Medicare Secondary Payer and a Conditional Medicare Payment
A 69-year-old patient is seen February 12 for cataract surgery. At intake she presents her Medicare card and a card from a group health plan; staff do not ask about employment. The claim goes to Medicare, which pays $2,940 of the $4,200 allowed amount as a conditional payment. Two months later, while updating records, the biller learns that the patient is retired but her spouse still works full time for an employer with 45 employees, and the patient is enrolled in that group health plan as a dependent. The claim is now 105 days old. The practice's Medicare participation agreement is standard, and the group health plan's timely filing limit is 180 days from the date of service. The front desk has no Medicare Secondary Payer questionnaire on file for this patient.
1. Which payer is primary for this claim and what rule decides it?
Read the worked answer
The group health plan is primary and Medicare is secondary under the Medicare Secondary Payer working-aged provision.
Medicare is secondary when the beneficiary has group health plan coverage based on the current employment status of the beneficiary or the beneficiary's spouse, and the employer has 20 or more employees. Here the spouse works full time for an employer with 45 employees and the patient is covered as a dependent - both conditions are met. Retirement of the patient is irrelevant; it is the spouse's current employment that triggers the rule. Age 69 does not override it.
The absence of an MSP questionnaire is the root cause. A questionnaire completed at intake, asking whether the patient or spouse is currently employed and the size of that employer, would have routed the claim correctly. The biller should also check whether Medicare's coordination of benefits record reflected the group health plan; if the employer plan was on file, Medicare should have denied the claim rather than paying.
2. What must the practice do with the $2,940 Medicare paid, and how does the group health plan claim get filed?
Read the worked answer
The Medicare payment is conditional and must be refunded. Medicare paid on the assumption that it was primary; once the practice learned of the group health plan, the correct sequence is to void or adjust the Medicare claim, return the $2,940 within 60 days of identifying the error, and bill the group health plan first.
Filing: submit to the group health plan within its 180-day limit. The date of service is February 12 and the claim is 105 days old, so roughly 75 days remain - enough time, but this should move immediately. If the group health plan pays less than the Medicare allowed amount, Medicare may consider a secondary payment for the difference, which is why the group health plan's remittance must accompany any secondary claim.
Also correct the coordination of benefits information so future claims route properly, and document the internal discovery. Retaining an overpayment past the 60-day window creates False Claims Act exposure that is far more expensive than the refund itself. The patient's cost-sharing, if any, now follows the group health plan's benefits, not Medicare's.
3. How would the analysis change if the employer had 15 employees, or if the patient were on Medicare because of disability and the employer had 50 employees?
Read the worked answer
15 employees: the small-employer exception applies and Medicare is primary. The 20-employee threshold for working-aged MSP is not met, so the group health plan is secondary regardless of current employment status. The original Medicare payment would stand, and the claim would be crossed over or billed to the group health plan for any balance. The number of employees counts the whole employer, not just the location where the spouse works.
Disability with 50 employees: for beneficiaries entitled to Medicare because of disability, the MSP threshold is 100 or more employees, so a 50-employee employer does not shift primary responsibility - Medicare stays primary. With 120 employees, the group health plan would be primary instead.
Both variations show why the questionnaire must capture the reason for Medicare entitlement, the employer size, and whose employment provides the coverage. Coders should not read the word Medicare and assume secondary; the MSP rules turn on employment and employer size, and the wrong assumption produces either an improper conditional payment or a wrongly denied claim.