Calculating Medicare Secondary Payments When Proper Claim

40.8.7 - Calculating Medicare Secondary Payments When Proper Claim Has Not Been Filed With Third Party Payer (Rev. 11550; Issued: 08-12-22; Effective: 10-13-22; Implementation:10-13-22) A "proper claim" means one that is filed timely and meets all other filing requirements specified by the third party payer (e.g., mandatory second opinion, prior notification before seeking treatment). When a provider, or a beneficiary who is not physically or mentally incapacitated, receives no third party payment, or a reduced third party payment, because of failure to file a proper claim, the Medicare secondary payment is the amount that Medicare would have paid if the third party payer had paid on the basis of a proper claim. The A/B MAC (Part A) calculates this amount with the rules in §30.5.1, except that the phrase "the amount the third party would have paid for Medicare covered services if a proper claim had been filed with the third party" is substituted for the phrase "amount payable by the third party for Medicare covered services." The provider must inform CMS that the third party payer has made no payment, or a reduced payment, and the amount that the third party payer would have been paid if a proper claim had been filed. If the A/B MAC (Part A) makes a greater secondary payment because the provider fails to provide such notice, and it is later discovered that the third party made no payment, or paid a reduced amount, because of failure to file a proper claim, the difference between the Medicare payment and the amount Medicare should have paid, on the basis of a proper claim for third party payment, is an overpayment. The A/B MAC (Part A) recovers this amount in accordance with the instructions in Pub 100-05, Chapter 7. However, when failure to file a proper claim is attributable to the physical or mental incapacity of the beneficiary, the A/B MAC (Part A) considers the primary claim to have been properly filed, and pays secondary benefits without regard to any third party benefit reduction attributable to failure to file a proper claim. EXAMPLE: A beneficiary receives services for which a hospital's charges are $10,000. The primary payer would pay $9,900 on a properly filed claim. However, the primary payer requires that the beneficiary submit a second opinion regarding the medical need for a hospital admission as a condition for filing a proper claim. Since the beneficiary failed to do so, the primary payer reduced its payment by 50 percent; i.e., the plan paid $4,950. Medicare determines its secondary payment, in this case, as if the primary payer had paid on the basis of a proper claim. The Medicare gross payment amount (total prospective payment amount without regard to deductible and coinsurance amount) is $10,000. The secondary payment is calculated as follows: A. The Medicare gross payment amount minus the applicable Medicare deductible amount: $10,000 - $676 = $9,324. B. The Medicare gross payment amount minus the amount the primary payer would have paid on the basis of a proper claim: $10,000 - $9,900 = $100. C. The hospital's charges (or an amount the hospital is obligated to accept as payment in full), minus the amount the primary payer would have paid on the basis of a proper claim: $10,000 = $9,900 = $100. D. The hospital's charges (or an amount the hospital is obligated to accept as payment in full), minus the applicable Medicare deductible and/or coinsurance amounts: $10,000 - $676 = $9,324. E. Medicare pays $100 (lowest of amounts in steps 1, 2, 3, or 4). The beneficiary can be billed $4,950 by the hospital (the amount of the primary payer reduction).