a. General Requirements

When Medicare is the secondary payer, the claim must first be submitted to the primary insurer. The primary insurer must process the claim in accordance with the coverage provisions of its contract. If, after processing the claim, the primary insurer does not pay in full for the services, the claim may be submitted to Medicare electronically or via a paper claim for consideration of secondary benefits.
Note: It is the provider’s responsibility to obtain primary insurance information from the beneficiary and bill Medicare appropriately. Claim filing extensions will not be granted because of incorrect insurance information.

The Medicare paper claim must include a copy of the primary insurer’s explanation of benefits (EOB). The EOB should include the following information:

name and address of the primary insurer
name of subscriber and policy number
name of the provider of services
itemized charges for all procedure codes reported
a detailed explanation of any denials or payment codes
date of service

NOTE: A detailed explanation of any primary insurer denial or payment codes MUST be submitted with the claim and EOB. If the denial/payment code descriptions or any of the above information is not included with the claim, it may result in a delay in processing or denial of the claim.

If the beneficiary is covered by more than one insurer primary to Medicare (e.g., a working aged beneficiary who was in an automobile accident), the explanation of benefits statement from BOTH plans must be submitted with the claim.

Are Your Medicare Secondary Payer (MSP) Claims Rejecting?

Medicare Secondary Payer (MSP) refers to instances in which Medicare does not have primary responsibility for paying the medical expenses of a Medicare beneficiary. This is because the Medicare beneficiary may be entitled to other coverage, which should pay the primary health benefits.

Medicare secondary claims can be submitted electronically. However, Palmetto GBA has rejected some claims because there was a mismatch between the MSP Type submitted on the claim and the specific patient’s Medicare record. Below are some examples of situations that you may wish to verify when you receive these Medicare rejections:

Are we required to submit our Medicare Secondary Payer (MSP) claims electronically?

Answer:
Yes. Unless you have been approved to submit hard copy claims to Medicare, submit all Medicare claims electronically, including MSP claims. An exception to this requirement is when a patient has two or more payers who are primary to Medicare. In situations where Medicare is the tertiary payer, these claims may be submitted hard copy.

The ASC v5010 format allows for electronic submission of primary payer information for MSP claims. Palmetto GBA also offers the PC-ACE Pro32 EDI billing software, which supports electronic submission of MSP claims.

Do you routinely submit claims containing the same MSP Type (example: MSP type 47) when Medicare does not show this to be a valid MSP type for the specific patient?

If you submit your claims to a clearinghouse, does your clearinghouse understand that claims must be submitted with the correct MSP Type?

Is your patient covered by Medicare as an Aged Worker (Type 12), but claims for the patient are being submitted as Disability (Type 43)?

Was your patient’s injury related to Workers’ Compensation (Type 15), but you submitted the MSP claim as an Aged Worker (Type 12)?

If you submit claims through an electronic clearinghouse, make sure you provide the clearinghouse with the correct MSP Type for each claim. If you are still receiving rejections from Medicare, verify that your clearinghouse is submitting the MSP Type you provided for each patient.

If you answered ‘Yes’ to any of the above questions, your Medicare MSP claims are most likely rejecting because there is a mismatch of the type submitted and the Medicare MSP files. This situation can drastically impact the cash flow for your office. Below are the loops and segments where this information should be located in the electronic claims format:

b. Electronic Claim Submission


To submit Medicare Secondary Payer (MSP) claims electronically, please refer to the American National Standards Institute (ANSI) ASC X12N Implementation Guide. To learn how to report MSP claims in your software, contact your software vendor.

The following records are required in order to get a MSP claim to process. Other records may also be necessary depending on the information obtained by the primary insurer.  When sending a MSP claim electronically, the EOB from the primary insurance does not need to be sent separately.

b.1 Paper Claim Submission


When submitting a paper claim to Medicare as the secondary payer:
The CMS-1500 (02-12) claim form must indicate the name and policy number of the beneficiary’s primary insurance in items 11-11c. Please refer to Chapter 9 for additional instructions on completing the CMS 1500 (02-12) claim form.

Providers must submit a claim to Medicare if a beneficiary provides a copy of the primary explanation of benefits (EOB). The claim must be submitted to Medicare for secondary payment consideration with a copy of the EOB. If the beneficiary is not cooperative in supplying the EOB, the beneficiary may be billed for the amount Medicare would pay as the secondary payer.

Providers must bill both the primary insurer and Medicare the same charge for rendered services. If the primary insurer is billed $50.00 for an office visit and they pay $35.00, do not bill Medicare the remaining $15.00. Medicare must also be billed for the $50.00 charge, and a copy of the primary insurer’s EOB must be attached to the completed claim form.

c. Determining Secondary Liability

Medicare may pay secondary when the primary insurer does not pay the entire charge. Medicare will not pay, however, if the provider accepts or is obligated to accept the primary insurer’s payment in full or if the primary insurer pays the charge in full.

If the primary insurer does not pay in full, Medicare’s secondary liability is calculated follows:

1. Compare the billed amount to the primary allowed amount and limiting charge amount (non-assigned claim only). Subtract the primary paid amount from the lowest number.

2. Determine what Medicare would pay if they were the primary payer.

3. Take the higher of the primary allowed amount or the Medicare allowed amount. Subtract the primary paid amount.

4. Compare the results of the first three steps. Medicare’s liability is the lowest of the three numbers.
If the primary insurer does not pay for certain services because the services are not covered by the plan, the benefits have been exhausted, or the primary insurer’s payment is applied to the beneficiary’s deductible, Medicare may pay primary benefits for covered services. The explanation of benefits from the primary insurer must state a valid reason for not paying certain services in order for Medicare to consider primary payment.

When the primary insurer’s reason for denial states that a service is not payable because it is considered an integral part of another service or part of a primary procedure (or similar message), Medicare has no liability. An exception may be made when the primary insurer holds the beneficiary responsible to pay for the service

c.1 Patient Liability when Medicare is Secondary


Agreements with all insurance companies must be reviewed prior to balance billing a patient for a Medicare secondary claim. Consider the following before attempting to bill the patient or try using our interactive form.

Non-Participating Providers

Non-participating with both the primary insurer and Medicare – You may bill the lower of the limiting charge amount (115% times the Medicare non-participating amount) or the billed amount.
Non-participating with Medicare only – You may bill an amount up to the primary insurer’s allowed amount.

Participating Providers


Participating with both the primary insurer and Medicare OR participating with Medicare only – You may bill the patient an amount up to the Medicare Fee Schedule allowance.

c.2 Determining Who Pays When Coverage Changes During Hospital Stay

When a patient’s coverage changes from one insurer to another during the course of a hospitalization, which insurance is financially responsible for the care? Part A and Part B handle this situation differently.

Example: Patient has Medicare on 10/31, the same day they were hospitalized for a two week stay. On 11/1, the patient’s insurance coverage changes to a HMO.

Part A: Whichever insurance the patient had on the day of admission is the insurer responsible for the entire hospital stay. Therefore, Medicare would be responsible for the entire Part A bill.
Part B: Responsibility shifts from one insurer to the other on the exact date of termination and enrollment. So in this example, Medicare would be responsible only for services rendered on 10/31, and the HMO would be responsible for physician services rendered 11/1 and after.

c.3 Medicare Deductible on MSP Claims


Medicare applies money to a beneficiary’s deductible regardless of primary insurer benefits. This means that even if the same charge is paid in full or in part by the primary insurer, Medicare’s fee schedule amount will be applied to the beneficiary’s deductible.

Medicare has certain rules that explain how much a patient is responsible for when Medicare deductible is applied on a Medicare Secondary Payer (MSP) claim. These rules differ from the standard guidelines in regard to the patient’s liability when Medicare deductible is applied.
Assigned claims – You may bill up to the Medicare fee schedule, minus payments made by the primary and secondary insurance.


Non-assigned claims


Non-participating with both the primary insurer and Medicare – You may bill the lower of the limiting charge amount (115% times the Medicare non-participating amount) or the billed amount.
Non-participating with Medicare only – You may bill an amount up to the primary insurer’s allowed amount.

d. Speed Payment of MSP Claims


Do your Medicare secondary payer (MSP) claims take longer than others to process?
Do you struggle completing electronic claims when Medicare is the secondary payer?
The number one error we see on electronic MSP claims involves the trailer type for the primary insurance. The trailer type is incorrectly keyed.

Take a moment to familiarize yourself with the trailer types listed below:
12 – Working Aged
13 – End Stage Renal Disease/ESRD
14 – Automobile/No Fault
15 – Worker’s Compensation
16 – Federal
41 – Black Lung
42 – Veteran’s Administration
43 – Disability
47 – Liability
Spending a moment double checking the trailer type is time well spent!

How is a Medicare secondary payment determined?

Q. How is a Medicare secondary payment determined?
 
A. The Medicare secondary payment is determined by a series of calculations and comparisons. The primary insurer’s claim processing details on their explanation of benefits (EOB) is needed to determine the secondary payment amount.
Three calculations are made per procedure. The lowest of the three is the secondary payment.
Calculation 1
If the Obligated to Accept payment in Full (OTAF) amount is present,
• Determine the lowest amount between the OTAF amounts vs. the billed amount of the service.
• Use the lowest amount listed above minus the primary paid amount.
If the OTAF amount is not present,
• Use the billed amount of the service minus the primary paid amount
Calculation 2
Determine Medicare’s primary payment would be:
• Note the Medicare allowed amount for the procedure.
• If applicable, subtract Medicare’s deductible indicated in the DEDCT column.
• Multiply the difference by the appropriate percentage: 62.5 percent, 80 percent, or 100 percent, depending on the procedure code.
Calculation 3
Compare the Medicare allowed amount to the primary insurer’s allowed amount and select the higher allowed amount.
Using the higher allowed amount from listed above, subtract from the primary insurer’s paid amount.
• The Medicare secondary payment is equal to the lowest payment amount resulting from calculation #1, #2 or #3 above.
Note: You may also utilize the Medicare secondary payer (MSP) calculator