How Do You Bill a Claim When Medicare Is Secondary?

How Do You Bill a Claim When Medicare Is Secondary?

Work in this order. Each step feeds the next, and a missing primary payment is the most common reason a secondary claim stalls. The Medicare Secondary Payer (MSP) rules page explains when Medicare is secondary; this post starts after that answer is known.

1. Confirm the order for the date of service. Ask the MSP questions and run the eligibility inquiry. The 271 response returns every policy that is primary to Medicare and overlaps the date of service.
2. Bill the primary payer with your normal claim and wait for its EOB or electronic remittance.
3. Post the primary payment: the amount paid, the amount allowed, and whether your contract obliges you to accept that allowed amount as payment in full.
4. Build the Medicare claim as a normal claim for the same services, with total charges as if there had been no other payment, then add the primary payer's amounts in the loops or fields below.
5. Send it to your Medicare Administrative Contractor (MAC) electronically when there is one primary payer. On paper, attach the primary EOB.
6. Read Medicare's remittance against your own calculation and post each adjustment.

Medicare's filing limit still applies to the secondary claim. Under 42 CFR 424.44, a claim must be filed within 1 calendar year after the date of service, so diary the date when the primary claim goes out. The Medicare payer guide covers the exceptions.

When Does Medicare Pay Anything as the Secondary Payer?

Medicare pays secondary benefits only when three things are true. MSP Manual chapter 3, section 30.3, says the plan payment must be less than your charges for Medicare-covered services, less than the gross amount payable by Medicare, and you must not have accepted, and not be obligated to accept, the group health plan payment as payment in full.

That last condition is the one that zeroes out a claim. If your contract with the primary plan obliges you to accept its allowed amount, you have no balance left for Medicare to supplement. For an inpatient hospital or skilled nursing stay where the plan payment equals or exceeds what Medicare would have paid, the section tells you to submit a no-payment bill.

Where Does the Primary Payer's Payment Go on the Claim?

On the electronic professional claim (837P), MSP Manual chapter 3, section 30.5, assigns each figure a place.

For institutional claims on the 837I, chapter 3 section 30.4 puts the primary payer's paid amounts in loop 2300, in the HI segment with qualifier BE, with the value code in HIXX-2 and the dollar amount in HIXX-5. If you hold an amount you are obliged to accept, report value code 44 and enter Y in loop 2320, segment OI03, so Medicare knows to look for it. A paper UB-04 carries the same value codes and amounts in form locators 39 to 41.

Two paper rules matter. A claim with more than one primary payer cannot be sent electronically, and chapter 3 section 30.5.B says a hardcopy CMS-1500 must go with each other payer's EOB or remittance advice attached. For a single primary payer on paper, chapter 26 says a copy of the primary payer's EOB must be forwarded along with the claim form.

Our MSP rules page lists the UB-04 value, condition and occurrence codes and the CMS-1500 items, so they are not repeated here.

How Much Will Medicare Pay as the Secondary Payer?

Medicare pays the lowest of three amounts. MSP Manual chapter 5, section 40.7.3, defines them for a properly filed claim, and the A/B MAC takes the inputs from the primary payer's EOB.

1. Your actual charge, or the amount you are obligated to accept as payment in full if that is less, minus the primary payer's payment.
2. The amount Medicare would have paid if the services were not covered by the group health plan.
3. The higher of the Medicare fee schedule amount or the plan's allowable charge, minus what the plan actually paid.

Now change one fact. The plan contract obliges you to accept $170 as payment in full. Step 1 becomes $170 minus $160 = $10, which is now the lowest, and Medicare pays $10. Chapter 3 section 30.5.D says the Medicare remittance then uses group code CO with reason code 45 to identify the secondary payment, which is how a CO-45 can appear on a payment that is working as designed.

If the plan's allowed amount cannot be read from its EOB, chapter 5 says the MAC assumes, absent evidence to the contrary, that your actual charge is the plan's allowable charge. A primary EOB that shows the allowed amount avoids that assumption.

What If the Primary Payer Denies the Claim?

Bill Medicare for conditional primary benefits and say why. MSP Manual chapter 3, section 30.3, says that if a group health plan denies a claim for primary benefits, you submit a bill for conditional primary benefits with an explanation of any reason the plan gave for the denial. Keep the denial EOB with the account.

Before you do, check that the denial is not your own error. Under 42 CFR 411.32(c), if the primary payer reduced its payment because you did not file a proper claim, Medicare pays as if you had, and you may not bill the patient for the reduction. File a proper claim with the primary payer first. The conditional payment rules sit on the MSP rules page.

Which Denials Come Back on Secondary Claims, and What Fixes Them?

The wording of CARC 22 in the X12 list is that the care may be covered by another payer per coordination of benefits. When a CO-22 comes back on a claim you know is correct, work it as a record problem first. The denial management playbook has the follow-up routine.

What Should Be on the Account Before You Send the Secondary Claim?

• The order of payers for the date of service, with who confirmed it and when.
• The primary payer's EOB or remittance, with paid, allowed and patient responsibility amounts.
• A note on whether your contract obliges you to accept the primary allowed amount.
• Total charges entered as if there had been no other payment.
• The primary paid amount in the right loop, or the EOB attached for paper.
• A diary date well inside the 1-calendar-year Medicare limit.

For the patient side of the order, see how to sort out coordination of benefits, and for a patient who also has Medicaid, Medicare vs Medicaid billing.

How Nucleus Align Handles It

We run automated eligibility checks to catch other coverage before the claim is built, then send claims within 24 hours of charge entry and work denials within 48 hours. Book a call to review your secondary claim workflow, or see more on the blog.