CMS Pub. 100-05, ch. 3, § 10.1.3

If a provider, physician, or other supplier receives from a payer, that is primary to Medicare, a

payment that is reduced because the provider, physician, or other supplier failed to file a proper

claim, the provider, physician, or other supplier must include this information on the claim for

secondary payment that is submitted to Medicare. Medicare’s secondary payment will be based

on the full payment amount (before the reduction for failure to file a proper claim) unless the

provider, physician, or other supplier demonstrates that the failure to file a proper claim is

attributable to a physical or mental incapacity of the beneficiary that precluded the beneficiary

from being able to provide other payer information.

For example, a physician’s charges are $1,000. The primary plan’s allowable charges without

reduction for failure to file a proper claim are $800.00. The Medicare allowable was $700.00.

The primary plan would have paid $640.00 if a proper claim had been filed. The primary plan

reduced its payment to $500.00 because the physician had not filed a proper claim. Medicare’s

secondary payment would be based on a primary plan payment of $640.00 rather than the

reduced amount of $500.00. The beneficiary may not be billed for the reduction in the primary

plan’s payment due to the physician’s failure to file a proper claim.