Definition of Certain Terms Used in Coordination of Benefits

140.1.1 - Definition of Certain Terms Used in Coordination of Benefits (Rev. 30, 09-05-03) • The CMS' claim is the amount that is determined to be owed to the Medicare program. This is the amount that was paid out by Medicare, less any prorated procurement costs (see 42 CFR 411.37) if the claim is in dispute. 15 • An Employer, as used in these instructions, means not only individuals and organizations engaged in a trade or business, but also includes organizations exempt from income tax, such as religious, charitable, and educational institutions, as well as the governments of the United States, the States, Puerto Rico, Guam, the Virgin Islands, American Samoa, the Northern Mariana Islands, and the District of Columbia, including their agencies, instrumentalities, and political subdivisions. • A secondary payer for purposes of this instruction, when used with respect to Medicare payment, means that Medicare incurs a legal obligation to pay only after other primary third party payers satisfy their payment responsibilities. If the primary payer covers all expenses, Medicare has no payment obligation. If the primary payer covers part of the expenses, Medicare may pay for the residual, uncovered amounts. In certain instances when the primary payer does not pay promptly, CMS pays conditional primary benefits and later recovers them from the responsible party. • Subrogation means the substitution of one person or entity for another.