Understanding the Different Types of Medicare Secondary Payers (MSP)

What is a MSP?

MSP stands for Medicare Secondary Payer and describes when another payer is responsible for paying a beneficiary’s claims before Medicare kicks in. The first payer is determined by the patient’s coverage. Different conditions determine if Medicare will be the primary, secondary, or tertiary payer.

Before submitting an MSP claim to Medicare, some information from the primary payer’s remittance advice should be included in the claim. This consists of the following:

• Deductible amount
• Co-insurance amount
• Primary paid amount
• Obligated to Accept as Payment in Full (OTAF) amount

There are nine different types of MSPs. Below is a list with each of their respective reason type codes.

• 12 – Working Aged Beneficiary or Spouse with Employer Group Health Plan
• 13 – End-Stage Renal Disease Beneficiary in the 30-Month Coordination Period with an Employer’s Group Health Plan
• 14 – No-fault insurance, including auto, is primary (any no-fault insurance)
• 15 – Workers Compensation
• 19 – Workers Compensation Medicare Set-Aside Arrangements (WCMSA)
• 41 – Black Lung
• 42 – Veteran’s Administration (VA)
• 43 – Disabled Beneficiary Under Age 65 with Large Group Health Plan (LGHP)
• 47 – Other Liability insurance is primary

Let’s take a closer look at each of these types.

Working Aged Beneficiary or Spouse with Employer Group Health Plan

This health plan is contributed to by an employer of 20 or more employees. The working-age is a patient 65 and older who has an Employer Group Health Plan (EGHP) coverage through his or her employment or their spouse’s employment.

End-Stage Renal Disease Beneficiary in the 30-Month Coordination Period with an Employer’s Group Health Plan

This health plan is coordinated through the current or previous employer of a patient, patient’s spouse, or parent, without regard to several employees or whether the employer contributed to an EGHP. Medicare benefits are secondary to benefits payable under an EGHP for individuals entitled to Medicare benefits solely based on end-stage renal disease. The patient must be younger than 65. Secondary benefits are payable for a period of up to 30 months. This is known as the “coordination period.”

No-Fault Insurance, Including Auto, Is Primary (Any No-Fault Insurance)

This MSP pays for healthcare services resulting from injury to an individual in an accident, regardless of who is at fault for causing the accident. This can be found as part of a person’s automobile insurance policy, homeowners’ insurance policy, commercial insurance plan, medical payments coverage/personal injury, and protection/medical expense coverage. According to the Code of Federal Regulations (CFR), Chapter 42, Section 411.53, in no-fault cases, conditional Medicare payment may be made if either of the following circumstances is true:

• The beneficiary has filed a proper claim for no-fault insurance benefits, but the intermediary or carrier determines that the no-fault insurer will not pay promptly for any reason other than the circumstances described in 42 CFR 411.32(a)(1). This includes cases in which the no-fault insurance carrier has denied the claim.
• The beneficiary, because of physical or mental incapacity, failed to meet a claim-filing requirement stipulated in the policy.” (42 CFR 411.53)

No-Fault Medicare Set-Aside Arrangement (NFMSA). An NFMSA is an allocation of funds from a no-fault related settlement, judgment, or award used to pay for an individual’s future medical and future prescription drug treatment expense that would otherwise be reimbursable by Medicare.

Workers Compensation

This is a law or plan that compensates employees who get sick or injured on the job. Most employees are covered under workers’ compensation plans.

The basis for conditional Medicare payment in workers’ compensation cases are:

• The beneficiary has filed a proper claim for workers’ compensation benefits, but the intermediary or carrier determines that the workers’ compensation carrier will not pay promptly. This can include cases in which a workers’ compensation carrier has denied a claim.
• The beneficiary, because of physical or mental capacity, failed to file a proper claim. In the case of an auto accident or other accident when liability insurance applies, a claim should be submitted to the other insurer first. Per the Code of Federal Regulations, third party payers have 120 days after receipt of the claim to make payment. When payment or denial is received, then a claim can be submitted to Medicare.

Workers Compensation Medicare Set-Aside Arrangements

WCMSA allocates funds from a workers’ compensation-related settlement, judgment, or award that is used for an individual’s future medical and future prescription drug treatment expenses that would otherwise be reimbursable by Medicare.

Black Lung

All claims associated with this must be submitted to the Federal Black Lung Program. If a claim for Black Lung or related services is incorrectly sent to Medicare, it will be denied.

Veteran’s Administration

Veterans who are also entitled to Medicare may choose which program will be responsible for payment; however, claims for the same date and service may not be submitted to both programs. When services are authorized by the VA, the authorization binds the VA to pay in full for the items and services provided. If no payment is made by the VA, then a claim may be submitted to Medicare.

Disabled Beneficiary Under Age 65 with Large Group Health Plan

An LGHP is any health plan (contributed by an employer or by an employee’s organization, including a self-insured plan) that provides health care directly or through other methods, including insurance or reimbursement to employees, former employees, employer, others associated or formerly associated with the employer in a business relationship or their families. This insurance or reimbursement covers employees of at least one employer with 100 or more employees on 50% or more of its business days during the preceding calendar year.

Other Liability Insurance is Primary

If a beneficiary is involved with an injury resulting from a work-related accident, an automobile accident, or any other accidental injury, Medicare may be chosen as the secondary payer.

It should be noted that Medicare does not pay for medical services when payment has been made or can reasonably be expected to be made by a primary plan. Medicare is considered the secondary payer and is only responsible for paying the excess medical expenses if and when the amount paid by the primary plan is exhausted. Monetary penalties can occur for noncompliance with the mandated reporting requirements.

Navigating through MSP can be tricky and sometimes overwhelming. It’s essential you know the difference and criteria for payment.

Our LW Consulting, Inc. experts have developed a training module “Medicare Billing Training: Medicare as a Secondary Payer for Skilled Nursing Facilities” to help staff learn the MSP process.