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Last Modified: 11/14/2020 Location: FL, PR, USVI Business: Part B

Billing the correct Medicare secondary payer insurance type code

Part B Medicare physicians and suppliers are required to:
Obtain MSP information such as group health coverage through employment or non-group health coverage resulting from an injury or illness,
Inquire with the beneficiary at the time of the visit if he/she is taking legal action in conjunction with the services performed, and,
Submit claims to Medicare with all appropriate MSP information.
Effective October 16, 2003, the Administrative Simplification Compliance Act (ASCA) requires that MSP claims be submitted electronically to Medicare, except in cases where there is more than one primary payer to Medicare.
Providers that qualify for the ASCA exception and are, therefore, allowed to submit paper claims do not have to identify the numeric MSP insurance type code with their paper billing; however, the numeric MSP insurance type code is required with electronic billing. First Coast’s analysis of MSP claims received with the incorrect insurance type codes revealed that some of the common errors being made include:
Type 47 -- Liability; appears to be used as a “default code.”
Type 12 -- Working aged; appears to be used as a “default code.”
Type 12 (working aged) and Type 43 (disability) -- appear to be used interchangeably, regardless of the age of the beneficiary.
The MSP insurance type identifies the type of other insurance specific to the MSP provision that is the basis for the beneficiary’s MSP status. For claims billed electronically, the code is submitted in loop 2000B, within the SBR 05 segment of the ANSI X12 5010 format.
To assist physicians and suppliers in selecting the correct MSP insurance type when billing Medicare, the chart below has been developed as a quick reference guide. By following this chart, MSP claims will be filed correctly the first time, thereby avoiding claims processing delays.

MSP Insurance Type
MSP Provision
Working aged -- Beneficiaries age 65 or older who are insured through their, or their spouse’s current employment. Employer’s group plan has 20 or more employees.
Note: This type must only be used for beneficiaries who are 65 years old or older on the date the service was rendered.
End-stage renal disease (ESRD) -- Beneficiaries enrolled with Medicare solely due to renal failure and are insured through their own, or through a family member’s former or current employment. Medicare is the secondary payer for the first 30 months from the beneficiary’s Medicare eligibility date.
Note: This type is not age specific.
Automobile/no fault -- No-fault insurance that pays for medical expenses for injuries sustained on the property or premises of the insured, or in the use, occupancy, or operation of an automobile regardless of who may have been responsible for causing the accident.
Workers’ compensation -- Insurance that employers are required to provide to cover employees who become sick or are injured on the job.
Federal agency (public health) -- Services that are the direct obligation of another federal, state or local governmental entity.
Workers’ Compensation Medicare Set-aside -- An allocation of funds from Workers’ Compensation (WC) settlement, judgment or award for future medical and/or future prescription drug expenses related to the WC injury and/or illness/disease.
Black lung -- Coverage under the federal black lung program due to black lung disease and other respiratory conditions caused by coal mining in which a Medicare beneficiary may be entitled to have services reimbursed by the United States Department of Labor (DOL).
Veterans Administration -- A federal program supervised and supported by the Department of Defense that provides medical coverage benefits for beneficiaries who were members of the armed forces. Veterans who are Medicare-eligible may elect whether Medicare or VA benefits will handle their claims.
Disability -- Beneficiaries under age 65, who are disabled and insured through their current employment or through the current employment of a family member. Employer’s group plan has 100 or more employees.
Note: If the basis of disability is ESRD, the ESRD type should be used when billing Medicare. Also, the disability type must only be used for beneficiaries who are under 65 years of age on the date the service was rendered.
Liability Set Aside - An allocation of funds from a Liability settlement, judgment or award for future medical and/or future prescription drug expenses related to the liability injury and/or illness/disease.
Automobile/No Fault Set Aside - An allocation of funds from No Fault settlement, judgment or award for future medical and/or future prescription drug expenses related to the automobile injury.
Liability -- Insurance (including a self-insurance plan) that provides payment based on the policyholder’s alleged legal liability for injury or illness or damage to property. It includes homeowner’s liability insurance, malpractice insurance, product liability and general casualty insurance and payments for medical damages made under the “wrongful death” statutes.
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Source: WPC 837 IG; CMS IOM - MSP, Ch 5, Sec 50.1.8
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