Medicare Secondary Payment Part A Claims Determination

40.7.3.2 - Medicare Secondary Payment Part A Claims Determination for Services Received on ASC X12 837 Institutional Electronic or Hardcopy Claims Format (Rev. 11550; Issued: 08-12-22; Effective: 10-13-22; Implementation:10-13-22) Medicare’s secondary payment for A/B MAC (Part A) MSP claims is based on: 1) Medicare covered charges, or the amount the provider is obligated to accept as payment in full (OTAF), whichever is lower (in the case where there are multiple prior payers to Medicare the lowest OTAF is used unless the Medicare covered charges are lower); 2) what Medicare would have paid as the primary payer; and 3) the primary payer(s) payment. MSP policy also dictates what the shared systems and A/B MACs (Part A) must take into consideration in processing MSP claims. This includes adjustments made by the primary payer(s), which, for example, explains why the claim’s billed amount was not fully paid. Adjustments made by the payer(s) are reported in the Claims Adjustment (CAS) segments on the 835 electronic remittance advice (ERA). The provider must take the CAS segment adjustments found on the primary payer(s) remittance advice and report these adjustments on the 837 when sending the claim to Medicare for secondary payment. 837 claims transaction examples are cited below. Example 1: A Medicare beneficiary visits a hospital that charges $10,000 for the services. The beneficiary is a working aged beneficiary with employer group plan insurance that is primary to Medicare. The beneficiary’s Medicare deductible had already been met. The provider participates under the primary payer’s employer group health plan. The contract amount (the OTAF amount) is the same as Medicare’s fee schedule amount of $8,000. The primary payer (Payer 1) ultimately pays $7,200 for the services. The service amounts are broken down: Medicare Fee schedule Procedure $8,000 Charges $10,000 Payer 1 Allowed Amount $8,000 (not sent to MSPPAY) Payer 1 Contractual Amount (OTAF) $8,000 Payer 1 Patient Co-Insurance @ 10% $800 Payer 1 Payment Amount $7,200 The Value Code(s) 44 OTAF amount is found in the HI segment (BE qualifier) on the 837 Institutional Claim (837-I) and this amount is sent to MSPPAY. If the OTAF is not found in the HI segment (BE qualifier), but there is a group code CO (Contractual Obligation) in the CAS, take the charge minus the CO amount and send this amount as the OTAF to MSPPAY. In the case where there are multiple prior payers to Medicare, perform the calculation (the charge minus the CO amount) for each prior payer contractual amount and send the lowest calculated contractual amount as the OTAF amount to MSPPAY, if the OTAF amount is lower than the charges. Primary Payer Abbreviated 835 containing the MSP amounts for MSP calculation: CLP*200725638901*1*10000*7200*800*12*07256000236520**1~ CAS*CO*45*2000~ CAS*PR*2*800~ Provider Abbreviated Secondary Claim to Medicare SBR*P*18*ABCGROUP******CI CAS*CO*45*2000~ CAS*PR*2*800~ AMT*D*7200~ Shared System MSP calculation: Allowed amount equals submitted charge minus CARC CO 45 adjustments – $10,000 - $2,000 = $8,000. (NOTE: The allowed amount is shown here and is used for purposes of balancing the remittance advice.) Since the HI segment (BE qualifier) did not contain OTAF, the CO adjusted amount in the CAS is used to determine the OTAF. OTAF amount equals charges minus CO group code adjustments – $10,000 - $2,000 = $8,000 Medicare Abbreviated 835 to Provider CLP*200725638901*2*10000*800**MB*0725600110236520**1~ CAS*OA*23*9200~ Example 2: A Medicare beneficiary visits a hospital that charges $10,000 for the services. The beneficiary is a working aged beneficiary with employer group plan insurance that is prior to Medicare. The beneficiary’s spouse is also working with employer group plan insurance that is prior to Medicare. The beneficiary’s Medicare deductible had already been met. The provider participates under both prior payers’ employer group health plans. The contract amount (the OTAF amount) for one of the prior payers, is the same as Medicare’s fee schedule amount of $8,000. You must combine both prior payers’ payment amounts and send the total payment amount to MSPPAY. The prior payers ultimately pay $7,200 for the services. The service amounts are broken down: Medicare Fee schedule Procedure $8,000 Charges $10,000 Payer 1 Allowed Amount $9,000 (not sent to MSPPAY) Payer 1 Contractual Amount (OTAF) $9,000 Payer 1 Patient Co-Insurance @ 30% $3,000 Payer 1 Payment Amount $6,000 Payer 2 Allowed Amount $8,000 (not sent to MSPPAY) Payer 2 Contractual Amount (OTAF) $8,000 Payer 2 Patient Co-Insurance @ 10% $800 Payer 2 Payment Amount $1,200 The Value Code(s) 44 OTAF amount is found in the HI segment (BE qualifier) on the 837-I and this amount is sent to MSPPAY. If the OTAF is not found in the HI segment (BE qualifier), but there is a group code CO in the CAS, take the charge minus the CO amount and send this amount as the OTAF to MSPPAY. In the case where there are multiple prior payers to Medicare, perform the calculation (the charge minus the CO amount) for each prior payer and send the lowest calculated contractual amount as the OTAF amount to MSPPAY if lower than the charges. The Medicare covered charges or the OTAF amounts are never combined. Medicare payment is calculated as follows: 1) The gross amount payable by Medicare minus applicable Medicare deductible and coinsurance: $8,000 - $0 = $8,000 2) The gross amount payable by Medicare minus the primary payments: $8,000 - $7,200 = $800 3) The lowest obligated to accept payment in full minus the primary payment: $8,000 - $7,200 = $800 4) The obligated to accept payment in full minus the Medicare deductible: $8,000 – $0 = $8,000 5) Pay $800 (lowest of amounts in steps 1, 2, 3, or 4) First Prior Payer’s Abbreviated 835 containing the MSP amounts for MSP calculation: CLP*200725638901*1*10000*6000*3000*12*07256000236520**1~ CAS*CO*45*1000~ CAS*PR*2*3000~ Second Prior Payer’s Abbreviated 835 containing the MSP amounts for MSP calculation: CLP*200725638901*1*10000*7200*800*12*07256000236520**1~ CAS*CO*45*2000~ CAS*PR*2*800~ Provider Abbreviated Secondary Claim to Medicare SBR*P*19*CBAGROUP******CI~ CAS*CO*45*1000~ CAS*PR*2*3000~ AMT*D*6000~ SBR*S*18*ABCGROUP******CI~ CAS*CO*45*2000~ CAS*PR*2*800~ AMT*D*7200~ Shared System MSP calculation: Allowed amount equals submitted charge minus highest CARC 45 adjustments – $10,000 - $2,000 = $8,000. (NOTE: The allowed amount is shown here and is used for purposes of balancing the remittance advice.) Since the HI segment (BE qualifier) did not contain OTAF, the CO adjusted amount in the CAS is used to determine the OTAF. The lowest OTAF amount from all the prior payers equals charges minus CO group code adjustments – $10,000-$2,000=$8,000 Medicare Abbreviated 835 to Provider CLP*200725638901*2*10000*800**MB*0725600110236520**1~ CAS*OA*23*9200~ Example 3: The patient receives the same service from the provider. However, in this case the provider fails to follow plan procedures and is assessed a $500 penalty under the contract for not following plan procedures. Medicare bases its payment on the amount the primary payer would have paid if the provider followed plan procedures. Medicare Fee schedule $8,000 Charges $10,000 Payer 1 Contractual Amount (OTAF) $8,000 Payer 1 CO Plan Procedures not followed $500 Payer 1 Patient Responsibility @ 10% $750 Payer 1 Payment Amount $6,750 The Value Code(s) 44 OTAF amount is found in the HI segment (BE qualifier) on the 837-I and this amount is sent to MSPPAY. If the OTAF is not found in the HI segment (BE qualifier), but there is a group code CO in the CAS, take the charge minus the CO amount and send this amount as the OTAF to MSPPAY. In the case where there are multiple prior payers to Medicare, perform the calculation (the charge minus the CO amount) for each prior payer and send the lowest calculated contractual amount as the OTAF amount to MSPPAY if lower than the charges. The Medicare covered charges or the OTAF amounts are never combined. Medicare’s Payment is calculated in the usual manner: 1) The gross amount payable by Medicare minus applicable Medicare deductible and coinsurance: $8,000 - $0 = $8,000 2) The gross amount payable by Medicare minus the primary payment: $8,000 - $7,250 = $750 3) The obligated to accept payment in full minus the primary payment: $8,000 - $7,250 = $750 4) The obligated to accept payment in full minus the Medicare deductible: $8,000 – 0 = $8,000 5) Pay $750 (lowest of amounts in steps 1, 2, 3, or 4) Primary Payer Abbreviated 835 containing the MSP amounts for MSP calculation: CLP*200725638901*1*10000*6750*750*12*07256000236520**1~ CAS*CO*45*2000**95*500~ CAS*PR*2*750~ Physician Abbreviated Secondary Claim to Medicare SBR*P*18*ABCGROUP******CI CAS*CO*45*2000**95*500~ CAS*PR*2*750~ AMT*D*6750~ Shared System MSP calculation: Allowed amount equals submitted charge minus CARC 45 adjustments – $10,000 - $2,000 - $500 = $7500 OTAF amount equals submitted charge minus CO group code adjustments – $10,000 - $2,000 = $8,000 Medicare Abbreviated 835 to Provider CLP*200725638901*2*10000*750**MB*0725600110236520**1~ CAS*OA*23*9250~