Contrary to popular belief, Medicare is not always the primary payer of a Medicare beneficiary’s health care costs. There are many instances when both Medicare and a Part D Prescription Drug Plans will be the secondary payer. Sometimes Medicare may not pay on some claims at all. The Center for Medicare and Medicaid Services published a training module regarding the coordination of benefits between Medicare and other types of insurance. The coordination of benefits training module is a high level overview of some of the conditions where Medicare is either the primary or secondary payer.
Coordination of Medicare Benefits
The coordination of benefits decides which health insurance is the primary payer if person has more than one source of health insurance coverage. The primary payer pays the health cost claim first according to their plan. The remainder of the cost goes to the secondary payer. A good example of coordination of benefits is a person who has a Medicare Supplement plan. Medicare reviews the claim and pays their portion according the rules of Original Medicare. Then the Medicare Supplement, secondary payer in this case, reviews the claim to determine what portion they will pay under the terms and conditions of the Medicare Supplement plan.
Medicare can be the secondary payer in situations where they don’t provide the primary health insurance coverage or when another insurer may have the primary responsibility for covering the claim. However, even when Medicare is the secondary payer, they still may not cover all of the remaining health care costs associated with the claim.
Medicare is usually the primary payer if you have any of these other coverages:
- Medicare Supplement Insurance
- Retiree benefits
- The Indian Health Service
- Veterans benefits*
- TRICARE for life
- COBRA continuation coverage except during a 30-month coordination period for people with End-Stage Renal Disease.
*There are no coordination of benefits if the person has both Veterans Affairs Coverage and Medicare.
If you have both Medicare and Veterans’ benefits, you can get health care treatment under either program. However, you must choose which benefit you’ll use each time you see a doctor or get health care (for example, in a hospital). Medicare won’t pay for the same service authorized by Veterans Affairs (VA); similarly, VA coverage won’t pay for the same service covered by Medicare. – page 12
Medicare Secondary Payer
However, there are times when Medicare is secondary payer when other government programs cover the individual such as the Federal Black Lung Benefits Program, other insurance such as Workers’ Compensation. Medicare has a specific unit dedicated to determining when they are primary or secondary payer. The Benefits Coordination & Recovery Center (BCRC) can work with other insurance carriers to share health care claims data and coordinate benefits. If the insurer does not have an agreement with Medicare to coordinate benefits, the Medicare beneficiary or authorized representative may have to file claims and facilitate the coordination.
The BCRC initiates an investigation when it learns that a person has other insurance. The investigation determines whether Medicare or the other insurance has primary responsibility for paying the person with Medicare’s health care costs. The goal of these Medicare Secondary Payer (MSP) information-gathering activities is to identify MSP situations quickly, making sure responsible parties are making correct payments. – page 9
For Medicare beneficiaries with employer sponsored group plans, Medicare will pay first under certain conditions.
- 65 years old with employer group coverage and the employer has fewer than 20 employees
- Under 65 years old with a disability in a group plan and the employer has fewer than 100 employees
- Eligible for Medicare due to End-Stage Renal Disease after a 30-month coordination period with the group plan and they had Medicare as primary coverage before they had ESRD
Medicare is usually not the primary payer in situations where
- In the event of an auto accident where automobile liability insurance is triggered
- Illness related to mining (Federal Black Lung Benefits Program)
- Third-party liability
- Work injury or illness where workers’ compensation coverage comes into play
Whenever no-fault insurance is involved such as auto, home or commercial plans, Medicare will typically be the secondary payer. Medicare can make conditional payments to the providers of health care services if the no-fault insurance claim has not been settled within 120 days. Medicare will seek to recover the costs once the claim is settled.
Medicare is usually secondary payer under liability insurance claims such as
- Product liability
- Uninsured motorist
- Underinsured motorist
Medicare generally won’t pay for an injury, illness or disease covered by workers’ compensation. If the workers’ compensation claim is denied, Medicare will review the claim for coverage under the Medicare coverage benefits. If the Medicare beneficiary receives a Workers’ Compensation Medicare Set-Aside Arrangement, then Medicare will pay for claims once that fund has been exhausted.
Medicare Prescription Drug Benefits
Rules concerning the coordination of benefits for Part D Prescription Drug plans are similar to those for Medicare health care coverage. An important aspect of coordinating benefits is to make sure that drug plan member’s out-of-pockets costs are allocated to the True Out of Pocket (TrOOP) annual amount. The TrOOP is important for determining when a Part D Prescription (PDP) plan member goes into the coverage gap (donut hole) or when they have hit their catastrophic coverage level.
The PDP will be the primary payer for drugs. PDPs generally won’t pay if the plan is aware that the drug is part of workers’ compensation, Federal Black Lung Program benefits, or no-fault/liability coverage benefits.
If you have questions regarding the coordination of benefits and if Medicare is primary or secondary payer, you should call the Medicare Benefits Coordination & Recovery Center at 1-855-798-2627. More information, details, and resources are outlined in the Coordination of Benefits presentation.