Medicare Secondary Payer (MSP) Change in “Conditional Billing” Process

(Where another Plan is Primary but they do not make Payment) Effective April 1, 2007

Medicare has a responsibility to pay for covered medical expenses only after (i.e., secondary to) another insurer, who is deemed the primary payer, has made payment. The statute intentionally shifts the financial burden for covered medical expenses from Medicare to other insurers that Congress has determined must be primary payer. Section 1862(b)(2)(A) of the Social Security Act prohibits Medicare from making payment if payment has been made, or can reasonably be expected to be made promptly by a third-party payer. If payment has not been made, or cannot be expected to be made promptly, Medicare may make a conditional payment, subject to reimbursement.

A conditional payment may be made when Medicare has knowledge that another insurer is primary to Medicare, and the primary payer has not made prompt payment (within 120 days, only applicable for Black Lung, Workers Compensation and accidents), or has denied the claim for an acceptable reason. From a reimbursement standpoint, a claim paid conditionally will pay the same as if there was no insurance other than Medicare.
With the upcoming implementation of the UB-04, we have decided to enhance our claim submission process for conditional claims and to implement changes in the way conditional claims will be handled. In the past, if a primary payer denied a claim for a valid reason, providers submitted the claim as Medicare primary and included an occurrence code 24 with the date the primary payer denied and remarks to explain the reason.

Effective April 1, 2007, this method will change. Providers will submit such claims described above to Medicare as conditional claims rather than as Medicare primary claims. Conditional claims “look like” MSP claims since the primary insurance is reported as the primary payer and Medicare is reported as the secondary payer (unless Medicare is tertiary). Therefore, the most significant changes are that the provider will need to enter an MSP value code on the conditional claim and will need to report a two-position explanation code in Remarks to explain why the primary payer did not make payment for an acceptable reason or did not make payment promptly (within 120 days, only applicable for Black Lung, Workers Compensation and accidents). Conditional claims can be billed electronically.

Complete Instructions for Submitting Conditional Claims to Medicare

For conditional claims, the following information must be reported:
MSP Value Code (VC) and Zero Payment (UB-04, field locators 39 - 41)

• An appropriate VC for the correct MSP program (options 12, 13, 14, 15, 41, 43, and 47) along with six zeros (0000.00) to show that no payment was received from the primary payer. Please note that the chart in Attachment A below does not include VC 16 (Public Health Service or Government Research Program) or VC 42 (Veterans Administration). Providers should not be submitting any conditional claims for these VCs.
• Occurrence Codes (OC) and Dates (UB-04, field locators 31 - 34)
• For all accident and Worker Compensation cases, the appropriate OC(s) and date(s) such as 01, 02, 03, or 04 with the date if injury/illness. For all MSP VCs, the OC 24 and date of denial (See chart in Attachment C).
  

Note: if the conditional billing is the result of not receiving a prompt payment, an OC 24 and date is not needed. However, a two-position explanation code of “DA” along with the date the primary payer was billed must be reported in the Remarks field (see Remarks field requirements below).

Primary Payer ID

• The primary payer ID code of “C” (conditional) regardless of the MSP program into which the beneficiary falls.

Note : This code only applies if a provider is submitting conditional claims through the Fiscal Intermediary Standard System (FISS) using the Medicare Part A Direct Data Entry (MEDA DDE) System known as OMNIPRO SM.

Name of Primary Insurer (UB-04, field locators 50 A, B, C)

• The complete name of the primary insurer on line 50A. Incomplete or generic names will cause the claim to be RTP. Examples of unacceptable primary insurer names include but are not limited to “liability insurer,” “auto insurance,” “liability (potential),” or BC/BS (without the corresponding plan name and number).

Address of Primary Insurer

• The complete address of the primary insurance company. If a provider is submitting conditional claims through the FISS using the MEDA DDE System known as OMNIPRO SM, the insurance address information should be provided on page six of the claim. The insurance address information can also be supplied in the Remarks field. If a provider is submitting through a vendor that uses the electronic ASC X12N 837 00401X096A1 format, the insurance address information from the Remarks field should be provided in the NTE segment, loop 2300. If the complete address is not provided, the claim will be RTP.

Insured’s Name (UB-04, field locators 58A, B, C)

• The complete name of the insured on line 58A
  Patient Relationship (UB-04, field locators 59A, B, C)
• The patient’s relationship to the insured on line 59A
  Insured’s Unique ID (UB-04, field locators 60A, B, C) \
• The insured’s ID on line 60A
  Insurance Group Name (UB-04, field locators 61A, B, C)
• The name of the insurance group on line 61A
  Insurance Group Number (UB-04, field locators 62A, B, C)
• The insurance group number on line 62A
  Remarks (UB-04, field locator 80)
• A two-position explanation code. The provider will select the appropriate two-position explanation code from the list of codes in Attachment A. The selected code must match the reason no payment is being made by the primary payer. If there is no appropriate two-position explanation code in the Remarks field, the claim will be RTP.

Pre-Payment Processing of Conditional Claims

Once a conditional claim is submitted accordingly, it will suspend in our system to be checked for the requirements listed above, particularly the two-position explanation code and complete name and address of the primary insurer. If the required information is provided, the claim will be updated and allowed to process. If no additional edits are encountered, the claim will proceed through and payment on the claim will be made to the provider.

Post-Payment Actions on Conditional Claims

For quality assurance purposes, we will randomly request copies of the primary payer’s benefit statements through our post-pay system. If the requested benefit statement is not received within the specified time frame, or the benefit statement does not agree with the two-position explanation code used, the provider’s payment will be rescinded. Another post-pay letter will be sent notifying the provider that Medicare’s payment of the claim has been recouped. In the event the payment is rescinded, the provider will have to submit a new claim with the original bill type. Do not send in the primary payer’s benefits statement unless NGS requests it on a post-pay basis.

In addition, our claims review process will include auditing the provider’s conditional billing practices. If it is found that providers are not complying by not using the appropriate two-position explanation code or not using an explanation code at all, that provider may be put on 100% review of all conditional claims submitted.

Please note: If a conditional claim is submitted as an adjustment bill, remember to change the bill type and reference the DCN number of the claim being adjusted. Failure to change the bill type will result in a claim being rejected as a duplicate claim.

Attachment A: Two-position explanation codes
Attachment B: MSP Bill Format Helpsheet
Attachment C: Conditional Payment checksheet
Attachment D: Occurrence/Value Code Relationship for Conditional Billing
Attachment E: Reason Codes (Common Reasons a conditional claim will be returned to a provider)
Attachment F: MSP Conditional Billing Checksheet