and determine the proper action to take.

Medicare does not penalize providers for incidental errors related to MSP. However, if a provider repetitively fails to file correct and accurate claims Medicare is allowed by federal law to recover its conditional payments and can fine providers up to $2,000 for knowingly, willfully, and repeatedly providing inaccurate information related to the existence of other health insurance or coverage. 

REFERENCES

1. Medicare Secondary Payer (MSP) Manual:

• Chapter 1
• Chapter 2
• Chapter 3
• Chapter 4
• Chapter 5

2. Medicare’s MSP Computer Based Curriculum.

3. MLM Matters Number SE 1227.

Mary R. Daulong, PT , CHC, CHP, is a PPS member and the owner of Business & Clinical Management Services, Inc., a consulting firm specializing in outpatient therapy compliance, including documentation, coding and billing, enrollment and credentialing, and Health Insurance Portability and Accountability Act and Occupational Safety and Health Administration regulation education. She is also the author of both The Private Practice Compliance Manual and The Third-Party Biller Compliance Manual. She can be reached at daulongm@earthlink.net.