CMS Pub. 100-04, ch. 1, § 100

HO-301, HO-469, CFR 411.32

The provider is required to determine whether Medicare is a primary or secondary payer

for each inpatient admission of a Medicare beneficiary and outpatient encounter with a

Medicare beneficiary. Refer to the Medicare Secondary Payer Manual for specific MSP

rules and for special admission and claims processing procedures for providers, suppliers,

FIs, and carriers.

Medicare benefits are secondary to benefits payable by a third party payer, even if State

law or the third party payer states that its benefits are secondary to Medicare benefits or

otherwise limits its payments to Medicare beneficiaries. Medicare will make secondary

payments except when the provider or supplier is either obligated to accept, or voluntarily

accepts, as full payment, a third party payment that is less than its charges. When a

provider or supplier, or a beneficiary who is not physically or mentally incapacitated,

receives a reduced third party payment because of failure to file a proper claim, the

Medicare secondary payment may not exceed the amount that would have been payable

if the third party payer had paid on the basis of a proper claim.

The law mandates that Medicare is secondary payer for:

• Claims involving Medicare beneficiaries age 65 or older who have GHP coverage

based upon their own current employment status with an employer that has 20 or

more employees, or that of their spouse of any age, or based upon coverage by a

multiple employer, or multi-employer group health plan by virtue of their own, or

a spouse’s, current employment status and the GHP covers at least one employer

with 20 or more employees. An individual has current employment status if the

individual is actively working as an employee, is the employer (including a self-employed person), or is associated with the employer in a business relationship;

or is not actively working, but meets all of the following conditions:

o Retains employment rights in the industry;

o Has not had employment terminated by the employer,

o Is not receiving disability payments from an employer for more than six

months;

o Is not receiving social security disability benefits; and

o Has group health plan (GHP) coverage based on employment that is not

COBRA continuation coverage.

Examples of individuals who fall in the second group are teachers, employees who are on

furlough or sick leave, and active union members between jobs.

• Claims involving beneficiaries eligible for or entitled to Medicare on the basis of

end stage renal disease (ESRD) during a period of 30 months) except where an

aged or disabled beneficiary had GHP or LGHP coverage which was secondary to

Medicare at the time ESRD occurred;

NOTE: The Balanced Budget Act of 1997 extended the ESRD coordination period to 30

months from 18 months for any individual whose coordination period began on or after

March 1, 1996. Individuals whose period began before that date have an 18-month

coordination period. This issue may need to be clarified with ESRD beneficiaries upon

admission.

• Claims involving automobile or non-automobile liability or no-fault insurance;

• Claims involving government programs, e.g., Worker’s Compensation (WC),

services authorized and paid for by the Department of Veterans Affairs (DVA), or

Black Lung (BL) benefits; and

• Claims involving Medicare beneficiaries under age 65 who are entitled to

Medicare on the basis of disability and are covered by an LGHP (plans or

employers, or employee organizations, with at least one participating employer

that employs 100 or more employees) based upon the beneficiary’s own current

employment status or the current employment status of a family member.