What is Medicare Secondary Payer (MSP) and How Does It Work?

Understanding Medicare Secondary Payer

In the world of insurance claims, navigating Medicare Secondary Payer (MSP) rules can be challenging. In this article, we’re going to unravel the mystery of MSP compliance, revealing how to save time and money while staying on the right side of the law.

What is Medicare Secondary Payer (MSP)?

Medicare Secondary Payer, or MSP, is a set of federal laws that make Medicare the secondary payer in certain situations where other insurers are responsible for primary payment. In essence, Medicare is saying, “I’ll back you up, but only if I have to.” MSP applies when your claimant has additional insurance, such as a group health plan, workers’ compensation, or auto insurance.

Here’s a quick rundown of common scenarios:

1. Group Health Insurance

Example: Sarah, 70, has health insurance through her husband’s employer and is also enrolled in Medicare. If Sarah incurs medical expenses, her husband’s insurance is the primary payer, with Medicare covering any remaining eligible costs.

2. Workers’ Compensation or Liability Insurance

Example: John, 68, is injured in a car accident. While Medicare might cover some medical expenses, it is secondary to any insurance settlement from the at-fault driver’s auto insurance.

3. No-Fault Insurance

Example: In states like Michigan, where no-fault auto insurance is required, Medicare becomes the secondary payer if a Medicare beneficiary is injured in a car accident.

MSP Regulations for Workers Compensation Claims Overview

MSP solutions require close attention to rules and regulations. Let’s talk about some of the procedures followed when an individual is eligible for both Medicare and workers’ compensation benefits. Here are some regulations that apply to workers’ compensation that you don’t want to miss:

1. Mandatory Reporting (Section 111 Reporting):

Its required to report certain workers’ compensation claims to Medicare using the Section 111 reporting process. This ensures that Medicare is aware of situations where it might have a secondary payer role.

2. Conditional Payments:

If Medicare makes payments for medical treatment related to a workers’ compensation claim before the workers’ compensation insurer, it may seek reimbursement from the insurer once the primary payment obligation is established.

3. Set-Asides and Medicare Set-Aside (MSA) Arrangements:

In some cases, it’s necessary to establish a Medicare Set-Aside (MSA) arrangement. An MSA is a portion of the workers’ compensation settlement that is set aside to cover future medical expenses that would otherwise be paid by Medicare. MSAs must be reviewed and approved by Medicare to ensure compliance.

4. Section 111 Reporting:

In order to document medicare to have a secondary payer role you must report the claim to CMS as required by Section 111.

Post settlement administration:

The fun doesn’t end there! These claims require you to monitor and administer the MSA account, handle ongoing payments and provide reporting to CMS. This is all to ensure that funds are spent correctly according to MSP regulations.

The Benefits of an MSP Expert?

1. Navigating Complex Regulations:

MSP regulations are intricate and constantly evolving. MSP specialists stay updated on changes and interpretations, ensuring compliance and avoiding penalties.

• Example: A small company faced steep fines due to MSP non-compliance because it hadn’t accounted for recent regulatory changes. This highlights the need for MSP experts who keep current with evolving rules.

2. Maximizing Cost Savings:

Proper MSP coordination helps shift primary payment responsibility, saving companies money by accurately identifying when Medicare is the secondary payer.

• Example: In a recent case, a claimant had both group health and Medicare coverage. Initially, Medicare covered $45,000 in costs, with an additional $30,000 billed to the group health plan. MSP experts corrected this oversight, saving over $80,000 in future costs.

What Are The Cost Savings?

Proper MSP coordination helps shift primary payment responsibility, saving companies money by accurately identifying when Medicare is the secondary payer.

Example: In a recent case, a claimant had both group health and Medicare coverage. Initially, Medicare covered $45,000 in costs, with an additional $30,000 billed to the group health plan. MSP experts corrected this oversight, saving over $80,000 in future costs.

The total costs for MSP solution client services was in the range of $9,000-$10,000. Due to preventing penalties, fees and other costs, the total savings were over $80,000.

Total Costs for MSP Solutions: $9,000+
Total Savings and Avoided Costs: $80,000+

3. Reducing Legal Risks

MSP compliance also mitigates legal risks. Experts understand the legal implications, protecting insurers from costly litigation.

Example: A claim mishandled without MSP compliance led to a potential lawsuit. With the help of an MSP specialist, the company demonstrated compliance, resulting in a case dismissal.

4. Master Coordination of Benefits (COB)

Coordination of Benefits (COB) is crucial to understand when dealing with MSP compliance. It’s a process that helps insurers determine which plan pays first when a beneficiary has multiple forms of insurance coverage.

Here’s how:

Double-Check Information: Ensure all claimant information is accurate, including their Medicare information.

Timely Coordination: Implement systems to coordinate benefits with Medicare, other insurers, and claimants. Delays can lead to complications.

Claims Management Software: Consider investing in claims management software that automates COB processes. It can save you time and reduce the risk of errors.

“Remember, the goal is not just to avoid penalties but to streamline your claims process and provide efficient service to your clients.”

 

In conclusion,by using MSP solutions you can avoid penalties, billing errors, and outstanding medical funds. Medicare Secondary Payer experts can be crucial but usually not recognized as important until after something goes very wrong. Talk to someone on the team that can answer all of your MSP questions.