Medicare Secondary Payment Part B Claims Determination for

40.7.3.1 - Medicare Secondary Payment Part B Claims Determination for Services Received on ASC X12 837 Professional Electronic Claims (Rev. 11550; Issued: 08-12-22; Effective: 10-13-22; Implementation:10-13-22) Medicare’s secondary payment is based on provider charges, or the amount the physician or other supplier is obligated to accept as payment in full (OTAF), whichever is lower; the primary payers allowed amount for Part B services; what Medicare would have paid as the primary payer; and the primary payer(s) payment. MSP policy also dictates what the shared systems and A/B MACs (Part B) and DME MACs must take into consideration in processing MSP claims. This includes adjustments made by the primary payer, which, for example, explains why the claim’s billed amount was not fully paid. Adjustments made by the payer are reported in the Claims Adjustment (CAS) segments on the ASC X12 835 electronic remittance advice (ERA). The provider must take the CAS segment adjustments found on the remittance advice and report these adjustments on the ASC X12 837 professional claim format when sending the claim to Medicare for secondary payment. The physician and other supplier also identify its charges and the other payer payment amounts which are found in other loops and segments in the ASC X12 837 professional claim transaction. ASC X12 837 claim transaction examples are cited below. Example 1: A Medicare beneficiary visits her physician for an exam where the provider charges $1,000 for the services. The beneficiary is a working aged beneficiary with employer group plan insurance that is primary to Medicare. The beneficiary’s deductible had already been met. The physician is a participating physician under the primary payer group health plan. The contract amount, a.k.a. obligated to accept as payment in full amount, is the same as Medicare’s fee schedule amount of $800. The primary payer also allowed $800. The primary payer ultimately pays $720 for the services. The service amounts are broken down: Medicare Fee Schedule Procedure $800 Submitted Charges $1,000 Payer 1 Allowed Amount $800 Payer 1 Contracted Agreement (OTAF) $800 Payer 1 Patient Co-Insurance @ 10% $ 80 Payer 1 Payment Amount $720 Medicare payment is calculated as follows: 1) The contractual agreement amount (since this amount is lower than the charges) minus the third party payment: $800 - $720 = $80 2) Determine the Medicare payment in the usual manner: $800 - $160 = $640 3) The allowable charge minus the primary payer payment: $800 - $720 = $80 4) Medicare Pays $ 80 (lowest of amounts in steps 1, 2, or 3) Primary Payer Abbreviated 835 containing the MSP amounts for MSP calculation: CLP*200725638901*1*1000*720*80*12*07256000236520**1~ CAS*CO*45*200~ CAS*PR*2*80~ Physician Abbreviated Secondary Claim to Medicare: SBR*P*18*ABCGROUP******CI CAS*CO*45*200~ CAS*PR*2*80~ AMT*D*720~ Shared System MSP calculation: Allowed amount equals submitted charge minus CARC 45 adjustments – 1000-200=800 OTAF amount equals submitted charge minus CO group code adjustments – 1000- 200=800 Medicare Abbreviated 835 to Physician CLP*200725638901*2*1000*80**MB*0725600110236520**1~ CAS*OA*23*920~ Example 2: The same patient receives the same service from the physician. However, in this case the physician fails to follow plan procedures and is assessed a $50 penalty under the contract for not following plan procedures. Medicare Fee schedule $800 Submitted Charges $1000 Payer 1 Contracted $800 Agreement (OTAF) Payer 1 CO Plan $50 Procedures not followed Payer 1 Patient Co $75 insurance @ 10% Payer 1 Payment Amount $675 Medicare’s Payment is calculated in the usual manner: 1. The contractual agreement amount (since this amount is lower than the charges) minus the third party payment: $800 - $725 = $75 2. Determine the Medicare payment in the usual manner: $800 - $160 = $640 3. The Medicare’s allowable charge minus the primary payer payment: $800 - $725 = $75 4. Medicare pays $75 (lowest of amounts in steps 1, 2, or 3) Due to the physician not following the primary health plan procedures Medicare uses the payment amount that the primary payer would have paid if the primary payer claim was filed properly. Primary Payer Abbreviated 835 containing the MSP amounts for MSP calculation: CLP*200725638901*1*1000*675*75*12*07256000236520**1~ CAS*CO*45*200**95*50~ CAS*PR*2*75~ Physician Abbreviated Secondary Claim to Medicare SBR*P*18*ABCGROUP******CI CAS*CO*45*200**95*50~ CAS*PR*2*75~ AMT*D*675~ Shared System MSP calculation: Allowed amount equals submitted charge minus CARC 45 adjustments – 1000-200 - 50=750 OTAF amount equals submitted charge minus CO group code adjustments – 1000- 200=800 Medicare Abbreviated 835 to Physician CLP*200725638901*2*1000*75**MB*0725600110236520**1~ CAS*OA*23*925~ Note: One of the problems of looking at adjustments other than patient responsibility is how accurately payers code 835’s. In the above example the $50 adjustment could just as easily have been reported out as OA - Other Adjustment with the same Claim Adjustment Reason Code. That would necessitate examining not only group codes, but individual Claim Adjustment Reason Codes and possibly Remarks Codes in the Medicare edit logic. Example 3: A patient receives services from a participating Medicare physician who is not a participating provider in the Primary Payer’s network. The patient in this case is responsible for up to the provider’s charges, but as a Medicare participating physician, the physician accepts the Medicare fee (Allowed Amount) as payment in full and thus cannot accept payment in excess of the Medicare Allowed Amount, a.k.a. Medicare fee schedule. Medicare would indicate a $200 contractual obligation in its 835 remittance statement to the physician. Medicare Fee schedule $800 Submitted Charges $1000 Payer 1 Fee Schedule $700 Payer 1 Patient Co-insurance @ 10% $70 Payer 1 Payment Amount $630 Note that the charges and the OTAF are the same due to physician not participating in the primary payer’s network. For this reason, no CO appears on the inbound 837 to Medicare. Medicare’s Payment is calculated in the usual manner: 1. The charges/OTAF minus the third party payment: $1000 - $630 = $370 2. Determine the Medicare payment in the usual manner: $800 - $160 = $640 3. The Medicare’s allowable charge minus the primary payer payment: $800 - $630 = $170 4. Medicare pays $170 (lowest of amounts in steps 1, 2, or 3) Shared System MSP calculation: Primary payer allowed amount equals submitted charge minus CARC 45 adjustments – 1000-300=700 OTAF amount equals submitted charge minus CO group code adjustments – 1000- 0=1000 Primary Payer Abbreviated 835 containing amounts for MSP calculation CLP*200725638901*1*1000*630*370*12*07256000236520**1~ CAS*PR*45*300**2*70~ Physician Abbreviated Secondary Claim to Medicare SBR*P*18*ABCGROUP******CI CAS*PR*45*300**2*70~ AMT*D*630~ Medicare Abbreviated 835 to Physician CLP*200725638901*2*1000*170**MB*0725600110236520**1~ CAS*CO*45*200~ CAS*OA*23*630~