The Medicare Health Insurance Program provides health insurance coverage for people 65-years old and older and disabled individuals. The Medicare Secondary Payer Act is a federal law that establishes Medicare's role within the claims payment process when a person carries one or more types of insurance in addition to Medicare coverage.
Medicare Secondary Payer Act
The Medicare Secondary Payer Act was created in 1980 as an amendment to the 1965 Social Security Act that established Medicare as a national insurance program. In an effort to reduce the costs taken on by Medicare, the Secondary Payer Act designates Medicare as a secondary, or back-up payment provider for eligible Medicare participants. Since Medicare is a federal program, the Secondary Payer Act supersedes any state laws that dictate payment processes for health insurance providers. This federal law also takes precedence over any health plan provisions that address payer responsibilities.
Primary Payers
Under the Medicare Secondary Payer Act, primary payers consist of any employer-sponsored health plan and liability insurance or no-fault plans issued for car insurance coverage. Employer-sponsored plans in particular encompass a wide range of insurance coverages, some of which include group health plans, workers' compensation, self-insured plans and government employee health plans. These plan types also apply for beneficiaries and spouses covered under an employer-sponsored plan. In terms of liability or no-fault insurance coverage, these policies are designed to provide automatic claims coverage for accidents involving personal injury.
Payer Roles
Within the private health insurance industry, insurance providers typically include a "coordination of benefits" provision within health insurance policies. The coordination of benefits provision dictates an insurance provider's role or order within the claims payment process. Private health insurance carriers conduct business according to state regulations and laws. And while Medicare's role as a secondary payer takes precedence over state laws and plan provisions, Medicare takes on the role of a primary payer in cases where a person has an employer retiree group health plan or holds Medigap supplement insurance coverage.
Recovery Process
Under the Medicare Secondary Payer Act, Medicare has the option of making a conditional payment in cases where delays prevent primary payers from paying health care provides in a timely manner. Any conditional payments made by Medicare must be paid back once the primary payer makes payment on a claim. Medicare recipients are responsible for notifying Medicare when a primary payer delivers payment on a claim. Once notified, Medicare's recovery process entails seeking reimbursement from the insured's primary insurance plan or primary payer. Under the Secondary Payer Act, Medicare's claim for reimbursement takes precedence over any other reimbursement claim made by another insurance plan provider.
Tags: Medicare Secondary Payer, Secondary Payer, health insurance, insurance coverage, Medicare Secondary, primary payer, health plan
