What Is Medicare Secondary Payer (MSP) and Who Pays First?
Medicare Secondary Payer, or MSP, means Medicare does not pay first because another insurer or plan has primary payment responsibility. The plan that pays first is called the primary payer. Medicare may pay second only for covered costs the primary payer does not cover, subject to Medicare rules. Who pays first depends on the type of other coverage, employment status, employer size, ESRD status, and whether an injury-related insurer is involved.
What does Medicare Secondary Payer mean?
Medicare Secondary Payer is the term used when Medicare is not responsible for paying a claim first. In that situation, another payer, such as an employer group health plan, workers’ compensation, no-fault insurance, or liability insurance, may have to pay before Medicare.
When more than one type of coverage may pay a bill, Medicare uses coordination of benefits rules to determine the order of payment. The first payer is called the primary payer. The second payer is called the secondary payer.
How do primary and secondary payers work?
The primary payer pays what it owes under its own coverage rules, up to the limits of that coverage. The remaining balance may then be sent to the secondary payer.
The secondary payer only pays if there are costs the primary payer did not cover and if those costs are covered under the secondary payer’s rules. If neither payer covers part of the bill, you may be responsible for that amount.
If Medicare is secondary, the provider generally must bill the primary payer first before Medicare can consider a secondary payment.
Who pays first in common Medicare situations?
Who pays first depends on the facts of your coverage. Common Medicare coordination rules include:
- Active employment coverage at age 65 or older: If you have group health plan coverage based on current employment, the employer’s size can affect whether the group health plan or Medicare pays first.
- Disability-based Medicare under 65: If you have coverage through a large group health plan based on current employment, that plan may pay first when the applicable rules are met.
- Retiree coverage: Medicare commonly pays before retiree coverage, but you should confirm how the retiree plan coordinates benefits.
- COBRA: Medicare often pays before COBRA, except certain ESRD situations may have different rules.
- End-Stage Renal Disease: During the 30-month coordination period, an employer or union group health plan may pay first and Medicare pays second. After that period, Medicare pays first for Medicare-covered services.
- Workers’ compensation, no-fault, or liability insurance: For services related to the injury or claim, those insurers may be primary to Medicare.
- Medicaid: Medicaid does not pay before Medicare. It may help with costs after Medicare pays, if the person qualifies.
What if the primary payer does not pay promptly?
If the insurance company that should pay first does not pay promptly, a provider may be able to bill Medicare. Medicare may make a conditional payment to avoid delaying payment for covered care.
A conditional payment is not the same as Medicare agreeing to be the final payer. Medicare can later seek repayment from the primary payer, from a settlement, or from another responsible party when Medicare should not have paid first.
Why is reporting other insurance important?
Medicare needs current information about your other insurance so claims are paid in the correct order. If Medicare does not know about another payer, claims can be delayed, denied, or paid incorrectly.
Tell your doctors, hospitals, pharmacies, and Medicare plan about other coverage you have, including employer coverage, retiree coverage, COBRA, Medicaid, workers’ compensation, auto insurance medical coverage, or liability-related claims.
If your coverage changes or you are unsure who pays first, Medicare says you can contact the Benefits Coordination & Recovery Center at 1-855-798-2627. TTY users can call 1-855-797-2627.
What should you check before assuming Medicare pays first?
Before assuming Medicare is primary, check the specific facts that affect coordination of benefits:
- Whether your other coverage is based on current employment or former employment
- The size of the employer connected to a group health plan
- Whether Medicare eligibility is based on age, disability, or ESRD
- Whether the care is related to a work injury, auto accident, liability claim, or no-fault insurance claim
- Whether you are enrolled in COBRA, retiree coverage, Medicaid, VA benefits, TRICARE, or another program
Because Medicare coordination rules depend on individual circumstances, the safest approach is to verify the payment order with Medicare, the other insurer, and your provider before services are billed when possible.
From First Meeting to Medicare Enrollment
We begin by helping you understand how Medicare works and how the different pieces fit together. We walk through Original Medicare, Parts A and B, Medicare Advantage, Medicare Supplement insurance, and Part D prescription drug coverage, including how formularies, drug tiers, and plan rules can affect your costs.
We also explain dental, vision, and hearing coverage, along with other products that may help fill gaps in your healthcare plan. Depending on your needs, that may include short-term in-home healthcare coverage, hospital indemnity insurance, or coverage designed to provide additional financial support following a cancer diagnosis, heart attack, or stroke.
Once you understand the landscape, we move into the planning stage. That is when we review your doctors, hospitals, prescription drugs, current coverage, and other personal details so we can begin evaluating the Medicare plan options that fit your situation.
Official Sources
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How Medicare works with other insurance | Medicare
Explains coordination of benefits, primary and secondary payers, conditional payments, and how to contact the Benefits Coordination & Recovery Center. -
Who pays first? | Medicare
Provides Medicare’s official guidance for determining which coverage pays first in different insurance situations. -
Medicare Secondary Payer | CMS
Defines Medicare Secondary Payer and lists common situations where another payer may be primary to Medicare. -
Reporting Other Health Insurance | CMS
Explains why beneficiaries should report other insurance and how coordination rules help Medicare pay claims correctly. -
End-Stage Renal Disease (ESRD) | Medicare
Verifies the ESRD coordination period and when a group health plan or Medicare pays first for ESRD-related coverage situations.
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