Overview Of Medicare As A Secondary Payer Issues

You may have heard that Medicaid is a payer of last resort, a requirement that Medicaid providers bill other payers first when Medicaid enrollees have other forms of insurance, such as Medicare. But providers should note that Medicare is not always the payer of first resort.

There are circumstances where Medicare beneficiaries have other health insurance whose obligation to pay is primary to Medicare. In such instances, Medicare is the secondary payer and is billed after the primary insurer is billed and that claim is processed.

The Centers for Medicare & Medicaid Services (CMS) advises that before billing Medicare, providers take an aggressive role in the identification of Medicare Secondary Payer (MSP) claims. Providers are encouraged to obtain information from patients in order to make a determination on whether or not Medicare is the primary or secondary payer. CMS recommends that providers develop and use a questionnaire with all beneficiaries to facilitate the proper identification of primary versus secondary.

According to CMS, Medicare is the secondary payer in the following circumstances:

  • If the patient is age 65 or older and covered by a Group Health Plan (GHP) because he or she is working or is covered by a GHP of a working spouse of any age and the employer has 20 or more employees
  • If the patient is disabled and is covered by a Large Group Health Plan (100 or more employees) because he or she is working or is covered by a LGHP of a working family member.
  • If a patient is under 65 and has Medicare coverage solely on the basis of End Stage Renal Disease, and has GHP coverage, the GHP is the primary payer for the first 30 months of Medicare eligibility or entitlement.
  • Liability insurance is primary to Medicare. A physician who treats a Medicare patient who has filed a liability claim must bill the liability insurance first unless the insurance will not pay during the 120-day promptly period. After the 120-day promptly period, the physician may either continue the lien or claim against the liability insurance or bill Medicare. If the physician bills Medicare, he/she must drop any liens and claims against the liability insurance. Malpractice insurance can fall into this category.
  • No fault insurance covers accident injuries and pays for medical expenses no matter who is responsible for the accident. No-fault car insurance and no-fault homeowner’s insurance are familiar examples. No-fault insurance is primary to Medicare. Under certain circumstances, Medicare may make conditional payments if the no-fault insurance will not pay within the 120-day promptly period. If services are covered under no-fault insurance, that insurance must be billed first. If the insurance does not pay all of the charges, a claim for secondary Medicare benefits can be submitted. If the no-fault insurer will not pay because benefits are exhausted or coverage has expired, Medicare will pay as the primary payer.  CMS requires that providers submit documentation with their claim that shows what happened.
  • Veterans who are entitled to Medicare may choose which program will be responsible for payment for services covered by both programs. Medicare cannot pay for the same service that was authorized by the VA or performed by a VA facility.
  • Medicare will not pay for medical services covered by Workers’ Compensation, the state-supervised insurance system for job related injuries and diseases. If a patient has a disease or injury incurred on the job, the claim must be filed with Workers’ Compensation first. If Workers’ Compensation denies the claim in whole or in part, providers should then proceed to file a claim with Medicare.
  • If the patient has black lung disease, Medicare will not pay when treatment is covered by the federal Black Lung Program, which is run by the Department of Labor (DOL). If DOL has said that the patient is not eligible for Black Lung program benefits, then Medicare will pay as primary. Medicare should pay for any service that is not related to the Black Lung Disease Program.

Medicare is generally primary to TRICARE, the health care program serving active duty service members, National Guard and Reserve members, retirees, their families, survivors and certain former spouses worldwide. However, if a patient receives services from a military hospital or other federal provider, TRICARE will pay because Medicare will not pay for services received from a federal provider or other federal agency.

For patients over 65 who are receiving Medicaid, state Medicaid programs are required to pay the copayments and deductibles of “qualified Medicare beneficiaries.” Medicare is always primary for patients that have Medicaid.

For more information see the Medicare as Secondary Payer Statute (42 U.S.C. §1395y(b)(2)).