How to Deal with Medicare as a Secondary Insurance

Some things are just better together, like peanut butter and jelly or milk and cookies. And for Medicare patients with other health insurance providers, few things are better than when Medicare and their private payers work together cooperatively. However, Medicare has a lot of unique rules, which means providers should tread carefully when their patients have Medicare and a second insurance. To that end, here’s a rundown of all the things PTs, OTs, and SLPs need to know about Medicare as a secondary payer:

Verify whether it’s a secondary or primary.

This first part is often where things go awry: Medicare functions differently depending on the other types of insurance benefits the patient receives (i.e., Medicare always functions as the secondary in some instances). For that reason, it’s super important to confirm whether or not Medicare is the patient’s only insurance, and if not, what other type of insurance he or she has. This is also why it’s best practice to collect the necessary billing information at the time of service—or even beforehand—using the CMS Questionnaire (which you can download from CMS) or a questionnaire that covers similar questions.

Here are some common scenarios and plan types where Medicare functions as secondary to another payer (as adapted from this resource):

• The beneficiary receives benefits through an employer with 20 or more employees.
• The beneficiary is on his or her spouse's insurance as part of the spouse’s employment benefits, and the employer has 20 or more employees.
• The beneficiary is retired and is on his or her spouse's insurance as part of the spouse’s employer's plan, and the employer has 20 or more employees.
• The beneficiary is under 65 years of age, disabled, and receives coverage through a family member's employment benefits, and the employer has 100 or more employees.
• The beneficiary is receiving workers' compensation.
• The beneficiary’s coverage is under no-fault or liability insurance.

Collect the deductible from the patient.

As CMS explains in the Medicare Secondary Payer Manual, patients will likely still have to make payments toward their deductibles, which “are credited to those deductibles even if the expenses are reimbursed by a [group health plan].” This is true even if the patient’s primary plan covered the entire expense of the patient’s care. As for how much a provider should actually collect from the patient, if the primary health plan paid for expenses (in whole or in part) that are usually covered by Medicare, the provider should credit the Medicare deductible based on the Medicare fee schedule amounts as opposed to the amount the primary payer paid. In other words, Medicare will credit any amount paid by the primary insurance up to the amount allowed by the Medicare fee schedule toward the deductible.

Here are a couple of examples:

• Say a patient’s deductible is $185, which he or she has not yet met. The patient incurred $185 in charges, and the primary health plan paid $75. The Medicare fee schedule amount is $185, and no Medicare benefits are payable. The patient can be billed for the remaining $110, and $185 would go toward the Part B deductible.
• A patient has a $185 deductible, which he or she has paid $50 toward. He or she incurred $100 in charges, which the primary payer paid in full. Because the Medicare fee schedule amount was $75 and no Part B benefits are payable, Medicare will credit the patient with $75 toward his or her deductible—which, along with the patient’s payment, amounting to a total of $125 toward the deductible.

However, “where no Medicare secondary benefit is payable, no utilization is charged to the beneficiary.” In other words, if the services are not ordinarily considered covered services under Medicare Part B, then the patient will not have to pay a Medicare deductible or copay. 

Finally, for liability or no-fault insurers, if Medicare makes conditional payments to the provider on behalf of the primary payer, Medicare will credit the recovered amounts to the Part B deductible.

Follow all plan of care rules—even if Medicare is the secondary.

According to PT compliance expert Rick Gawenda (as mentioned in a comment on this blog post), you must adhere to all of Medicare’s plan of care rules and documentation standards when you submit claims to Medicare—even when it’s a secondary insurance. Furthermore, avoid the temptation to not bill Medicare when it’s the secondary payer. Just as when Medicare is primary, you are legally obligated to bill Medicare for any covered services you provide to a beneficiary.

Send the claim to the primary payer first.

Similar to any other scenario involving primary and secondary payers, you’ll need to ship the claim off to the primary payer first. Only once you’ve received an Explanation of Benefits (EOB) from the primary insurance can you attempt to bill Medicare. Whoever completes the claim must also indicate the amount paid by the primary insurance (as noted in Chapter 3 of the Medicare Secondary Payer Manual).

What if the primary payer does not provide prompt payment?

If you attempt to bill Medicare before the primary payer provides the reimbursement, it can create a huge mess for you and CMS alike. That said, according to CMS, if the primary payer does not provide prompt payment (and you can provide evidence of this), Medicare will temporarily cover the cost of any service the primary insurance would typically reimburse. However, once the primary insurance provides payment, you’ll need to repay Medicare for any conditional coverage the entity provided.

Seek guidance if necessary. 

Medical billing is complicated, and even Medicare doesn’t expect you to figure it all out on your own. So if you get stuck, here are a few resources and suggestions:

• If you’re an APTA member, you can view the APTA FAQ on Medicare as a secondary payer here. 
• You can review this CMS fact sheet, which provides an overview of Medicare as a secondary payer.
• If you have questions regarding the Coordination of Benefits, you can contact the Benefits Coordination & Recovery Center support team toll-free at 1-855-798-2627.
• If you’re unsure about whether Medicare should function as a secondary or primary payer to the patient’s other insurance, you can contact the Coordination of Benefits Contractor (COBC) at 800-999-1118.

Working with two insurance payers may sound like a hassle—especially when Medicare is involved—but a perfect pairing can also take a lot of financial pressure off your patient’s shoulders. Did we miss anything? Let us know in the comment section below!