Mastering Medicare Secondary Payer Compliance: A Guide for Insurance Adjusters

Medicare Secondary Payer is complex. In this article we are going to break down what MSP is and when it applies - potentially saving you thousands of dollars and headaches.

By Carla Rodriguez | Sep. 15, 2023 | 5 min. read

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.

Medicare Secondary Payer, often referred to as MSP, is a set of federal laws that make Medicare the secondary payer in certain situations, with primary payment responsibility lying elsewhere. Essentially, It’s Medicare saying, “I’ll back you up, but only if I have to.” MSP rules jump in when your patient has another insurance —like group health plans, workers’ comp, or auto insurance.

Here’s a quick rundown of common scenarios:

1. Group Health Insurance

If your claimant has group health insurance through their or their spouse’s current employment, Medicare is the secondary payer for services covered by the group health plan.


Sarah, 70 years old, is covered under her husband’s employer-sponsored health insurance. She’s also enrolled in Medicare. In case Sarah incurs medical expenses, her husband’s insurance is the primary payer, and Medicare picks up the remaining eligible costs.

2. Workers’ Compensation or Liability Insurance

In cases where injuries are the result of a workplace incident or due to someone else’s negligence (like a car accident), Medicare may be a secondary payer.


John, 68 years old, is involved in a car accident resulting in injuries. While Medicare might cover some medical expenses related to the accident, it comes second after any insurance settlements from the at-fault driver’s auto insurance.

3. No-Fault Insurance

Some states require “no-fault” insurance coverage for automobile accidents, where Medicare could play a secondary role.


In Michigan, where no-fault auto insurance is mandatory, Medicare becomes the secondary payer if a Medicare beneficiary is injured in a car accident.


MSP Regulations Overview


MSP requires 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.


What are the Benefits of an MSP Expert?


1. Navigating Complex Regulations:

What’s worse than watching paint dry? Reading about Medicare compliance. And even through all your best efforts there is still human error when you are dealing with multiple cases. MSP rules and regulations are intricate and ever-changing. To ensure compliance, insurance companies must have professionals who possess a deep understanding of these laws. Having specialized experts who stay current with updates and interpretations of MSP regulations is crucial to avoid costly penalties and legal troubles.


It can be hard for a young company to be faced with a legal challenge due to MSP non-compliance. Inevitably you are unaware of recent regulatory changes, resulting in significant fines and a damaged reputation. This incident underscores the need for dedicated MSP experts who are always up-to-date.

2. Maximizing Cost Savings:

Medicare Secondary Payer rules are designed to shift primary payment responsibility to other insurers when appropriate. Having experts who can accurately identify MSP cases and establish Medicare’s secondary payer status can save insurance companies substantial amounts of money.


In a recent case, a claimant had both group health insurance and Medicare coverage. Initially, the claim was processed without considering MSP. An MSP expert later identified the oversight, corrected the payment structure, and saved you thousands of dollars.

3. Reducing Legal Risks

You must be aware of the most common MSP blunders and how to avoid them! MSP compliance is not just about financial implications; it’s also about mitigating legal risks. Specialized experts understand the intricacies of MSP-related legal matters, which can help insurance companies avoid expensive litigation.


Imagine your company faced with lawsuit from a claimant due to alleged MSP non-compliance. With the expertise of an MSP specialist, you are able to demonstrate adherence to MSP regulations, ultimately leading to a dismissal of the lawsuit.

Another perfect example of this is when an attorney may fail to resolve a conditional payment because they weren’t aware that it was an MSP requirement. When a firm does not reimburse Medicare the state government can become involved with missing payments. In this case, you don’t want your company or attorney to be held liable for missing a step on this lengthy procedure.

4. Master the Art of COB

Coordination of Benefits (COB) is your best friend 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 promptly 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, the ever-evolving nature of Medicare Secondary Payer regulations and the potential for costly consequences -if something goes wrong – makes it imperative to have specialized MSP experts managing their cases.