Understanding Medicare Secondary Payer

How to Know When Medicare is the Primary or Secondary Payer

Medicare Secondary Payer (MSP) is an important part of submitting claims that must be understood by medical billers. The rules can be complex. Medical offices that bill Medicare must ensure that their staff members who are responsible for preparing and submitting claims are well-trained and stay up-to-date on the guidelines and regulations. Consider attending training events and opportunities.

What is MSP?

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Medicare Secondary Payer or MSP refers to Medicare benefits when Medicare is not the primary insurance. Medicare requires all health care providers to know how to determine when Medicare is the primary or secondary insurance for their Medicare patients.

Become familiar with the CWF

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The CWF or Common Working File is Medicare's application that maintains information regarding coverage for Medicare beneficiaries. Be sure to always check the CWF in order to review the MSP information to obtain other health insurance coverage.

Medicare is the primary payer for a patient who meets these requirements:

  • 65 or older and has a small group health plan through their own current employer or through their spouse's current employer
  • 65 or older with insurance through a retirement plan
  • Disabled and has a small group health plan through their own current employer or through their spouse's current employer

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Medicare is the secondary payer for a patient who meets these requirements:

  • 65 or older and has a large group health plan through their own current employer or through their spouse's current employer
  • Disabled and has a large group health plan through their own current employer or through their spouse's current employer
  • Is covered by Worker's Compensation
  • Is covered by accident or liability insurance

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What Does Medicare Do If the Primary Insurance Denies the Claim?

In instances that the primary insurance denies the claim, Medicare may pay only for certain denial reasons, such as:

  • The subscriber's policy has terminated
  • Worker's compensation has determined that services are not covered
  • Accident or liability insurance denies or takes too long to pay. The provider may be eligible for a conditional payment if the claim is expected to take an extensive amount of time to pay.

Using Condition Codes FL 18-28

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Code 02: Condition is employment related
Code 03: Patient Covered by insurance not reflected here
Code 05: Lien has been filed
Code 06: ESRD patient in first 30 months of entitlement
Code 08: Beneficiary would not provide information concerning other insurance coverage
Code 09: Neither patient nor spouse is employed
Code 10: Patient and/or spouse is employed but not EGHP coverage exists
Code 11: Disabled beneficiary but no LGHP coverage
Code 28: Patient and/or spouse's EGHP is secondary
Code 29: Disabled beneficiary and/or family member's LGHP is secondary to Medicare
Code 77: Provider accepts or is obligated/required due to a contractual agreement or law to accept payment by a primary payer as payment in full. No Medicare payment will be made.

Using Occurrence Codes FL 31-34

Code 01: Accident - beneficiary's medical payment coverage
Code 02: No fault insurance involved (use with value code 14)
Code 03: Accident - liability (use with value code 47)
Code 04: Accident - employment related (use with value code 15)
Code 06: Crime victim
Code 18: Date of patient/beneficiary's retirement
Code 19: Date of spouse retirement
Code 24: Date insurance denied
Code 33: First day of coordination period for ESRD beneficiaries covered by EGHP
Code A3: Payer A benefits exhausted

Using Value Codes FL 39-41

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Enter the payment amount for Payer A located at FL 50 for Codes 12 - 43:
Code 12: Working aged beneficiary or spouse
Code 13: ESRD beneficiary in 30-month coordination period
Code 14: No-fault insurance including auto
Code 15: Workers' compensation
Code 16: Public health service or other federal agency such as crime victim, drug trial, etc.
Code 41: Black lung
Code 42: Veteran's administration
Code 43: Disabled beneficiary under age 65 with LGHP
Code 44: Amount provider agreed to accept from the primary payer when this amount is less than charges, but higher than the payment received, then a Medicary secondary payer is due. Enter the total amount you agreed to or are obligated to accept.
Code 47: Liability insurance

Using Relationship Codes FL 59

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Code 01: Spouse
Code 04: Grandfather/grandmother
Code 05: Grandson/granddaughter
Code 07: Nephew/niece
Code 10: Foster child
Code 15: Ward
Code 17: Stepson/stepdaughter
Code 18: Self
Code 19: Child
Code 20: Employee
Code 21: Unknown
Code 22: Handicap dependent
Code 23: Sponsored dependent
Code 24: Dependent of minor dependent
Code 29: Significant other
Code 32: Mother
Code 33: Father
Code 36: Emancipated minor
Code 39: Organ donor
Code 40: Cadaver donor
Code 41: Injured plaintiff
Code 43: Child where insured has no financial responsibility
Code 53: Life partner
Code G8: Other relationship

Complete List of All Billing Codes

Visit Medicare Claims Processing at the cms.gov website for a complete list of all billing codes.

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