What Is Medicare Secondary Payer? Crucial Insights Into Medicare Secondary Payer Rules

What is Medicare Secondary Payer?

Medicare Secondary Payer (MSP) is a term commonly used when the Medicare program does not bear primary payment responsibility.

In other words, when another entity is responsible for payment before Medicare steps in.

At its inception in 1966, Medicare served as the primary payer for all claims, excluding those covered by Workers’ Compensation, Federal Black Lung benefits, and Veteran’s Administration (VA) benefits.

In 1980, Congress enacted legislation designating Medicare as the secondary payer for specific primary plans.

This legislative move aimed to transfer costs from Medicare to the appropriate private sources of payment.

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The MSP provisions play a vital role in safeguarding Medicare Trust Funds, ensuring that Medicare does not cover expenses for items and services that certain health insurance or coverage should primarily handle.

These provisions come into play when Medicare is not the beneficiary’s primary health insurance coverage.

Both Medicare statute and regulations mandate that all entities billing Medicare for items or services provided to Medicare beneficiaries must assess whether Medicare holds primary payer status for those items or services.

Primary payers are entities with the principal responsibility for settling a claim.

Medicare continues to be the primary payer for beneficiaries without other health insurance or coverage.

Additionally, in specific instances meeting specified conditions, Medicare retains its primary payer status.

Primary vs. Medicare Secondary Payer Responsibility in Common Situations

The following outlines common scenarios where Medicare and other health insurance or coverage may coexist, specifying which entity assumes the role of the primary or secondary payer:

Working Aged (Medicare beneficiaries age 65 or older) and Employer Group Health Plan (GHP):

Individual aged 65 or older, covered by a GHP through current employment or spouse’s current employment;

And the employer has less than 20 employees:

Medicare pays Primary, GHP pays secondary

Individual aged 65 or older, covered by a GHP through current employment or spouse’s current employment;

And the employer has 20 or more employees (or at least one employer is a multi-employer group employing 20 or more individuals):

GHP pays Primary, Medicare pays secondary

Individual aged 65 or older, self-employed, and covered by a GHP through current employment or spouse’s current employment;

And the employer has 20 or more employees (or at least one employer is a multi-employer group employing 20 or more individuals):

GHP pays Primary, Medicare pays secondary

Disability and Employer GHP:

Individual is disabled, covered by a GHP through their own current employment (or through a family member’s current employment);

And the employer has 100 or more employees (or at least one employer is a multi-employer group employing 100 or more individuals):

GHP pays Primary, Medicare pays secondary

Individual has ESRD, covered by a GHP, and is in the first 30 months of eligibility or entitlement to Medicare:

GHP pays Primary, Medicare pays secondary during 30-month coordination period for ESRD

Individual has ESRD, covered by a Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA plan), and is in the first 30 months of eligibility or entitlement to Medicare:

COBRA pays Primary, Medicare pays secondary during 30-month coordination period for  End-Stage Renal Disease (ESRD)

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Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)

Individual has ESRD, covered by COBRA, and is in the first 30 months of eligibility or entitlement to Medicare:

COBRA pays Primary, Medicare pays secondary during 30-month coordination period for ESRD

Individual aged 65 years or older and covered by Medicare & COBRA:

Medicare pays Primary, COBRA pays secondary

Individual is disabled and covered by Medicare & COBRA:

Medicare pays Primary, COBRA pays secondary

Retiree Health Plans:

Individual aged 65 or older with an employer retirement plan:

Medicare pays Primary, Retiree coverage pays secondary

No-fault Insurance and Liability Insurance:

Individual entitled to Medicare involved in an accident or other situation where no-fault or liability insurance is applicable:

No-fault or Liability Insurance pays Primary for healthcare services related to the accident or situation, and Medicare pays secondary

Workers’ Compensation Insurance

Individual entitled to Medicare, covered under Workers’ Compensation due to a job-related illness or injury:

Workers’ Compensation pays Primary for healthcare items or services related to job-related illness or injury claims.

If a claim is denied by Workers’ Compensation, Medicare may pay for services not covered by Workers’ Compensation.

Consideration of Medicare’s interest and the potential inclusion of a Workers’ Compensation Medicare Set-aside Arrangement (WCMSA) is advisable before settling a Workers’ Compensation case.

Note: In cases where evidence suggests that the no-fault insurer, liability insurer, or Workers’ Compensation plan will not promptly pay;

Medicare may issue a conditional payment, which must be repaid when a settlement or other payment is made.

Federal law takes precedence over state laws and private contracts in determining primary payer status.