By Joe McTernan
AOPA Government Affairs Department

    A patient arrives for a scheduled
appointment and presents her Medicare card. She receives her orthosis or prosthesis, makes a 20 percent coinsurance payment and leaves your office. You submit a claim to Medicare and receive reimbursement for the remaining 80 percent of the Medicare allowable.
    Except the patient neglected to mention that she’s also covered under her husband’s health insurance plan. You only realize this because a year after the claim was paid by Medicare, your DMERC subjected the claim to a process called Coordination of Benefits (COB) and discovered that Medicare should not have paid primary benefits on your claim.
    As a result of this discovery by your DMERC, you receive an overpayment letter identifying the improper claim. The letter demands that you return the original amount paid by Medicare and refund the patient her 20 percent coinsurance payment. If you do not repay the money, Medicare will recoup the amount from future claim payments, including interest that is compounded every thirty days until the overpayment amount has been repaid.
    Once you refund the money to Medicare and the patient, you may be able to submit a claim to the primary insurance company (assuming you have a valid contract with them and they will accept a year-old claim). The primary insurance company may even pay your claim. Then, if that happens, you can submit a new claim to Medicare for secondary benefits.

MSP provisions
    In order to avoid these situations and the administrative headaches that come with them, you must understand when Medicare is considered a secondary payer and how to gather the necessary information from your patients. Then you are more likely to submit your claim to the proper payer or payers in the correct order of payment responsibility.
    Medicare Secondary Payer (MSP) provisions are separated into six distinct categories, each with its own set of rules. The six categories are:
•    the working aged,
•    end-stage renal disease (ESRD) beneficiaries,
•    disabled beneficiaries,
•    liability insurance,
•    workers’ compensation and
•    no fault insurance.
Here is a summary of each provision.

The working aged
    This is the most common situation where Medicare will pay secondary to another insurer. This situation arises when a person is enrolled in Medicare because he has reached the age of 65 but works and maintains a group health insurance plan (GHP) through his employer. Medicare will also be the secondary payer if a beneficiary who is eligible due to age is no longer working but remains covered under his spouse’s group health insurance plan.
    When either of these scenarios occurs, the group health plan must pay primary benefits on the claim. Medicare will only consider the claim after the GHP has processed and either paid or denied the claim.
    Participation in an employer-sponsored GHP is typically a voluntary process requiring the payment of some form of premium. Medicare beneficiaries have the right to refuse coverage under the group health plan, in which case Medicare would remain primary.
    It is important to note that employers are prohibited by law from offering Medicare beneficiaries secondary coverage for Medicare-covered services. If a Medicare beneficiary chooses not to participate in the group health plan, he must pay the Medicare 20 percent coinsurance through personal funds or through a separately purchased Medigap policy.
    Also, there are several important exceptions to Medicare Secondary Payer rules involving the working aged in which Medicare remains primary even if the beneficiary participates in a GHP. Medicare remains primary in each of the following instances:
•    The GHP covers fewer than 20 employees.
•    The Medicare beneficiary is not eligible for Medicare Part A or pays a monthly premium to maintain Medicare Part A coverage.
•    The beneficiary has GHP coverage as a retiree and he or she is not currently employed by the company offering the GHP.
•    The Medicare beneficiary has GHP coverage as a result of his or her domestic partner’s employment status. This qualifies as an exception because federal law does not define a domestic partner as a spouse.

ESRD beneficiaries
    Medicare coverage is available to individuals under the age of 65 who have end-stage renal disease (ESRD). ESRD is diagnosed when the kidneys are no longer functioning at levels necessary to sustain life. Without regular dialysis or a kidney transplant, ESRD will result in death due to the patient’s inability to remove waste from the bloodstream.
    When a patient becomes eligible for Medicare based on ESRD, and she is covered by a group health plan, the MSP rules are significantly different from the rules for the working aged. First, the GHP is primary regardless of the number of employees.
    Second, the patient or her spouse no longer needs to be employed by the organization offering the GHP. Either person can be a retiree with GHP benefits and Medicare will remain secondary. The biggest difference is that Medicare will eventually become the primary payer, regardless of the patient’s GHP coverage.
    Medicare ESRD patients who are also covered by a GHP are subject to a coordination period during which the GHP must act as the primary payer and Medicare as the secondary payer. This coordination period begins on the first day of the month in which a patient became entitled to Medicare based on ESRD and continues for 30 months. At the end of the 30-month coordination period, the payment order reverses and Medicare becomes the primary payer as long as the patient continues to be eligible for Medicare.

Disabled beneficiaries
The MSP provisions for individuals eligible for Medicare due to disability have two significant differences from those for the working aged.
First, in order for Medicare to be secondary, the group health plan must be classified as a large group health plan (LGHP). In order to be classified as an LGHP, there must be at least 100 people employed by the sponsoring company. In the case of a plan that covers multiple employers, at least one employer in the group must have at least 100 employees.
Second, the group of individuals for which Medicare will pay secondary has been expanded to include not only spouses, but other family members such as children or other related dependants.
For example, Mr. Smith is covered by a LGHP offered by his employer and has elected family coverage. Mr. Smith has a disbled child named John who has qualified for Medicare coverage due to his disability status. In this case, the LGHP would be billed as the primary payer and Medicare as the secondary payer for any of John’s medical expenses.

Liability insurance
    Medicare Secondary Payer provisions in cases involving liability insurance differ from other MSP provisions in that there is no direct relationship between the provider of service and the liability insurance carrier. Other primary payers (e.g., GHPs, automobile insurance, etc.) may be billed directly by the provider since these payers are covering the individual to whom the service was provided.
    Liability insurance covers the person who has wronged the beneficiary, not the beneficiary himself. Because of this, and the fact that liability settlements often take months or years to negotiate and finalize, Medicare will typically pay primary benefits on a conditional basis.
    While the provider may not bill the liability insurance carrier directly, federal law allows Medicare to recover their payment directly from the liability carrier once the claim is settled.

Workers’ compensation
    The main difference between MSP provisions involving workers’ compensation and other insurances is that Medicare will pay secondary on claims related to the workplace injury, but primary on any claims that are not related to the workplace injury.
    Thus, it is very important that you clearly identify whether your service is for an injury covered under the workers’ compensation policy.
    For example, Mr. Green has been an amputee for twenty years but is out of work due to a broken arm caused by a machine in the workplace. He arrives at your office for a new lower limb prosthesis and indicates that he is covered by Medicare and workers’ compensation.
    In this case, the provision of the prosthesis is unrelated to his broken arm and therefore Medicare is the primary payer. If Mr. Green was coming to your office to be fit with a fracture brace to treat the injured arm, then workers’ compensation would be the primary payer and Medicare would be secondary.

No fault insurance
    No fault insurance covers beneficiaries who are involved in accidents even if there was no establishment that they caused the accident. Automobile policies are the best example of no fault policies. In an auto accident, if there is a dispute over who caused the accident, benefits may be paid by each car owner’s insurance policy under no fault provisions.
    Medicare is always secondary to no fault insurance, even if state law or the no fault contract states that the no fault policy is secondary to Medicare. Medicare will only pay primary benefits if the no fault policy has already paid its maximum benefit or if the services are unrelated to injuries caused by the accident.

You need to know
    Understand Medicare Secondary Payer provisions thoroughly and you will know the right questions to ask during the intake process. You’ll quickly determine who is responsible for paying your claim and how much you will be reimbursed for a specific service. Ignorance of MSP rules, on the other hand, leads to unnecessary claim denials and confusion about proper reimbursement for your services.