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MSP billing and coding
Last Modified: 11/29/2024
Location: FL, PR, USVI
Business: Part A
The MSP provisions apply to situations when Medicare is not the beneficiary’s primary health insurance coverage. Providers are responsible for gathering MSP data to determine whether Medicare is the primary payer by asking Medicare beneficiaries questions concerning the beneficiary’s MSP status.
MSP coding must be logical to the processing system. The type of coverage determines the appropriate value code and payer code.
Payer codes identify the type of insurance coverage.
The chart below lists the type of coverage, value code (VC), payer code and occurrence code (OC) if applicable.
If an accident-related OC code is reported on the claim, an MSP related VC must also be reported, or the claim will return to provider (RTP). Payer codes are driven by the VCs reported on the claim.
Type of coverage |
Value code |
Payer code |
Occurrence code |
Working Aged |
12 |
A |
N/A |
ESRD |
13 |
B |
33 |
Automobile/No-Fault |
14 |
D |
01, 02, 03, 06 |
Worker’s Compensation |
15 |
E |
04 |
Public Health Svc, Other Federal Agency |
16 |
F |
N/A |
Black Lung |
41 |
H |
N/A |
Veteran’s Administration |
42 |
I |
N/A |
Disability |
43 |
G |
N/A |
Liability |
47 |
L |
01, 02, 03, 06 |
WCMSAs |
15 |
W |
N/A |
Medicare |
N/A |
Z |
N/A |
When the primary payer pays less than the actual charges (e.g., under the terms of a preferred provider agreement) and is less than the amount the provider is obligated to accept as payment in full (e.g., because of imposition of a primary payer’s deductible and/or co-payment, but not because of failure to file a proper claim), Medicare uses the amount the provider is obligated to accept as payment in full in its payment calculation. In such cases, the provider reports in value code 44 the amount it is obligated to accept as payment in full. Medicare considers this amount to be the provider’s charges. Absent a lower amount that the provider is obligated to accept as payment in full (OTAF), the amount of the provider’s actual charges is used.
The VC 44 is reported only if a provider is expecting to receive a payment after a primary payment has been made through a (preferred provider) contractual arrangement.
The VC 44 should not be reported when:
• Providers have failed to file a proper claim to the primary payer
• Provider does not accept the primary payment as payment in full
Reminder: Providers are required to submit a covered claim for either determining the benefit period or for crediting the beneficiary’s Medicare deductible. This obligation is to be met regardless of whether the VC 44 is applicable to the claim.
Condition code (CC) 77, is entered when a provider accepts or is obligated or required due to a contractual arrangement or law to accept payment from the primary payer as payment in full. In this case, no Medicare payment will be made.
It is not a requirement to report VC 44 or CC 77 in all cases. Report CC 77 only in cases where the primary payer has paid the services in full and no payment from Medicare is expected. Providers are to report VC 44 when a Medicare payment is expected. CC 77 and VC 44 are never reported on the same claim.
Reminder: Providers are required to submit a claim to Medicare as a secondary payer, to fulfill beneficiary deductibles, co-insurances and to maintain the beneficiary benefit period.
For a helpful tool in determining the use of the VC 44 and CC 77 refer to the
VC 44 decision tree.
The Medicare secondary payment system follows four calculation methods, before issuing a final payment. The Medicare secondary payment system will pay the lowest of four calculations following the methodology described below. Medicare defines interim payment, as the payment that Medicare would make if Medicare was the primary payer.
1. Medicare interim payment minus primary payment amounts.
2. Medicare interim payment minus applicable deductible and coinsurance.
3. Provider's covered charges (or value code 44 if lower) minus primary payer amounts.
4. Provider's covered charges (or value code 44 if lower) minus applicable deductible and/or coinsurance.
Outpatient services were furnished to a working aged Medicare beneficiary. The primary payer made a partial payment because dollars were applied to the deductible and/or co-insurance.
• Total Provider Charges = $450
• Medicare interim payment (Medicare's covered amount) = $400
• Primary Payer contractual agreement (OTAF) = $350
• Primary Payer deductible amount = $50
• Primary Payer payment amount = $300.00
• VC 44 amount = $350
• VC 12 (working aged) = $300
Using the payment calculation method 2 outlined above and based on benefits available, Medicare will consider for payment the primary payer deductible amount of $50.
As demonstrated above, a primary payment may be less than provider's charges. This may occur due to the agreed terms of the contractual arrangement or when deductible and co-payments were applied.
When primary payer reduces provider's charges due to a contractual agreement, provider reports VC 44 with the OTAF. Medicare will use the OTAF as payment in full in its payment calculation. For the purposes of calculating your claim, Medicare will consider the VC 44 amount, to be provider charges (Medicare calculations methodology 3 & 4).
CARC codes explain why there is a difference between the total billed amount and the paid amount and the MSP claim. These codes are required for all adjustments made by the primary payer which explains why the claim’s billed amount was not fully paid.
When billing a claim and there is an open auto/no-fault, liability, or workers compensation file which is diagnosis based for the patient and none of the diagnosis codes are related to the open file, indicate in remarks “Not related to open segment”.
Providers must indicate in the remarks section of the claim any denial reason from the primary insurance (when applicable).
The appropriate group code/CARC for the reason for no payment must be submitted in addition to the remarks.
If the provider cannot get all the remarks needed on the claim due to the character limitation, the provider should abbreviate the remarks.
The provider cannot send a paper Explanation of Benefits or EOB in place of remarks on the claim.
A
conditional payment is a payment made by Medicare for services on behalf of a Medicare beneficiary when there is evidence that the primary plan does not pay promptly. These payments are referred to as conditional payments because the money must be repaid to Medicare when a settlement, judgment, award, or other payment is secured.
If the primary payer applied full payment to deductible and coinsurance, it is not a conditional payment. However, in order for the claim to process correctly, you must follow the conditional payment billing guidelines.
A conditional payment is based on the ability for Medicare to have a reasonable expectation of recovering the payment in the future. This situation does not meet that expectation. However, because the primary insurer did not apply a payment to your claim, you are obligated to report the OC 24 with the corresponding date on your MSP claim, as well as the appropriate value code with zero dollars. The remarks section of your claim must indicate the dollar amount applied to either coinsurance or deductible.
Conditional payment requires the following special coding:
• OC 01, 02, 03, 04 or 33 (whichever is applicable) with corresponding date
• OC 24 with the date from below
• Date primary insurance denied or applied to deductible or coinsurance; or
• 120-day elapsed date:
• Date primary insurance was billed, or
• Date of service (date of discharge for inpatient services)
• VC 12, 13, 14, 15, 16, 41, 42, 43, or 47 with dollar amount of zero
• Add payer code ‘C’ for conditional payment
• The appropriate group code/CARC for the reason for no payment
• Remarks
• Reason for non-payment
• The amount primary applied to deductible or coinsurance
After the processing of the claim by the primary insurer, the claim should be submitted to Medicare for consideration of secondary benefits.
Note: The normal Medicare claims timely filing rules apply. Claim filing extensions will not be granted because of incorrect insurance information filed on a claim
Providers are required to submit MSP claims, even if no payment is due, to fulfill beneficiary deductibles, co-insurances and to maintain the beneficiary benefit period.
Tertiary claims can be submitted through direct data entry (DDE) or by paper.
MSP claims will reject when the claim does not balance. The most common error is when the primary claim adjustment amounts found in the claim adjustment segment (CAS) and the amount paid by the primary in the amount (AMT) segment do not equal the total charge.
MSP claim should be submitted electronically via:
• A billing service or clearinghouse
• Directly through a Secure File Transfer Protocol (SFTP) connection:
• PC-ACE
• SPOT portal
• DDE/FISS
Florida:
First Coast Service Options
Medicare Part A Claims
P.O. Box 2006
Mechanicsburg, PA 17055-0733
PR/USVI:
First Coast Service Options
Medicare Part A Claims PR / VI
P.O. Box 2001
Mechanicsburg, PA 17055-0733
• Should be submitted electronically or through DDE.
• Submitted with type of bill (TOB) xx7 and appropriate coding.
• Submitted within one year from the date of service.
• Adjustments will be accepted as a reopening submission TOB xxQ when the submission falls outside of the period to submit an adjustment bill.
Adjustment condition codes
Reminder: It is very important for providers to use the most appropriate condition code when adjusting their claims whether the claim is an MSP situation or not. Do not use D9 as a 'catch-all' code.
If |
And |
Adjust claim using condition code |
Remarks |
Claim billed as Medicare primary but rejects indicating other insurance is primary |
CWF is updated |
D9 |
Cost avoid resubmission – MSP file updated Medicare primary |
Claim billed as Medicare primary but rejects indicating other insurance is primary |
Primary insurance denied |
D9 |
Cost avoid resubmission – indicate reason for primary insurance denial |
Claim billed as Medicare primary but rejects indicating other insurance is primary |
Other insurance makes a payment to provider |
D7 |
Cost avoid resubmission – Name and address of primary insurance |
Claim billed as Medicare secondary |
Other insurance recoups their payment |
D8 |
Reason for other insurance recoupment, i.e., WA file termed and date |
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