Medicare Secondary Payer -- Coordination of Benefits

Publication Date: July 2008

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Health

Type: Report

Coverage: United States

Abstract:

Medicare is the nation’s health insurance program for qualifying individuals who are 65 and older, disabled, and those with End Stage Renal Disease (ESRD). Generally, Medicare is the “primary payer” — that is, it pays health claims first, and if a beneficiary has other insurance, that insurance may fill in all or some of Medicare’s gaps. However, in some situations the Medicare Secondary Payer (MSP) rules prohibit Medicare from making payments for any item or service when payment has been made or can reasonably be expected to be made by a third-party payer. Under certain conditions, the law makes Medicare the secondary payer to insurance plans and programs for beneficiaries covered through (1) a group health plan based on either their own or a spouse’s current employment; (2) auto and other liability insurance; (3) no-fault liability insurance; and (4) workers’ compensation situations, including the Black Lung program. The purpose of the MSP program is to shift costs from Medicare to private sources of payment, thus reducing Medicare expenditures. Additionally, the Medicare statutes exclude Medicare coverage for items and services paid for directly or indirectly by a government entity, subject to certain limitations. This includes the Department of Veterans Affairs, among others. The circumstances detailing when Medicare is primary or secondary are discussed in this report.

The law authorizes several methods to identify cases when an insurer other than Medicare is the primary payer and to facilitate recoveries when incorrect Medicare payments have been made. One such method is the data match program, where Medicare recipients are matched against data contained in Social Security Administration and Internal Revenue Service files to identify cases in which a working beneficiary (or working spouse) may have employer-based health insurance coverage. Most recently Congress passed the Medicare, Medicaid, and SCHIP Extension Act of 2007 (P.L. 110-173) expanding information requirements for group health plans, liability insurance (including self-insurance), no fault insurance, and workers’ compensation laws and plans. These entities must submit information to the Secretary of HHS to enhance efforts for coordination of benefits and for any applicable recovery claims.

Efforts by both the federal government and private citizens to use the MSP as a vehicle to recover payments made on behalf of beneficiaries for treatment of tobacco-related illnesses to date have not been successful.

This report will be updated as necessary to reflect legislative changes.