MSP Definitions

The definition of MSP-specific terms are provided in the following table.

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Term Brief Description
Allowed Charge Individual charge determination (approved amount) made by a contractor on covered Part B or Part A medical service or supply
Coinsurance

Portion of reimbursable hospital and medical expenses, after subtraction of any deductible, that Medicare does not cover and for which beneficiary is responsible; or, for which Medicaid may pay in case of certain dually entitled beneficiaries

  • Under Part A (Hospital Insurance [HI]), there is no coinsurance for first 60 days of inpatient hospital care; from 61st-90th day of inpatient care, daily coinsurance amount is equal to one-fourth of inpatient hospital deductible. For each of the 60 lifetime reserve days used, daily coinsurance amount is equal to one-half of inpatient hospital deductible. There is no coinsurance for first 20 days of Skilled Nursing Facility (SNF) care; from 21st-100th day of SNF care, daily coinsurance amount is equal to one-eighth of inpatient hospital deductible
  • Under Part B (Supplementary Medical Insurance [SMI]), after annual deductible has been met, Medicare pays 80 percent of reasonable charges for covered services and supplies; remaining 20 percent of reasonable charges are coinsurance payable by enrollee. There is no coinsurance for home health services or for clinical laboratory services under SMI
Conditional payment Medicare payment for services for which another insurer is primary payer
Conditional Primary Medicare Benefits

Except in situations described in subsection 2, conditional primary Medicare benefits may be paid if:

  1. Beneficiary, physician, or supplier has filed a proper claim with a Trans Pacific Partnership (TPP) in case of services for which payment under Workers Compensation (WC), No-Fault, or liability insurance can reasonably be expected, and you determine that insurer will not pay promptly (see subsection B for definition);
  2. Beneficiary, provider, or supplier that has accepted assignment filed a proper claim with a Group Health Plan (GHP) or Large Group Health Plan (LGHP) and TPP denied claim in whole or in part; or
  3. Because of physical or mental incapacity of beneficiary, physician, supplier, failed to file a proper claim with TPP
Deductible

Amounts paid by enrollees or by a third party for covered services before Medicare makes reimbursements

  • Medicare HI deductible applies to each new benefit period, is determined each year by a formula specified by law, and approximates current cost of a 1-day inpatient hospital stay
  • Medicare SMI deductible is, by law, first $100 of covered charges
Liability Insurance Liability insurance (including a self-insured plan) provides payment based upon a legally established responsibility for injury, illness, or damage to property which includes, but is not limited to, automobile liability, uninsured and under-insured motorist, homeowner's liability, malpractice, product liability, and general casualty insurance. May also include payments under state "wrongful death" statutes that provide payment for medical damages
Medicare Secondary Payer (MSP) Medicare term used when a party is responsible for making a primary payment. (Private insurance industry generally talks about Coordination of Benefits when assigning responsibility for primary and secondary payment)

MSP is sometimes confused with Medicare supplement. A Medicare supplement (Medigap) policy is a private health insurance policy designed specifically to fill in some "gaps" in Medicare's Same coverage when Medicare is primary payer. Medicare supplement policies typically pay for expenses that Medicare does not pay because of deductible or coinsurance amounts or other limits under Medicare program
Medical Payments Coverage (Med-Pay) Payment made by an insurer intended specifically to pay for medical expenses without regard to fault of any part to accident. Med-Pay is a form of no-fault insurance. In these situations, Medicare's proportionate share of procurement costs are not deducted from this payment unless claim was contested
Obligated to Accept Field (OTAF) Amount provider agreed to accept from primary payer when amount is less than charges but higher than payment amount; then a Medicare secondary payment is due to provider

There is no specific column or area on Remittance Advice (RA) that indicates OTAF amount; however, this amount is determined by other information that is listed on RA, such as discount, provider write-off, withholding, risk amount, service benefit credit, contractual adjustment, provider agreement, negotiated savings, or an amount that beneficiary is not liable for

If beneficiary were not responsible for any of these amounts, then OTAF amount would be same as amount primary insurance paid. Using an OTAF amount will indicate that there is a discount that beneficiary was not responsible for

To calculate OTAF, take billed amount minus discounts/adjustments
Prompt Payment

Regarding liability, WC or No-fault insurance is a payment made within 120 days after earlier of below

  1. Date a claim is filed with an insurer or a lien is filed against a potential liability settlement; or
  2. Date service was furnished or, in case of inpatient hospital services, date of discharge
Proper claim Claim filed timely and meets all other claims filing requirements specified by TPP
Secondary Used to characterize Medicare benefits, meaning benefits that are payable only to extent that payment has not been made and cannot reasonably be expected to be made by a TPP that is primary to Medicare
Trans Pacific Partnership (TPP) A WC law or plan, automobile or non-automobile no-fault insurance, any liability insurance, or a GHP or LGHP that is required to pay primary to Medicare
Utilization Used amount. Specifically, when Medicare conditional payments are recovered, services paid conditionally are not counted against number of inpatient care days available to beneficiary. If an individual is hospitalized twice in same benefit period and Medicare recovers its payment from liability insurance for first hospitalization, first hospitalization would not be charged to beneficiary

 

Last Updated Sep 25, 2018