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Last Modified: 5/25/2018 Location: FL, PR, USVI Business: Part B

How is a Medicare secondary payment determined?

Q. How is a Medicare secondary payment determined?
A. The Medicare secondary payment is determined by a series of calculations and comparisons. The primary insurer’s claim processing details on their explanation of benefits (EOB) is needed to determine the secondary payment amount.
Three calculations are made per procedure. The lowest of the three is the secondary payment.

Calculation 1

If the Obligated to Accept payment in Full (OTAF) amount is present,
Determine the lowest amount between the OTAF amounts vs. the billed amount of the service.
Use the lowest amount listed above minus the primary paid amount.
If the OTAF amount is not present,
Use the billed amount of the service minus the primary paid amount

Calculation 2

Determine Medicare's primary payment would be:
Note the Medicare allowed amount for the procedure.
If applicable, subtract Medicare's deductible indicated in the DEDCT column.
Multiply the difference by the appropriate percentage: 62.5 percent, 80 percent, or 100 percent, depending on the procedure code.

Calculation 3

Compare the Medicare allowed amount to the primary insurer's allowed amount and select the higher allowed amount.
Using the higher allowed amount from listed above, subtract from the primary insurer's paid amount.
The Medicare secondary payment is equal to the lowest payment amount resulting from calculation #1, #2 or #3 above.
Note: You may also utilize the Medicare secondary payer (MSP) calculator.
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