What is Medicare Secondary Payer Act?

  • By admin
  • 7 November, 2012
  • Comments Off on What is Medicare Secondary Payer Act?


Medicare Secondary Payer Act (MSP)  is a legislation to the Social Security Act, introduced in 1980 to combat the rising burden of Medicare payments.  Under the MSP,  Medicare providers, suppliers or beneficiaries must submit claims first to private health insurers who process the claims and make payments according to insurance coverage agreements.  Medicare, as the secondary payer, pays benefits not covered by the primary plan.  Basically, beneficiaries are required to exhaust all available coverage before requesting Medicare to cover payments.

Medicare must make a timely, yet reimbursable payment to providers should the primary health insurer not pay the initial sum according with its coverage agreement (or if the insurer is late in providing payment).   This is considered a conditional payment.   If Medicare provides such a conditional payment, MSP allows for the government to initiate an action against the private health insurer or third party for double damages if the primary plan has failed to make payments according to MSP regulations and Medicare was not reimbursed.

In a 2003 revision of the MSP incorporated the Medicare Prescription, Drug, Improvement, and Modernization Act (MMA),  which defined self-insured entities being entitled as a responsible party carrying the obligation to reimburse Medicare.  The broad definition of self-insured entities in the MMA potentially jeopardizes defendants settling cases in which Medicare has paid any portion of the plaintiff’s medical expenses. It does not require that a portion of the risk carried by the settling defendant be the first part of the risk under the self-insured definition.   Therefore, an under-insured defendant may not only be required to pay a portion of the settlement to a severely injured plaintiff, but also may have to pay double the Medicare lien, if it is not paid by the settling plaintiff.   Basically, self-insured defendants who pay increased insurance premiums to private liability insurance providers, placing the risk completely on that provider, is better off than assuming the risk by setting aside their retained earnings in the case of potential litigation.

In 2010, new reporting requirements were enacted including penalties for failure to comply for both insurance carriers and self-insured entities.   Likewise, double-damages if the lien was not satisfied in a timely fashion were imposed. Under MSP compliance, Medicare is also the secondary payer for post-settlement future treatment expenses.


Comments are closed.

Scroll Up
x Shield Logo
This Site Is Protected By
The Shield →