An MSP Reminder: Loud and Clear
In a recent Sixth Circuit Court of Appeals decision (Bio-Medical Applications of Tennessee, Inc. v. Central States Southeast and Southwest Areas Health and Welfare Fund), we are reminded of how important it is to comply with the Medicare Secondary Payer (MSP) Rules.
As background, Medicare provides health coverage for the aged, for the disabled, and for individuals with end-stage renal disease. In the beginning, Medicare provided all of the health coverage in these instances; and, if the individual was covered by a private sector plan, the private sector plan paid secondary. Beginning in 1980, and primarily due to cost reasons, laws began to be passed requiring that if private sector coverage is available, the private sector coverage pays first and Medicare pays second. The federal government is very serious about ensuring that these rules are properly administered.
Following is a quick summary of the MSP rules:
Working Aged. The working-aged MSP rule is applicable to employers with at least 20 full and/or part-time employees on each working day in each of 20 or more calendar weeks in the current or preceding calendar year. Employer-provided health coverage is the primary payer and Medicare is the secondary payer for the working aged. For purposes of the MSP rules, the "working aged" are:
- Individuals in current employment status, aged 65 and over.
- A spouse, aged 65 or older, of an individual who has current employment status.
Disability. Medicare is the secondary payer for currently employed disabled individuals under age 65 with coverage through a large group health plan (LGHP). An LGHP is defined as a plan sponsored by an employer who employs at least 100 full or part-time employees on at least 50% of the regular business days in the preceding calendar year. The MSP rule relating to disability applies to an actively working employee, including a self-employed individual, or a disabled dependent of a currently employed individual.
End-stage Renal Disease. The MSP rule relating to end-stage renal disease applies without regard to:
- Employer size;
- Current employment status (active or inactive status); or
- The source of the health coverage (coverage through the individual's employer, or through the employment of a parent or spouse).
Employer-provided group health coverage is the primary payer for the first 30 months for individuals who have Medicare solely on the basis of end-stage renal disease. After the initial 30-month period, Medicare is the primary payer (for items or services provided on or after August 5, 1997).
The stakes are high for failing to comply with these rules. Not only will Medicare seek reimbursement, but they will also impose interest and penalties. Among other things, this case reminds us how important it is to make certain that employer provided group health plans are properly coordinated with Medicare.
The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations.
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