Medicare Secondary Payer (MSP) - Alternative Coverage

By: Edward Neeman
Published: Tuesday, October 09 2018
Last Updated: 4 years ago

The three most important things in our lives are our family and friends, our career and income possibilities, and our health. Without the first two, people begin to feel unbalanced, but without health, nothing else matters. Regardless of how gracefully we age, our health begins to deteriorate in our senior years. It’s for that reason that healthcare programs like Medicare exist, but what happens when just one insurance policy isn’t enough? Here’s where a Medicare Secondary Payer comes into play.

What Is Medicare Secondary Payer

Medicare Secondary Payer (MSP) is the term used by the industry to denote when another entity takes over primary payment responsibility. The provisions given to this secondary payer only come into effect when the Medicare health program pays for medical situations after the primary payer, which could be another health insurance program or a trust fund related to the customer.

Primary Vs. Secondary Payer Responsibilities

The responsibilities of the Medicare Secondary Payer (MSP) include paying for health-related expenses on top of what the primary payer was able to cover. The health insurance that pays first oftentimes has a limit and so it cannot pay for more than that limit. That's when the payment responsibilities take effect and the Medicare MSP rules take effect.

Medicare Primary Payer

The Medicare MSP rules do not apply when Medicare becomes the primary payer. This happens for the following reasons, and under the following circumstances:

  • If you are still employed at a place where there are less than 20 employees.
  • After thirty months of having end-stage renal disease (ESRD).
  • If you have not gotten to the age of 65 and already retired.

Medicare Secondary Payer

Medicare rules state that MSP happens, and Medicare becomes your secondary payer when:

  • When you are part of a group plan through your employer AND there are less than 20 employees in that same business.
  • If you are not yet at age 65, have a disability that is not end-stage renal disease (ESRD).
  • Your spouse remains employed and your current health coverage is through his or her plan.

What Is A Conditional Payment

The definition of a conditional payment is when Medicare takes care of a payment that they were not supposed to. In other words, when Medicare pays a bill that another health insurance provider was supposed to pay.

Medicare does this so that you don't have to pay out-of-pocket, but it comes with a condition. That condition is that Medicare must be repaid as soon as soon as there's a settlement or a similar event resulting in money to pay Medicare back for this conditional payment.

What Happens If The Primary Payer Denies A Claim?

When in the rare case that the primary payer cannot or denies a claim, Medicare may be able to pay for the cost of the service if it meets the following criteria:

  • The service is something that Medicare is allowed to and can pay for.
  • An insurer of liability denies the bill for a medical service, and/or refuses (does not) paying during the promptly period.
  • The services given were not related to the actual condition of the patient.
  • The beneficiary does not have anymore coverage from the primary because he or she exhausted.

A primary payer can be the health insurance given by an employee who has less than 20 employees, or health coverage from a spouse. Medicare is allowed to provide conditional payments if and only if they get re-paid for it, and can pay for a medical service that the primary payer denied the beneficiary, but, with a few exceptions which are listed in the previous section.