Here is what you’ll find in this week’s newsletter!

1. Important links 🔗 - the best articles we found this week about the Medicare Market along with links to Jared’s recent LinkedIn posts.

2. Deep Dive 📚 - Who’s Paying First? - Medicare Secondary Payer (MSP) 🧢

3. Sponsor Snapshot 🚀 - brought to you by Adsync Media

4. Compliance Chatter 📢 - VA & AR on fixed indemnity and short-term and more!

It’s only a 5 minute read, but it will make you 10x smarter.

DEEP DIVE 📚

Who’s Paying First? - Medicare Secondary Payer (MSP) 🧢

While actuaries typically don’t like to speak in absolutes, it is with certainty that Abbott and Costello never envisioned being artistically licensed in a Medicare related digital newsletter.  In fact, of the two, only Bud Abbott survived long enough to see Medicare signed into law in 1965. 

While it would be fun to dedicate an entire newsletter to comedians that were popular well before the dawn of Medicare, it’s time to turn our attention to this week’s deep dive, which covers Medicare Secondary Payer (MSP). 

The Centers for Medicare & Medicaid Services (CMS) defines MSP as “the term generally used when the Medicare program does not have primary payment responsibility…, when another entity has the responsibility for paying before Medicare.”

A common industry term that also describes MSP is - coordination of benefits.  In the beginning, Medicare served as the primary payer except when beneficiaries were also covered by Worker’s Compensation, and Veteran’s Administration (VA) or Federal Black Lung benefits.  However, in 1980, Congress amended the Social Security Act (section 1862(b)) with the MSP provisions, which were intended to shift costs to private sources and away from Medicare.

With that background out of the way, let’s get back to answering the original question – who’s paying first? 

To answer this question, we’ll take a look at some common situations where a Medicare beneficiary also has some other form of health insurance or coverage.

The first MSP situation we will look at is when a beneficiary is covered by a group health plan (GHP).  CMS defines GHP as “health coverage sponsored by an employer or employee organization (such as a union) for a group of employees, and possibly for dependents and retirees as well”.  In this situation where the GHP is the primary payer, there are some general rules that apply:

• GHP must provide equivalent coverage to both non-Medicare and Medicare beneficiaries

• Medicare may pay secondary for services covered by Medicare but only up to amount that is approved by Medicare

• Medicare may pay for services covered by Medicare in situations where the GHP does not cover a service and denies payment

The following chart identifies the primary and secondary payers in situations where a beneficiary is covered by a GHP and entitled to Medicare:

If a beneficiary is eligible for Medicare due to End Stage Renal Disease (ESRD), the following chart identifies the payer order:

Another common MSP situation is the presence of a non-group health plan (NGHP) which includes plans such as liability insurance, no-fault insurance, and workers’ compensation.  In these situations, Medicare is always the second payer by statute.

After accounting for GHP and NGHP MSP situations, the following chart captures the remaining common situations:

Given all of these different situations, it can be a lot for payers to keep track of. 

While Abbot and Costello ultimately gave up trying to understand the lineup, fortunately CMS offers a computer based training curriculum, so you’ll always know who’s paying first!

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Speaking of baseball. How about Freddie Freeman’s crazy homerun streak over the last week? And, the 10 year-old who caught his walk-off grand slam thought he was heading to the dentist before ending up at the game. Well done mom and dad!

If you’re ready, here are some ways we can help you:

• Newsletter Sponsorship opportunities: Promote your product or services to leaders in the Medicare space. Let’s discuss. (link)

• Market Research: Reports that help you wrap your arms around the Senior focused insurance markets. (link)

• Consulting: We can help you develop new insurance products for the Medicare market, appraise your books of business, and keep you compliant. Let’s discuss. (link)