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Medicare Payment for MSP Claims

When a primary insurer's payment for Medicare covered services is less than the provider's charges, the provider may be entitled to additional reimbursement from Medicare. If the primary insurer's payment for Medicare covered services is less than the provider's charges, and less than the gross amount payable by Medicare, and the provider does not accept/is not obligated to accept the primary insurer's payment as full payment, then Medicare secondary payment can be made.

In general, the Medicare secondary payment is the lesser of:

  • The Medicare gross payment amount minus the amount paid by the primary plan for Medicare covered services; or
  • The gross amount payment by Medicare minus the applicable deductible and/or coinsurance amount; or
  • The provider's charges (or an amount less than the charges that the provider is obligated to accept as payment in full) minus any applicable deductible or coinsurance amounts; or
  • The provider's charges (or an amount less than the charges the provider is obligated to accept as payment in full), minus the amount paid by the primary plan for Medicare covered services.

When the primary insurer pays less than actual charges (e.g., under the terms of a preferred provider agreement) and less than the amount the provider is obligated to accept as payment in full, Medicare uses the amount the provider is obligated to accept as payment in full in its payment calculation. In such cases, the provider reports a value code 44 and the amount it is obligated to accept as payment in full. This amount is considered to be the provider's charges.

For additional information about calculation for Medicare reimbursement of MSP claims, refer to the CMS Pub. 100-05, Medicare Secondary Payer Manual (Ch. 5, § 40.8.2External PDF).

Additional Resources

Posted: 02.05.19

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