Home Health News: Understanding Medicare Secondary Payer (MSP)

Understanding Medicare Secondary Payer (MSP) in Home Health

For home health agencies, accurate billing is critical, especially when Medicare is not the primary payor. Understanding Medicare Secondary Payer (MSP) rules ensures compliance and reduces the risk of claim denials or audit findings.

What is Medicare Secondary Payer (MSP)?

Medicare Secondary Payer means Medicare pays after another insurance plan has paid its share of the bill. This could be due to:

• • Group health plan coverage (e.g., patient or spouse actively working)
  • Workers’ compensation
  • Auto or liability insurance
  • Veterans Affairs (VA) benefits
  • Black lung benefits

In these situations, Medicare becomes the secondary payor, and the home health agency must bill the primary insurer first.

Why MSP Matters for Home Health Agencies

Failure to identify and properly bill the primary payor before Medicare can result in:

• • Claim denials and payment delays
  • Overpayments and future recoupments
  • Increased administrative burden
  • Compliance risk during audits

Identifying When Medicare is Secondary in Home Health

During home health Start of Care (SOC), intake and billing teams must assess:

• • Is the patient actively employed or covered under a spouse’s employer group health plan?
  • Was the condition due to a work-related injury (potential workers’ comp)?
  • Is there an open auto/liability claim?
  • Are VA benefits primary for the services?

MSP Billing in Home Health

• • Bill the primary insurance first (e.g., group health plan, workers’ compensation).
  • Once the primary payor has paid or denied, bill Medicare for the remaining allowable amount using the appropriate MSP type code.
  • Retain documentation of the primary payor’s payment or denial for your records
  • Update your EMR and billing system to reflect the payor hierarchy to avoid automatic Medicare primary claims submission.

MSP Billing Example

Scenario: A patient on traditional Medicare is covered under their spouse’s employer health insurance.

• • The home health agency bills the spouse’s employer insurance first.
  • If the primary insurance denies or partially pays, the agency submits the claim to Medicare as secondary.
  • The agency uses Condition Code 08 (Beneficiary would not furnish information concerning other insurance coverage) or appropriate MSP codes depending on circumstances.

Common MSP Challenges in Home Health

• • Intake staff failing to capture active employment status
  • Misunderstanding COBRA rules (COBRA coverage generally makes Medicare primary if the patient is over 65)
  • Delays in receiving primary EOBs, leading to AR delays
  • Confusion between Medicare as Secondary vs. Tertiary Payer when multiple insurances exist

Best Practices for Home Health MSP Management

• • Train intake and billing staff regularly on MSP rules.
  • Use a standardized MSP questionnaire at each Start of Care and Recertification.
  • Check eligibility using Medicare’s HIQA/eligibility tools to verify MSP flags.
  • Document all payor communications thoroughly.
  • Work with your billing vendor or clearinghouse to handle MSP claims correctly.

MSP compliance is not just a billing task; it’s a critical piece of your home health compliance program. Proper handling of MSP:

• • Reduces denials and AR days
  • Prevents overpayment and recoupments
  • Demonstrates compliance during MAC or UPIC audits

Next Steps:

Need training for your intake and billing teams or assistance streamlining your MSP workflow in your EMR? Contact Proactive. We can help your agency stay compliant, your billing to flow smoothly, and to maintain the business’ financial health so that you can focus on serving your patients.

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