Medicare Secondary Payer, or MSP, rules determine when another insurance plan must process a claim before Medicare.
DME suppliers should establish payer order before delivering equipment, submit the claim to the primary insurer first, record the primary payer’s payment and adjustment information, and then submit the remaining claim information to Medicare when Medicare is secondary.
What Is Medicare Secondary Payer?
Medicare is not always the first insurance program responsible for paying a beneficiary’s healthcare claim.
When another insurer has primary responsibility, that payer must process the claim first. Medicare may then consider all or part of the remaining covered amount according to Medicare’s rules.
Possible primary payers can include:
- Employer group health plans
- Workers’ compensation
- No-fault insurance
- Liability insurance
- Certain federal programs
- Other coverage identified through coordination of benefits
Getting the payer order wrong can result in rejected claims, delayed payments, takebacks and unnecessary patient balances.
Common Employer Coverage Scenarios
For a beneficiary age 65 or older who has group health coverage through current employment or a spouse’s current employment, the size of the employer can affect payer order.
CMS identifies the following common situations:
- When the employer has fewer than 20 employees, Medicare generally pays first and the group health plan pays second.
- When the employer has 20 or more employees, the group health plan generally pays first and Medicare pays second.
Different rules may apply to beneficiaries who qualify for Medicare because of disability or end-stage renal disease. Staff should not apply the working-aged rule to every patient with employer coverage.
Questions to Ask During Intake
A reliable MSP process begins before claim submission.
Ask the patient or representative:
- Is the patient currently employed?
- Is the patient’s spouse currently employed?
- Is the insurance connected to active employment or retiree coverage?
- How many employees work for the employer?
- Is the equipment related to a workplace injury?
- Is it related to an automobile accident?
- Is a liability claim involved?
- Has any other insurer already authorized the equipment?
- Has the patient recently changed insurance?
- Does Medicare’s coordination-of-benefits record reflect the current coverage?
The intake team should document both the answer and the source of the information.
A Step-by-Step MSP Billing Workflow
Step 1: Verify Every Active Plan
Confirm Medicare eligibility and collect complete information for all other insurance plans.
Verification should include:
- Payer name
- Member identification number
- Group number
- Coverage effective dates
- Policyholder information
- Employer information
- Coordination-of-benefits status
- DME benefits
- Authorization requirements
- Network participation
- Deductible and coinsurance information
Step 2: Determine Which Payer Is Primary
Do not select the primary payer based only on which insurance card the patient presents first.
Review:
- Why the patient qualifies for Medicare
- Whether employment is active or retired
- Employer size
- Whether an accident or workplace injury is involved
- Coverage effective dates
- CMS coordination-of-benefits information
When information conflicts, resolve it before delivery whenever possible.
Step 3: Obtain Required Authorizations
Primary and secondary insurers may have different prior authorization requirements.
Approval from one payer does not automatically satisfy another payer’s documentation or authorization rules. Suppliers should evaluate each plan separately before furnishing the equipment.
Step 4: Bill the Primary Insurer
When Medicare is secondary, submit the claim to the primary insurer first.
The primary payer will generally:
- Pay the claim
- Partially pay it
- Apply the amount to the deductible
- Deny the claim
- Request additional information
Keep the electronic remittance advice, explanation of benefits or payment determination.
Step 5: Review the Primary Payer’s Decision
Before sending the claim to Medicare, confirm:
- The amount billed
- The amount allowed
- The amount paid
- Contractual adjustments
- Deductible
- Coinsurance
- Patient responsibility
- Denial or remark codes
- Date of adjudication
Do not automatically transfer the entire remaining balance to the patient.
Step 6: Submit the Medicare Secondary Claim
The secondary claim must accurately communicate the primary payer’s adjudication.
For electronic claims, this generally means reporting the primary payer’s payment and adjustment information in the appropriate coordination-of-benefits segments. Paper claims require the relevant insurance and accident fields to be completed.
Medicare contractor guidance states that the claim should be submitted to the primary insurer first and that the primary insurer’s EOB or payment determination should accompany the Medicare secondary submission when required. The claim should reflect the total charge rather than only the unpaid difference.
Step 7: Post Both Payers Correctly
Payment posting should keep the primary and secondary transactions separate.
Staff should reconcile:
- Primary payment
- Medicare payment
- Contractual adjustments
- Deductible
- Coinsurance
- True patient responsibility
- Remaining insurance balance
This prevents incorrect statements and makes future A/R follow-up easier.
MSP and Capped Rental Equipment
Capped rental DME creates an additional challenge because each rental month may require separate payer processing.
When Medicare is secondary, the primary insurer’s decision may need to be captured for each monthly claim. Medicare contractor guidance states that Medicare may make secondary payments for qualifying capped rental months when the normal coverage conditions are met and Medicare could have paid as the primary payer. The primary payer’s EOB must accompany each Medicare claim when required.
Suppliers should therefore track:
- Rental month number
- Primary adjudication date
- Primary payment
- Medicare secondary submission date
- Remaining rental months
- Changes in coverage
- Changes in primary payer status
Example
A 68-year-old beneficiary is actively employed by a company with 45 employees and has employer group health coverage plus Medicare.
The general payer order is:
- Employer group health plan
- Medicare
The supplier verifies both plans, obtains any required authorization and submits the DME claim to the employer plan first.
After receiving the primary payer’s remittance, the supplier records the payment and adjustment details and submits the claim to Medicare as secondary. The account is not billed to the patient until both payers have processed the claim and the remaining responsibility has been verified.
Common MSP Mistakes
- Billing Medicare first without determining payer order
- Confusing retiree coverage with active-employment coverage
- Failing to verify employer size
- Ignoring accident or workers’ compensation information
- Submitting a secondary claim without primary payer details
- Reporting only the unpaid balance instead of the full charge
- Posting the primary adjustment as patient responsibility
- Failing to reverify coverage during a multi-month rental
- Using outdated coordination-of-benefits information
Frequently Asked Questions
Does Medicare always pay the remaining balance?
No. Medicare calculates its secondary payment according to Medicare coverage and payment rules. It does not automatically pay every amount left by the primary insurer.
What if the primary insurer denies the equipment?
A primary denial does not automatically guarantee Medicare payment. Medicare will still apply its own coverage, coding, documentation and medical-necessity requirements.
Should insurance be reverified during a capped rental period?
Yes. Employment, coverage and payer order can change during a multi-month rental period.
Final Takeaway
MSP billing begins at intake, not after a claim is rejected.
By identifying all active insurance, determining the correct payer order and accurately reporting primary payment information, DME suppliers can reduce avoidable delays and prevent incorrect patient balances.
QHS Health works with Medicare, Medicaid, commercial and private payer claims while supporting claim submission, payment posting, denial follow-up and account reconciliation.
