100-05 Medicare Secondary Payer Manual: Chapter 2 - MSP Provisions

Medicare Secondary Payer (MSP) Manual
Chapter 2 - MSP Provisions
Table of Contents
(Rev. 12436; Issued: 12-28-23)
Transmittals for Chapter 2
10 - MSP Provisions for Working Aged Individuals
10.1 - Individuals Subject to Limitations on Payment
10.2 - Individuals Not Subject to the Limitation on Payment
10.3 - The 20-or-More Employees Requirement
10.4 - Working Aged Exception for Small Employers in Multi-Employer Group
Health Plans (GHPs)
10.5 - Rules Defining Employees Covered by GHPs and Large Group Health Plans
(LGHPs)
10.5.1 Clarification of Current Employment Status for Specific Groups
10.6 - Aggregation Rules Applicable to Determine the Employer Size
10 .7 - Effect of GHPs Payments on Deductible, Coinsurance, and Utilization
10.7.1 – Crediting Deductible for Non-Impatient Psychiatric Services
10.8 - Beneficiary's Rights and Responsibility
20 - MSP Provisions for End-Stage Renal Disease (ESRD) Beneficiaries
20.1 - Determining the 30 Month Coordination Period During Which Medicare May
Be Secondary Payer
20.1.1 - Duration of Coordination Period
20.1.2 - Determination for Subsequent Periods of ESRD Eligibility
20.1.3 - Dual Eligibility/Entitlement Situations
20.1.4 - Summary Chart for ESRD-MSP Rules and Dually Eligible
Medicare Beneficiaries
20.2 - Effect of ESRD MSP on Consolidated Omnibus Budget Reconciliation Act
(COBRA)
30 - MSP Provision for Disabled Beneficiaries
30.1 - Individuals Not Subject to MSP Provision
30.2 - The 100 or More Employees Requirement
30.3 - Disabled Individuals Who Return to Work
30.4 - Dually Entitled Individuals
40 - Liability Insurance
40.1 - Medicare's Recovery Rights
40.2 - Billing in MSP Liability Insurance Situations
50 - Workers' Compensation (WC)
50.1 Effect of Payments Under WC Plan
60 - No-Fault Insurance
60.1 – Medicare’s Recovery Rights

70 – Interest on MSP Recovery Claims
80 - Prohibitions Applicable to Employers Offering GHP Coverage
80.1 – Financial Incentives
80.2 - Discrimination in Offering Equal Benefits for Older and Younger
Employees and Spouses
80.3 - Differentiation for ESRD
80.3.1 - Paying Benefits Secondary to Medicare
80.4 - Taking Into Account Medicare Entitlement
80.5 - Permissible Distinctions in Coverage Allowed a GHP or LGHP
90 - Actions Resulting from GHP or LGHP Nonconformance
100 - GHP or LGHP Actions to Document Conformance

The purpose of Pub. 100-05, Chapter 2 is for the Centers for Medicare & Medicaid
Services (CMS) to provide detailed information regarding the MSP provisions, and the
relationship of MSP to other laws. This information can assist the A/B Medicare
Administrative Contractors (MACs) (Part A), A/B MACs (Part B), or A/B MACs (Part
HHH) (collectively referred to as A/B MACs) and Durable Medical Equipment MACs
(DME MACs)with responses to questions from providers, physicians and other
suppliers, attorneys, employers, and other payers.
10 -MSP Provisions for Working Aged Individuals
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
Pursuant to 42 CFR § 411.100, and further specified in § 411.170 and § 411.172,
Medicare pays secondary to GHP coverage for individuals age 65 or over if the GHP
coverage is by virtue of the individual's current employment status or the current
employment status of the individual's spouse. Health insurance plans for retirees or the
spouses of retirees do not meet this condition and are not primary to Medicare. The law
requires employers (as defined in Pub. 100-05, Chapter 1) to offer to their employees
age 65 or over and to the age 65 or over spouses of employees of any age the same
coverage as they offer to employees and employees' spouses under age 65. For example,
a plan may not provide benefits that are less for individuals age 65 or over or charge
policyholders premiums that are higher for individuals age 65 or over since this would
create an incentive for these individuals to reject the GHP coverage and make Medicare
the primary payer. This provision applies whether or not the individual age 65 or over is
entitled to Medicare. This equal benefit rule applies to coverage offered to full-time and
part-time employees. CMS accepts that an individual attains a particular age on the day
preceding his or her birthday.
Medicare beneficiaries who have current employment status are free to reject employer
plan coverage, in which case they retain Medicare as their primary coverage in
accordance with 42 CFR § 411.172. If the employee or spouse refuses the plan Medicare
is primary payer for that individual; and the plan may not offer that individual coverage
complementary to Medicare. The requirements for employer compliance with the MSP
provisions may differ in some respects from the requirements for compliance with the
Age Discrimination in Employment Act (ADEA). For example, the ADEA law applies
only to employees, while the Medicare provision applies also to self-employed
individuals. Employers may not sponsor or contribute to individual Medigap or
Medicare supplement policies for beneficiaries who have or whose spouse has current
employment status, as outlined in 42 CFR § 411.108.
Where a GHP is primary payer, but does not pay in full for the services, secondary
Medicare benefits may be paid to supplement the amount it paid for Medicare-covered
services. If a GHP denies payment for services because they are not covered by the plan
as a plan benefit bought for all covered individuals, primary Medicare benefits may be
paid if the services are covered by Medicare. Primary Medicare benefits may NOT be
paid if the plan denies payment because the plan does not cover the service for primary
payment when provided to Medicare beneficiaries. (See 42 CFR § 411.108.)
A GHP's decision to pay or deny a claim because the services are or are not medically
necessary is not binding on Medicare. A/B MACs and DME MACs evaluate claims under
existing guidelines derived from the law and regulations to assure that Medicare covers the

services regardless of any employer plan involvement.
A/B MACs and DME MACs assume for developing claims and the requirement that
GHPs be billed before Medicare that, in the absence of evidence to the contrary, an
employer in whose health plan a beneficiary is enrolled because of employment meets the
definition of employer and employs at least 20 people. The A/B MACS or DME MAC
refers an employer’s allegation that the 20-employee requirement is not met to the MSP
contractor for coordination of benefits.
A/B MACs and DME MACs must refer a multi-employer plan’s (a plan sponsored by or
contributed to by two or more employers or employee organizations) statement
identifying specific members as employees of employers of fewer than 20 employees, as
a basis for making Medicare primary payer, to the MSP contractor for coordination of
benefits. Refer to the Employer Exception (SEE) provisions process on the following
link: https://www.cms.gov/Medicare/Coordination-of-Benefits-and-
Recovery/EmployerServices/Small-Employer-Exception
NOTE: The request to exempt is done on a prospective basis.
10.1 - Individuals Subject to Limitations on Payment
(Rev. 11755, Issued :12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
Medicare pays secondary for Part A and Part B benefits for an individual who:
• 	Is age 65 or over;
• 	Is entitled to Part A (hospital insurance) on the basis of the individual’s own
Social Security or Railroad Retirement earnings record, or Federal quarters of
coverage, or the earnings record or the Federal quarters of coverage of another
person; and
• 	Is covered on the basis of individual's own current employment status or the
current employment status of the individual's spouse.
Re-employed Retirees and Annuitants
If a retiree or annuitant returns to work even for temporary periods, the employer is
required to provide the same coverage under the same conditions that the employer
furnishes to other similarly situated employees (i.e., non-retirees). Medicare is the
secondary payer to the GHP that the employer provides to the re-employed retiree even
if the premiums for coverage in the plan are paid from a retirement pension or fund.
Medicare is also secondary payer for individuals associated with the employer in a
business relationship such as consultants who are former employees, if the employer
provides insurance coverage for other such individuals. (See 42 CFR §411.172(d))

10.2 - Individuals Not Subject to the Limitation on Payment
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
The MSP provision for working aged does not apply to:
• 	Individuals enrolled in Part B only;
• 	Individuals enrolled in Part A on the basis of a monthly premium;
• 	Anyone who is under age 65. (Medicare is secondary to LGHPs that cover at
least one employer of 100 or more employees for certain disabled individuals
under age 65.);
• 	Individuals covered by a health plan other than a GHP as defined above, e.g., one
that is purchased by the individual privately, and not as a member of a group, and
for which payment is not made through an employer;
• 	Employees of employers of fewer than 20 employees who are covered by a single
employer plan;
• 	Retired beneficiaries who are covered by GHPs as a result of past
employment and who do not have GHP coverage as the result of their own or
a spouse's current employment status;
• 	Individuals enrolled in single employer GHPs of employers with fewer than
20 employees;
• 	Members of multi-employer plans whom the plan identified as employees of
employers with fewer than 20 employees, provided the plan formally elected to
exempt the plan from making primary payment for employees and spouses of
employees of specifically identified employers with fewer than 20 employees;
• 	Domestic partners who are given “spousal” coverage by the GHP; or
• 	Former spouses who have Federal Employees Health Benefit (FEHB) coverage
under the Spouse Equity Act

10.3 - The 20-or-More Employees Requirement
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
The working aged MSP provision applies only to GHPs of employers with 20 or more
employees and to multi-employer and multiple employer GHPs in which at least one
employer employs 20 or more employees. See 42 CFR § 411.100(a)(1)(i). 42 CFR §
411.170(a)(2)(i) which specifies this requirement is met if an employer has 20 or more
full-time and/or part-time employees for each working day in each of 20 or more
calendar weeks in the current or preceding year. An employer is considered to have
20 or more employees for each working day of a particular week if the employer has
at least 20 full-time or part-time employees on its employment rolls each working day
of that week. This condition is met as long as the total number of individuals on the
employer's rolls adds up to at least 20 regardless of the number of employees who
work or who are expected to report for work on a particular day. Self-employed
individuals participating in a GHP are not counted as employees for purposes of
determining if the 20-or-more employee requirement is met. An individual is
considered to be on the employment rolls even if the employee does not work on a
particular day. An employer may not have different employment rolls for different
days reflecting those scheduled.
Where an employer does not have 20 or more employees in the preceding year, it is
required to offer its employees and spouses age 65 or over primary coverage beginning
with the point in time at which the employer had 20 or more employees on each
working day of 20 calendar weeks of the current year. The employer is then required to
offer primary coverage for the remainder of that year and throughout the following year
even if the number of employees drops below 20 after the employer has met the
requirement.
The 20-or-more employees requirement must be met at the time the individual receives
the services for which Medicare benefits are claimed. During the time the employer has
met the 20-or- more employees requirement in the current year or in the preceding
calendar year, the GHP is primary payer. An employer that meets this requirement must
provide primary coverage even if less than 20 employees participate in the GHP.

10.4 – Working Aged Exception for Small Employers in Multi-Employer
Group Health Plans (GHPs)
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
A multi-employer GHP having at least one employer participating that has at least one
employer with 20 or more employees may prospectively request to except employees
(and their spouses) of identified employers with fewer than 20 employees from the
working aged provision. The small employer provision of the MSP statute can be found
at 42 U.S.C. 1395y(b)(1)(A)(iii) and 42 CFR 411.172(b). Under this provision, multi-
employer GHPs may elect Medicare as the primary payer for services provided to
working aged Medicare beneficiaries covered through qualified employers participating
in the plan that have fewer than 20 employees. These employees and their spouses are
not subject to the working aged provision once an exception has been granted as long as
the employer continues to meet the requirements for the exception.
Be advised that it is the GHP’s responsibility to provide written updates of any
information that may affect the original exception request (updates should include
identification of any employees not previously identified as well as information on any
terminated coverage issues, etc.) to the MSP Contractor as soon as any changes take
place.
All requests for exceptions from the multi-employer plan/administrator of the small employer shall
be submitted to the MSP Contractor. A/B MACs and DME MACs having received a request or
an update to a previous request shall forward these requests within 14 calendar days of receipt to the
MSP Contractor. Please refer to the following link to identify the appropriate contact:
https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Coordination-of-
Benefits-and-Recovery-Overview/Contacts/Contacts-page.
The MSP contractor shall not make an exception for beneficiaries entitled to Medicare based on
permanent kidney failure (End-Stage Renal Disease) or Disability.
The MSP Contractor shall only grant requests on a prospective basis.
Detailed information regarding the Small Employer Exception and requirements for requesting an
exception can be found on the CMS Web site at: https://www.cms.gov/Medicare/Coordination-of-
Benefits-and-Recovery/EmployerServices/Small-Employer-Exception
10.5 - Rules Defining Employees Covered by GHPs and Large Group
Health Plans (LGHPs)
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
[See 42 CFR § 411.104 regarding current employment status]
A. Current Employment Status
An individual has current employment status if the individual is:
• 	Actively working as an employee, is the employer (including a self-employed
person), or is associated with the employer in a business relationship; or
• 	The individual is not actively working and is receiving disability benefits from an

employer for up to 6 months (the first 6 months of employer disability benefits
are subject to FICA taxes); or not actively working but meets all of the following
conditions:
° 	Retains employment rights in the industry;
° 	His or her employment terminated by the employer if the employer
provides the coverage or has not had his/her membership in the employee
organization terminated if the employee organization provides the
coverage;
° 	Is not receiving disability benefits from an employer for more than 6
months;
° 	Is not receiving Social Security disability benefits, and
° 	Has employment-based GHP coverage that is not COBRA continuation
coverage. [See 29 U.S.C. 1161-1168.]
A person aged 65 or older and receiving disability payments from an employer is
considered to have current employment status if such payments are subject to taxes under
FICA. Employer disability payments are subject to FICA tax for the first six months of
disability after the last calendar month in which the employee worked for that employer.
EXAMPLE: Adam Green stopped working because of disability in December 2021 at
age 63. His employer began paying him disability payments January 2022. Since
disability payments are taxed under FICA for 6 months after the last month in which the
employee worked, Medicare is the secondary payer through June 2022. Beginning with
July 2022, Medicare becomes the primary payer as the disability payments are no longer
considered wages under FICA.
B. Retain Employment Rights [See 42 CFR § 411.104(b)]
Persons who retain employment rights include but are not limited to:
• 	Those who are furloughed, temporarily laid off, or who are on sick leave;
• 	Teachers and seasonal workers who normally do not work throughout the year;
• 	Those who have health coverage that extends beyond or between active
employment periods (e.g., based on an “hours bank” arrangement). (Active union
members in certain trades and industries (e.g., construction) often have “hours
bank” coverage); and
• 	Those who take an employer-approved temporary leave of absence for any
reason. Temporary leaves of absence include, but are not limited to, periods when
an individual qualifies for short-term or long-term medical disability.
C. Coverage by Virtue of Current Employment [See 42 CFR § 411.104(c)]
An individual has coverage as a result of current employment status with an employer

if the individual has:
• 	GHP or LGHP coverage based on employment, including coverage based on a
certain number of hours worked for that employer or a certain level of
commissions earned from work for that employer at any time; and
• 	Current employment status with that employer, as defined above.
10.5.1 - Clarification of Current Employment Status for Specific Groups
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
[See 42 CFR § 411.104 for references to employment status of specific groups]
A. Member of Religious Order [See 42 CFR § 411.104(e)]
A member of a religious order whose members are required to take a vow of poverty is
not considered to have current employment status with the religious order if the services
he/she performs as a member of the order are considered employment by the order for
Social Security purposes only. This is because the religious order elected Social Security
coverage for its members under section 3121(r) of the Internal Revenue Member of
Religious Order Code. Thus, Medicare is primary payer to any group health coverage
provided by the religious order.
This exception applies only to members of religious orders who have taken a vow of
poverty. It does not apply to clergy or to any member of a religious order who has not
taken a vow of poverty or to lay employees of the order. This exception applies not only
to services performed for the order itself (such as administrative, housekeeping, and
religious services), but also to services performed at the direction of the order for
employers outside of the order, provided that the outside employer does not provide the
member of the religious order with its own GHP coverage. A member of a religious
order has current employment status with the outside employer as a result of providing
services on behalf of the outside employer (an ongoing business relationship exists). If
the outside employer provides GHP coverage to the member of the religious order on the
basis of that current employment status relationship, the usual MSP rules apply.
Medicare is the secondary payer to the GHP of the outside employer if the outside
employer has the requisite number of employees.
EXAMPLE 1:
Sister Mary Agnes is a member of a religious order where members are required to take a
vow of poverty. Sister Mary Agnes was assigned to teach at a church school in the
Diocese of the Metropolis. The Diocese does not provide GHP coverage to

Sister Mary Agnes. The only group health coverage available to Sister Mary Agnes is
provided by the religious order. Medicare is the primary payer for services provided to
Sister Mary Agnes.
EXAMPLE 2:
Sister Mary Teresa is a member of a religious order whose members are not required to
take a vow of poverty. Sister Mary Teresa was assigned to teach at a church school in
the Diocese of Smallville. On the basis of her teaching relationship with the Diocese of
Smallville, the Diocese provides GHP coverage to Sister Mary Teresa. The GHP
provided by the Diocese of Smallville is the primary payer and Medicare is the
secondary payer for services provided to Sister Mary Teresa.
A/B MACs and DME MACs should note that the exemption only applies to the working
aged and disability provisions that base a GHP's obligation to be a primary payer on a
current employment status relationship. The exception does not apply to the ESRD,
workers compensation, or liability and no-fault provisions.
B. Insurance Agents
The following guidelines apply in determining the status of insurance agents.
A self-employed insurance agent is considered to have coverage based on current
employment status if the agent:
1. 	Has an "active agent" relationship with the company; or
2. 	Has a "retired agent" relationship with the company and has reached the "earning
threshold" of $400 or more pursuant to §211(b) of the Act. The fact that a self-
employed insurance agent is authorized to represent the company, e.g., to write
policies on behalf of the company, does not itself imply current employment
status.
C. Senior Federal Judges
Senior Federal judges are retired judges of the U.S. court system and the Tax Court.
They may continue to adjudicate cases, but they are entitled to full salary as a retirement
benefit whether or not they perform judicial services for the Government. By law, the
remuneration they receive as senior judges is not considered wages for Social Security
retirement offset purposes. Since they are considered retired for Social Security
purposes, they are not considered to have current employment status for purposes of the
working aged and disability provisions.
D. Volunteers

Volunteers are considered to have current employment status when they perform services
or are available to perform services for an employer and receive remuneration for their
services. For example, for purposes of §1862(b) of the Act, AmeriCorps members in the
Volunteers In Service To America program (VISTA) are considered to have current
employment status since they receive remuneration from the Federal Government. Also,
remuneration may be of a monetary or nonmonetary nature. Benefits, including health
benefits that a volunteer receives, are considered remuneration.
E. Directors of Corporations
Directors of corporations (i.e., persons serving on a Board of Directors of a corporation
who are not officers of the corporation) are self-employed. (Officers of a corporation are
employees.) Directors who receive remuneration for serving on a board are considered to
have current employment status. Remuneration may be of a monetary or nonmonetary
nature. Benefits, including health benefits that a corporation provides to a board member,
are considered remuneration if they are subject to FICA taxes under the IRC.
Directors who receive no remuneration for serving on the Board (unpaid directors) are
not considered to have current employment status. However, remuneration may consist
of deferred compensation (i.e., amounts earned but not payable until some future date
usually when the individual reaches age 70 and is no longer subject to the Social Security
retirement test). A director receiving deferred compensation is considered to have
current employment status only while serving as a director. (See subsection F.)
F. Individuals Receiving Delayed Compensation Payments Subject to FICA Taxes
[See 42 CFR § 411.104(f)]
An individual who is not working is not considered to have current employment status
solely on the basis of receiving delayed compensation payments for previous periods of
work even though those payments are subject to FICA taxes (or would be subject to
FICA taxes if the employer were not exempt from paying those taxes). For example, an
individual who is not working and in 2021 receives payments subject to FICA taxes for
work performed in 2020 is not considered to be an employee in 2021 solely on the basis
of receiving those payments.
G. Leased Employees
Leased employees (as defined in §414(n)(2) of the IRC) are treated as employees of the
recipient. The term "leased employee" means any person who is not an employee of the
recipient of the services but who provides services to the recipient if the:
• 	Services are provided based on an agreement between the recipient and any other
person (i.e., the leasing organization);
• 	Person has performed such services for the recipient on a substantially full-time
basis for at least 1 year. (In general, an employee who works 30 hours or more
is considered to be full time.); and

• 	Services are of a type historically performed in the business field of the recipient
by employees. An example of a leased employee is an employee of a temporary
agency who is assigned to work full time for at least one year doing
bookkeeping for an accounting firm.
In implementing these provisions, CMS relies on the regulations and decisions made by
the Secretary of the Treasury. Specific questions relating to application of these
provisions may be directed to CMS.
H. Re-employed Retirees and Annuitants
If a retiree or annuitant returns to work even for temporary periods, the employer is
required to provide the same coverage under the same conditions that is furnished to
other employees (i.e., non-retirees). Thus, an employer is required to provide primary
coverage for a re-employed retiree if the amount of work the individual performs (based
on hours, productivity, etc.) would be sufficient to earn the employee coverage from the
employer had the employee not retired. The GHP or LGHP coverage is primary to
Medicare because of the current employment status. This rule applies even if the:
• 	Plan is the same plan that previously provided coverage to the individual retiree
or annuitant;
• 	Premiums for the plan are paid from a retirement pension or fund; or
• 	Re-employed retiree pays the entire premium.
I. Coverage for Self-Employed Individuals [See 42 CFR § 411.104(d)]
When Medicare is secondary payer, the employer is not required to provide GHP
coverage to self-employed individuals. However, if an employer subject to the MSP
provisions provides coverage to a self-employed individual (including owners, a
consultant, or a contractor), the employer may not take into account the individual's
Medicare entitlement (i.e., the GHP must pay primary to Medicare). Also see 42 CFR §
411.104(d).
10.6 - Aggregation Rules Applicable to Determine the Employer Size
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
The size of the employer is a factor in determining whether Medicare is secondary or
primary payer under the working aged and disability provisions of the law. For MSP
purposes, the employer is the legal entity that employs the employees. For example, the
employer may be an individual, a partnership, or a corporation. Ordinarily, the identity
of that entity is clear.
There are situations, however, when it is not clear which corporation or individual is the
employing entity for MSP purposes. For example, when a corporation is owned or
controlled by another corporation, it must be decided which corporation is the employer.

Similarly, when related individuals each have businesses and each claim to be a separate
employer with either fewer than 20 or fewer than 100 employees, it must be decided
whether the individuals are separate employers or a single employer.
The MSP law contains the following rules for determining the size of the employer under
the MSP for the aged and disabled provisions. [See 42 CFR § 411.106]
A. Single Employers
Single employers under Section §52 of the IRC are defined as follows:
• 	All employers that are treated as single employers under subsections (a) or (b) of
§52 of the IRC are treated as single employers;
• 	Section 52(a) of the IRC provides that all employees of all corporations that are
members of the same controlled group of corporations are treated as if employed by a
single employer; and,
• 	Section 52(b) of the IRC provides that all employees of trades or businesses
(whether or not incorporated), e.g., employees of partnerships or proprietorships that are
under common control, shall be treated as employed by a single employer.
In general, two or more individuals or corporations are considered to be separate
employers under §52(a) or (b) of the IRC if they file separate income tax returns. Two or
more individuals are considered to be a single employer if they file a consolidated tax
return.
When there is a question about the tax status of a particular employer that claims to have
fewer employees than the 20 or 100 employee thresholds, A/B MACs and DME MACs
must request the employer to submit copies of its most recent tax return to resolve the
question.
B. Affiliated Service Groups
All employees of the members of an affiliated service group (as defined in Section
414(m) of the IRC) are treated as employed by a single employer.
C. Treatment of Religious Organizations
CMS does not aggregate religious organizations for MSP purposes. Incorporated
parishes and churches that are part of a church-wide organization, such as a diocese or
synod, are considered to be individual employers. A GHP or LGHP for employees of
such parishes or churches is considered to be a multi-employer GHP. (See
§10.3 and §10.4 of this chapter, for policies regarding multi-employer GHPs in
which at least one participating employer employs 20 or 100 or more employees
respectively.)
10.7 - Effect of GHPs Payments on Deductible, Coinsurance,
and Utilization
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)

Expenses that serve to meet the beneficiary's Part A or Part B cash and blood deductibles,
if Medicare were primary payer, are credited to those deductibles even if the expenses are
reimbursed by a GHP. This is true even if the GHP paid the entire bill and there is no
secondary Medicare benefit payable. If a GHP paid for Medicare covered expenses in
whole or in part, the Part B deductible is credited on the basis of the Medicare fee
schedule amount rather than the amount paid by the GHP. Also, GHP payments to a
provider are applied to satisfy a beneficiary's obligation to pay a Part A or Part B
coinsurance amount. However, GHP payments are credited to deductibles before being
used to satisfy the coinsurance.
Where no Medicare secondary benefit is payable, no utilization is charged the
beneficiary. Where a Medicare secondary payment is made, the A/B MAC charges the
beneficiary with utilization. These procedures are applicable for calculating utilization
for stays for which Medicare is secondary only for a portion of the stay.
Expenses for which payments are made and Medicare conditional payments are recovered
from no-fault or liability insurance are credited toward the deductible amounts for both
Parts A and B. Also, no-fault and liability payments are applied to satisfy a beneficiary's
obligation to pay Part A or Part B coinsurance amounts. No-fault and liability payments
are credited to deductibles before being used to satisfy the coinsurance. For services
provided prior to November 13, 1989, payments by the primary payer are not counted
toward the Medicare deductible. The discharge date is used for determining when a
provider furnished the services.
Services for which Medicare conditional payments are recovered from liability or no-
fault insurance are not counted against the number of inpatient care days available to the
beneficiary. If an individual is hospitalized twice in the same benefit period and
Medicare recovers its payment from a no-fault or liability insurance for the first
hospitalization, the first hospitalization would not be charged to the beneficiary. See
CFR 42 § 411.30 and 411.33
EXAMPLE 1:
An individual who previously had not met any of the $233 Part B deductible incurred
$233 in charges for which the GHP paid $200. The Medicare fee schedule amount was
$233. No Medicare benefits are payable. The individual is credited with $233 toward
the Part B cash deductible.
The beneficiary can be charged $33. (The $233 fee schedule amount minus the sum of
the $200 primary payment plus the $0 Medicare payment).
EXAMPLE 2:
An individual who previously had met $100 of the $233 Part B deductible incurred $150
in charges that were paid in full by the GHP. The Medicare fee schedule amount was
$150. No Medicare benefits are payable. The individual is credited with an additional
$150 toward the Part B cash deductible and now has satisfied the Medicare deductible.
The physician cannot bill the beneficiary because the sum total of the primary payment
($150) and the Medicare payment ($0) meets the fee schedule amount of ($150).

10.7.1 - Crediting Deductible for Non-Inpatient Psychiatric Services
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
The Part B deductible for non-inpatient psychiatric services is credited on the basis of
the Medicare fee schedule amount. There is no annual limit on incurred expenses for
non-inpatient psychiatric services.
EXAMPLE 1:
An individual received non-inpatient psychiatric services for which a physician charged
$250. The $233 Part B deductible had not been met. The GHP allowed $100 and paid
$100. The Medicare fee schedule amount is $210.
A. 	Actual charge by the physician minus the third-party payment: $250 -
$100 = $150.
B. 	The Medicare payment is determined in the usual manner: $210 - $233 =
0 x .80 = $0.
C. 	Medicare's allowable charge of $210 (which is higher than GHP’s
allowed amount of $200) minus GHPs payment of $100 equals $110.
Medicare pays $0 (lowest of amounts in steps A, B, or C).
The beneficiary can be charged $110 (the $210 fee schedule amount minus the sum of the
$100 primary payment plus the $0 Medicare payment). The unmet Part B deductible is
credited with $210. The beneficiary still must meet $13 of the annual Part B deductible
before Medicare benefits become payable.
EXAMPLE 2:
An individual received non-inpatient psychiatric services for which the physician charged
$250. None of the individual's Part B deductible had been met. The GHP allowed
charges in full and paid $250. The Medicare fee schedule amount for the services
was
$200. No Medicare secondary benefit is payable since the GHP paid charges in full. The
$233 Part B deductible is credited by the first $200 of the fee schedule amount.
The beneficiary cannot be billed by the physician because the sum total of the primary
payment ($250) and the Medicare payment ($0) exceeds the fee schedule amount ($200).
EXAMPLE 3:
An individual received non-inpatient psychiatric services from a physician for which
the physician charged $500. None of the individual's $233 Part B deductible had
been met. A GHP allowed charges in full and paid $400 (80 percent of the $500). The
Medicare fee schedule amount for the services was also $500. The $233 Part B
deductible is credited in full. The Medicare secondary benefit calculated is $100.

The physician cannot bill the beneficiary because the sum total of the primary payment
($400) and the Medicare secondary payment ($100) equals the Medicare fee schedule
amount.
10.8 - Beneficiary's Rights and Responsibility
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
A. Beneficiary's Responsibility with Respect to GHPs that are Primary to Medicare
The A/B MACs and DME MACs shall not make any Medicare payment if the
beneficiary has not filed a claim or cooperated fully with the provider, physician or other
supplier or the GHP. Also, the A/B MACs and DME MACs will not make any Medicare
payments until the beneficiary has exhausted the entire claims process. Conditional
benefits are not payable if payment cannot be made under the GHP because the
beneficiary failed to file a proper claim (See §100 of this chapter for definition of proper
claim) unless the failure to file a proper claim is due to mental or physical incapacity of
the beneficiary. [See CFR 42 § 411.165, 411.175 and 411.206]. A beneficiary need not
file any appeal if not inclined to do so.
B. Beneficiary's Right to Take Legal Action Against A GHP
Section 1862(b)(3)(A) of the Act provides that any claimant (including a beneficiary,
provider, physician, or supplier) has the right to take legal action against, and to collect
double damages from a GHP, that fails to pay primary benefits for services covered by
the GHP. Any claimant, also, has the right to take legal action against, and to collect
double damages from, a no-fault or liability insurer that fails to pay primary benefits for
services covered by the no-fault or liability insurer where required to do so under
§1862(b) of the Act.
20 -MSP Provisions for End-Stage Renal Disease (ESRD) Beneficiaries
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
Pursuant to 42 CFR § 411.162, Medicare is secondary payer to GHPs for individuals
eligible for, or entitled to Medicare Part A based on ESRD during a coordination period
described below. This provision applies regardless of the number of employees
employed by the employer and regardless of whether the individual or other family
member has current employment status. The ESRD provision applies to former as well
as to current employees. This provision applies where an individual is eligible for
Medicare based on ESRD and where an individual is entitled to Medicare based on
ESRD. An individual who has ESRD but who has not filed an application for entitlement
to Medicare on that basis is eligible for Medicare based on ESRD for purposes of
§20.1.1 or §20.1.3 if the individual meets the other requirements.
In general, §13561(c)(2) and (3) of OBRA 1993 provided that plans must pay primary
benefits during the coordination period regardless of whether the individual is also entitled
to Medicare on another basis. (See
§20.1.3 for dual entitlement provisions. Specifically, see §20.1.3.B, which discusses the
dual entitlement provision under which a GHP remains secondary to Medicare during the

30-month coordination period and litigation challenging that provision.)
This provision applies to all Medicare-covered items and services furnished to
beneficiaries who are in the 30-month period, including services for non-ESRD treatment
and services required by kidney donors in cases of transplantation. This limitation applies
for claims processing for items or services furnished to ESRD beneficiaries who are in
their 30-months of eligibility or entitlement on the basis of ESRD.
20.1 - Determining the 30 Month Coordination Period During Which
Medicare May Be Secondary Payer
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
If Medicare was not the primary payer for an individual on the basis of age or disability
at the time the individual became eligible for or entitled to Medicare on the basis of
ESRD, Medicare is secondary payer to GHPs for items and services furnished during a
period of up to 30 consecutive months, which begins with the earlier of:
• 	The month in which a regular course of renal dialysis is initiated, or
• 	If the patient undergoes a course of self-dialysis training the first day of the month
in which the training occurred, or
• 	If an individual who received a kidney transplant, the first month in which the
individual became entitled.
NOTE: In the rare case of an untimely application by an individual who receives a
transplant, the 30-month period could begin with the first month in which the individual
would have been eligible for or entitled to Medicare benefits if a timely application had
been filed. It is not necessary to consider this possibility absent a specific indication,
e.g., information that the transplant occurred before the first month of eligibility or
entitlement. If further development is required, the contractor should contact the SSO.
When the 30-month period begins before the month the individual becomes eligible for or
entitled to Medicare, A/B MACs and DME MACs pay secondary benefits for the portion
of the period during which the individual is eligible or entitled. The latter is the
coordination period. Medicare entitlement usually begins with the third month after the
month in which the individual starts a regular course of dialysis.
20.1.1 - Duration of Coordination Period
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
The coordination period is a period that begins with the earlier of the first month of
entitlement to or eligibility for Medicare Part A based on ESRD. Eligibility refers to the
first month the individual would have become entitled to Medicare Part A on the basis of
ESRD if he/she had filed an application for such benefits.
The Balanced Budget Act (BBA) of 1997, extended the coordination period from 18
months to 30 months.
Eligibility refers to the first month the individual would have become entitled to

Medicare Part A on the basis of ESRD if an application were filed for such benefits. In
the rare case of an untimely application by an individual, the coordination period could
begin with the first month in which the individual would have been entitled to Medicare
benefits if a timely application had been filed. It is not necessary to consider this
possibility absent a specific indication, e.g., information that the transplant occurred
before the first month of entitlement. If further development is required, A/B MACs and
DME MACs contact the RO.
When the coordination period begins before the month the individual becomes entitled to
Medicare, the A/B MACs and DME MACs pay secondary benefits for the portion of the
period during which the individual is entitled. Medicare entitlement usually begins with
the third month after the month in which the individual starts a regular course of dialysis.
However, for individuals who undertake a course in self-dialysis training or who receive
a kidney transplant during the 3-month waiting period, Medicare may be the secondary
payer for up to the first 30 months of the individual's entitlement.
Individuals eligible for Medicare on the basis on ESRD cannot enroll for Part B during a
Special Enrollment Period (SEP)SEP, but can defer entitlement to both Part A and B and
file an initial application later, usually at the end of the coordination period.
More examples illustrating when Medicare pays secondary in cases of ESRD entitlement
and eligibility are found at 42 CFR § 411.162(d).
20.1.2 - Determination for Subsequent Periods of ESRD Eligibility
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
20.1.3 - Dual Eligibility/Entitlement Situations
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
If an individual also becomes entitled to Medicare based on age 65 or disability after
being entitled based on ESRD, the coordination period continues for the remainder of the
30-months if Medicare was properly the secondary payer at the time of the dual
entitlement. See 42 CFR § 411.163.
When an individual is eligible for, or entitled to Medicare Part A based on ESRD and
also entitled on the basis of age or disability, the coordination of benefits is described
below.
Except as provided in subsection B, GHPs are subject to a 30-month coordination period
for any plan enrollee eligible for, or entitled to Medicare Part A based on ESRD,
regardless of whether that individual also is entitled to Medicare on the basis of age or
disability. The 30-month period coincides with the first 30 months of ESRD-based Part
A Medicare eligibility or entitlement. (Under previous law, Medicare automatically
became the primary payer at the point of dual Medicare eligibility/entitlement.) As long
as dual eligibility/entitlement exists, the ESRD MSP provision applies exclusively.
Medicare becomes the primary payer after the 30th month of ESRD-based
eligibility/entitlement even though plan coverage may be in effect by reason of current
employment status.
That is, the working aged MSP provisions and the disability MSP provisions do not

apply to individuals who are entitled on the basis of ESRD during or after the 30-
month coordination period.
Subsection A, below, deals with coordination periods governed by present law and
provides examples. Subsection B specifies the circumstances under which the ESRD
MSP provision does not apply in dual entitlement situations and provides an example.
Subsection C deals with circumstances in which Medicare continues to be primary when
an individual is entitled to Medicare based on age or disability and then ESRD with no
GHP coverage, but obtains GHP coverage during the coordination period and provides
an example. Subsection D deals with the effect of the cessation of dual entitlement.
A - Circumstances in Which Medicare Continues to be Secondary After Aged
or Disabled Beneficiary Becomes Eligible for, or Entitled to Medicare on the
Basis of ESRD
Medicare is secondary payer during the first 30 months of ESRD-based eligibility and
entitlement and becomes primary payer after the 30th month of ESRD-based eligibility or
entitlement if Medicare was not properly primary prior to ESRD-based eligibility. (Refer
to subsection B below if Medicare is properly primary.)
EXAMPLE 1
Mr. C, who is 67 years old and entitled to Medicare on the basis of age, has GHP
coverage by virtue of current employment status. Mr. C is diagnosed as having ESRD
and begins a course of maintenance dialysis at an ESRD facility on June 27, 2020.
Effective September 1, 2020, Mr. C is eligible for Medicare on the basis of ESRD.
Medicare, which was secondary because Mr. C's GHP coverage was by virtue of current
employment, continues to be secondary payer through February 2023, the 30th month of
ESRD-based eligibility, and becomes primary payer beginning March 2023.
EXAMPLE 2
Mr. D retired at age 62 and maintained GHP coverage as a retiree. In January 2020 at the
age of 64, Mr. D became entitled to Medicare based on ESRD. Seven months into the
30-month coordination period (July 2020), Mr. D turned age 65. The coordination period
continues without regard to age-based entitlement with the retirement plan continuing to
pay primary benefits through June 2023, the 30th month of ESRD-based entitlement.
Thereafter, Medicare becomes the primary payer beginning July 2023.
EXAMPLE 3
Mr. Edwards retired at age 62 and maintained GHP coverage as a retiree. In July 2020,
he simultaneously became eligible for Medicare based on ESRD (maintenance dialysis
began in April 2020) and entitled based on age. The retirement plan must pay benefits
primary to Medicare from July 2020 through December 2022, the first 30 months of
ESRD-based eligibility. Medicare becomes the primary payer beginning January 2023.

B - Circumstances in Which Medicare Continues to be Primary After Aged or
Disabled Beneficiary Becomes Eligible on Basis of ESRD
Medicare remains the primary payer when an individual becomes eligible for Medicare
based on ESRD if both of the following conditions are met:
• 	The individual is already entitled to Medicare on the basis of age or disability
when he/she becomes eligible on the basis of ESRD, and
• 	The MSP prohibition against "taking into account" age-based or disability-based
entitlement does not apply because plan coverage was not "by virtue of current
employment status" or the employer had fewer than 20 employees (in the case of the
aged) or fewer than 100 employees (in the case of the disabled).
The plan may continue to pay benefits secondary to Medicare under this subsection.
However, the plan may not differentiate in the services covered and the payments made
between persons who have ESRD and those who do not.
EXAMPLE 1
Mrs. G, who is 67 years of age, is retired. She has GHP retirement coverage through her
former employer. Her plan permissibly took into account her age-based Medicare
entitlement when she retired and is paying benefits secondary to Medicare. Mrs. G
subsequently develops ESRD and begins a course of maintenance dialysis in October
2020. She automatically becomes eligible for Medicare based on ESRD effective
January 1, 2021. The plan continues to be secondary on the basis of Mrs. G's age-based
entitlement as long as the plan does not differentiate in the services it provides to Mrs. G
and does not do anything else that would constitute "taking into account" her ESRD-
based eligibility.
C – Circumstances in Which Medicare Continues to be Primary When Individual
is Entitled to Medicare Based on Age or Disability and then ESRD with no GHP
Coverage but Obtains GHP Coverage During the Coordination Period
If Medicare is the proper primary payer for services when eligibility for Medicare based
on ESRD is established, Medicare remains the primary payer (during the coordination
period and afterwards). Medicare is considered to be the primary payer when Medicare
is the only payer or Medicare is legally obligated to be the primary payer to any GHP
coverage.

EXAMPLE 1
Mr. Z is 67 years old and has Medicare based on age. He has no GHP coverage. Mr. Z
develops ESRD and begins a course in maintenance dialysis and becomes eligible for
Medicare based on ESRD which triggers the 30-month coordination period. However,
Mr. Z has no GHP coverage and Medicare continues as the primary payer. In the 6 th
month of the coordination period Mr. Z obtains coverage through his wife’s GHP. Since
Medicare was the proper primary payer when eligibility for ESRD was established,
Medicare remains the primary payer.
D - Dual Eligibility/Entitlement Ceases
If ESRD-based eligibility or entitlement ceases in accordance with the Medicare
Pub. 100-01, Medicare General Information, Eligibility and Entitlement, Chapter 2,
§10.4, Medicare is the primary payer unless plan coverage is in effect by virtue of
current employment status, and the provisions of §§10 and 20 or 30 apply.
More examples illustrating the coordination of benefits in cases of dual entitlement are
found at 42 CFR § 411.163(c).
20.1.4– Summary Chart for ESRD-MSP Rules and Dually
Entitled Medicare Beneficiaries
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation:
01-23-23)
Rule: If Medicare is the proper primary payer for services when eligibility for Medicare
based on ESRD is established, Medicare remains the primary payer (during the
coordination period and afterwards). Medicare is considered to be the primary payer when
Medicare is the only payer or Medicare is legally obligated to be the primary payer to any
GHP coverage. Otherwise, Medicare is secondary to any GHP coverage that may exist
during the ESRD coordination period.
BASIS OF MEDICAL ELIGIBILITY AND GHP
COVERAGE
APPLICATION OF RULE
ESRD Only 	Medicare secondary to any GHP coverage.
Age or Disability entitlement and GHP coverage
precede ESRD eligibility with Medicare primary
Medicare primary to any GHP coverage.
Age or Disability entitlement and GHP coverage
precede ESRD eligibility with Medicare secondary
Medicare secondary to any GHP coverage.
Age or Disability entitlement and ESRD eligibility
occur on same day
Medicare secondary to any GHP coverage at time
of ESRD eligibility or obtained later.
ESRD eligibility precedes entitlement based on
Age or Disability
Medicare secondary to any GHP coverage.
Age or Disability entitlement and NO GHP
coverage precedes ESRD eligibility
Medicare primary to any GHP coverage.

20.2 - Effect of ESRD MSP on Consolidated Omnibus Budget
Reconciliation Act (COBRA)
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
A. General
The COBRA requires that certain GHPs offer continuation of plan coverage for 18 to 36
months after the occurrence of certain qualifying events, including loss of employment or
reduction of employment hours. Those are events that otherwise would result in loss of
GHP coverage unless the individual is given the opportunity to elect and does elect to
continue plan coverage at his/her own expense.
On June 8, 1998, the Supreme Court in "Geissal v. Moore Medical Corp." invalidated the
COBRA continuation of health care coverage regulations with respect to when a GHP
may terminate COBRA coverage. The court ruled that individuals who obtain other
coverage (including Medicare) on or before the COBRA election date are permitted to
continue this coverage along with COBRA. Thus, where ESRD-based Medicare Part A
entitlement predates the COBRA qualifying event, the plan is obligated to offer COBRA
coverage for a qualifying event such as termination of employment. To the extent the
period of COBRA coverage overlaps the ESRD MSP coordination period, COBRA is
primary and the employer plan has no discretion to terminate COBRA because of the
ESRD-based Medicare entitlement. Those individuals who obtain other coverage
(including Medicare) after the COBRA election date can be terminated from COBRA
coverage. This means that where COBRA coverage came first, the employer may
terminate existing COBRA coverage under its health plan when Medicare entitlement
occurs. Where COBRA expressly permits termination of continuation coverage upon
entitlement to Medicare there is one exception. The exception is that the plan may not
terminate continuation coverage of an individual (and the individual's qualified
dependents) if the individual retires on or before the date the employer substantially
eliminates regular plan coverage by filing for Chapter 11, Bankruptcy. (See 26 U.S.C.
4980B(g)(1)(D), 29 U.S.C. 1162(2)(D), and 1167(3)(C).)
B. Medicare is Secondary to COBRA Coverage
To the extent COBRA coverage overlaps the 30-month ESRD MSP coordination period,
Medicare is secondary payer for benefits that a GHP:
• 	Is required to keep in effect under the COBRA continuation requirements where
Medicare entitlement occurs first; or
• 	Is required to keep in effect under the COBRA continuation requirements even
after the individual becomes entitled to Medicare based on ESRD (i.e., the
bankruptcy situation as described in subsection A above); or

• 	Voluntarily keeps in effect after the individual becomes entitled to Medicare on
the basis of ESRD even though not obligated to do so under the COBRA
provisions. [See 42 CFR § 411.162(a)(3)]
30 - MSP Provision for Disabled Beneficiaries
Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
Pursuant to 42 CFR § 411.204, Medicare is secondary payer to LGHPs for individuals
under age 65 entitled to Medicare on the basis of disability and whose LGHP coverage is
based on the individual's current employment status or the current employment status of
a family member. (See Pub. 100-05, Chapter 1 for definition.)
Under the law, a LGHP may not "take into account" that such an individual is eligible
for, or receives, Medicare benefits based on disability. Apply the instructions in this
chapter when processing claims where Medicare is secondary payer for disabled
individuals. Where those sections refer to a GHP of 20 or more employees, substitute the
term "large group health plan" as defined in Pub. 100-05, Chapter 1 to apply them to
disabled individuals.
30.1 - Individuals Not Subject to MSP Provision
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
Medicare is not secondary under the MSP provision for disabled individuals:
• 	Who work or whose family member works for employers having fewer than 100
employees unless the GHP is a multi-employer plan in which at least one employer of
100 or more employees participates;
• 	Covered by an LGHP as a result of past employment (e.g., as a retired former
employee or as the spouse of a retired former employee) and whose coverage is not also
based on current employment status of their own or a family members current
employment status;
• 	Covered by a health plan other than an LGHP (e.g., one that is purchased by the
individual privately and not through an employer);
• 	Who have FEHB coverage under the Spouse Equity Act;
• 	Enrolled in Part B only; or
• 	Enrolled in Part A on the basis of a monthly premium.

30.2 - The 100 or More Employees Requirement
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
The Medicare as secondary for the disabled provision applies only to LGHPs that cover
employees of at least one employer that employed 100 or more full-time and/or part-time
employees on 50 percent or more of its business days during the previous calendar year.
Medicare is secondary for all employees enrolled in the plan if a plan is a multi- employer
plan, such as a union plan which covers employees of some small employers and also
employees of at least one employer that meets the 100-or- more employee requirement,
including those that work for small employers. The exception discussed in this chapter,
with respect to the working aged provision, does not apply to the Medicare as secondary
for the disabled provision. An employer will be considered to employ 100 or more
employees on a particular day if the employer has at least 100 full-time or part-time
employees on his/her employment rolls on that day. This condition is met as long as the
total number of individuals on the employer's rolls adds up to at least 100 regardless of the
number of employees who work or who are expected to report for work on that day.
Self-employed individuals who participate in an LGHP are not counted as employees for
purposes of determining if the 100-or-more employee requirement is met. If an employer
does not meet the 100-or-more employees requirement in a particular year, the employer
may offer employees coverage that is secondary to Medicare during the following year.
If the employer meets the 100-or-more employee requirement at any time during the
current year, the employer is required to provide employees with coverage that is primary
to Medicare during the following year.
30.3 - Disabled Individuals Who Return to Work
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
If a disabled individual who has LGHP coverage based on prior service to the
employer returns to work, the coverage is considered to be by virtue of current
employment status if the employer provides coverage to similarly situated
individuals who are not disabled. Similarly situated individuals are individuals who work
in the same category of employment and who perform the same amount of work. Such
services may be based, for example, on the number of hours worked or the amount of
earnings. [See 42 CFR § 411.104 for current employment status regulations.]
30.4 - Dually Entitled Individuals
(Rev.11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
If a disabled individual is also eligible for, or entitled to Medicare under the ESRD
provisions, follow the rules in §20.1.3 under which Medicare is the secondary payer for
the applicable 30-month coordination period.
40 - Liability Insurance
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)

Under (42 U.S.C. 1395y(b)(2)), and outlined in 42 CFR § 411.50, Medicare does not make
payment for covered items or services to the extent that payment has been made, or can
reasonably be expected to be made under a liability insurance policy or plan (including a
self-insured plan). Under certain circumstances, Medicare may make conditional payments
if the liability insurance will not pay or will not pay promptly. Conditional payments are
conditioned on reimbursement to the Medicare program to the extent that payment with
respect to the same items or services has been made, or could be made, under a liability
insurance policy or plan (including a self-insured plan).
40.1 - Medicare’s Recovery Rights
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
Pursuant to 42 CFR § 411.24 and with reference to 42 CFR Subpart D, Medicare has a
statutory direct right of recovery from the liability insurance as well as any entity that has
received payment directly or indirectly from the proceeds of a liability insurance payment.
Medicare's recovery rights take precedence over the claims of any other party, including
Medicaid. Medicare's recovery right is superior to other entities including Medicaid
because Medicare’s direct right of recovery is explicitly prescribed in Federal law and
other entities’ recovery rights are based on either State law or subrogation rights.
In addition to its direct rights of recovery, Medicare has subrogation rights.
"Subrogation" literally means the substitution of one person or entity for another. If
Medicare exercises its subrogation rights, Medicare is a claimant against the responsible
party and the liability insurer to the extent that Medicare has made payments to or on
behalf of the beneficiary for services related to claims against the alleged tortfeasor (and
the alleged tortfeasor’s liability insurance). Medicare can be a party to any claim by a
beneficiary or other entity against an alleged tortfeasor and/or his/her liability insurance
and can participate in negotiations concerning the total liability insurance payment and
the amount to be repaid to Medicare.
40.2 - Billing in MSP Liability Insurance Situations
(Rev. 12436: Issued: 12-28-23: Effective: 01-29-24; Implementation: 01-29-24)
A - Difference Between Liability Insurance and Other Primary Plans
Liability insurance differs from the other insurance policies or plans that, under §1862(b)
of the Act, are primary to Medicare. In the case of other types of insurance that are
primary to Medicare, i.e., no-fault insurance, GHPs, and WC, the insurance has a
contractual obligation to pay for medical services provided to the covered/injured person.
Liability insurance, however, has a contractual obligation to compensate the alleged
tortfeasor for any damages the alleged tortfeasor must pay to an injured party.
Pursuant to §1862(b)(2)(A)(ii) of the Social Security Act (42 U.S.C.
1395y(b)(2)(A)(ii)), Medicare is precluded from making payment where payment “has
been made, or can reasonably be expected to be made...” under liability insurance
(including self- insurance), no-fault insurance, or a workers’ compensation law or plan,
hereafter, referred to as Non-Group Health Plan (NGHP). Where Ongoing
Responsibility of Medicals (ORM) has been reported, the primary plan has assumed
responsibility to pay, on an ongoing basis, for certain medical care related to the NGHP
claim. Consequently, Medicare is not permitted to make payment for such associated
claims absent documentation that the ORM has terminated or is otherwise exhausted.

See IOM 100-05, Chapter 5, Section 20.4 for detailed instructions regarding ORM.
B – Billing Options and Requirements – Alternative Billing
Generally, providers, physicians, and other suppliers must bill liability insurance prior to
the expiration of the promptly period rather than bill Medicare. (The filing of an
acceptable lien against a beneficiary’s liability insurance settlement is considered billing
the liability insurance.) As specified in 42 CFR § 411.50, promptly means payment
within 120 days after the earlier of: 1) the date the claim is filed with an insurer or a lien
is filed against a potential liability settlement; or 2) the date the service was furnished or,
in the case of inpatient hospital services, the date of discharge) rather than bill Medicare.
Following expiration of the promptly period, or if demonstrated (e.g., a bill/claim that
had been submitted but not paid and the liability insurer indicates, on the claim, the
reason why the claim is not being paid. Note: If the reason for primary payer denial is
not identified on the claim, the A/B MAC or DME MAC denies/rejects the claim). If
liability insurance will not pay during the promptly period, a provider, physician, or
other supplier may either:
• 	Bill Medicare for payment and withdraw all claims/liens against the liability
insurance/beneficiary’s liability insurance settlement (liens may be maintained
for services not covered by Medicare and for Medicare deductibles and
coinsurance); or
• 	Maintain all claims/liens against the liability
insurance/beneficiary’s liability insurance settlement.
C – Special Rule for Oregon [See 42 CFR § 411.54(d)(2)]
As a result of a court order, providers, physicians, and other suppliers in Oregon:
• 	May either (i.e., double billing is not permitted) bill Medicare or bill liability
insurance (the filing of a lien against a beneficiary’s liability insurance
settlement is considered billing the liability insurance) if the liability insurer
pays within 120 days after the earlier of the following dates:
o 	The date the provider or supplier files a claim with the insurer or
places a lien against a potential liability settlement; or
o 	The date the services were provided or, in the case of inpatient hospital
services, the date of discharge.
• 	Must withdraw claims/liens against the liability insurance/beneficiary’s
liability insurance settlement following expiration of the 120-day period
and bill Medicare.
However, CMS will not terminate the provider agreement of a provider that does not
comply with the court order if that provider is following the procedures outlined in B
above.

D – Charges to Beneficiaries
Provider Charges to Beneficiaries for Services Covered By Medicare
The following applies to providers that participate in Medicare, emergency hospitals that
do not participate in Medicare, and foreign hospitals with an election to bill Medicare:
• 	If the provider bills Medicare, the provider must accept the Medicare
approved amount as payment in full and may charge beneficiaries only
deductibles and coinsurance.
• 	If the provider pursues liability insurance, the provider may charge
beneficiaries actual charges, up to the amount of the proceeds of the liability
insurance less applicable procurement costs, but may not collect payment
from the beneficiary until after the proceeds of the liability insurance are
available to the beneficiary.
Physician and Other Supplier Charges to Beneficiaries for Services Covered By Medicare
The following applies to physicians and other suppliers who participate in Medicare:
• 	If the physician or other supplier bills Medicare, the physician or other
supplier must accept the Medicare approved amount as payment in full and
may charge beneficiaries only deductibles and coinsurance.
• 	If the physician or other supplier pursues liability insurance, the physician or
other supplier may charge beneficiaries actual charges, up to the amount of the
proceeds of the liability insurance less applicable procurement costs, but may
not collect payment from the beneficiary until after the proceeds of the liability
insurance are available to the beneficiary.
The following applies to physicians and other suppliers who do not participate in
Medicare and who submit or would be required to submit an assigned claim:
• 	If the physician or other supplier bills Medicare, the physician or other
supplier must accept the Medicare approved amount as payment in full and
may charge beneficiaries only deductibles and coinsurance.
• 	If the physician or other supplier pursues liability insurance, the physician or other
supplier may charge beneficiaries actual charges, up to the amount of the proceeds
of the liability insurance less applicable procurement costs, but may not collect
payment from the beneficiary until after the proceeds of the liability insurance are
available to the beneficiary.
• 	Physicians and other suppliers (with the exception of DMEPOS suppliers) who do not
participate in Medicare and who submit an unassigned claim may charge beneficiaries no
more than the limiting charge and may collect payment without regard to whether the
liability insurance is available to the beneficiary.
Physicians and other suppliers who do not participate in Medicare, do not submit an

unassigned claim, and are not required to submit an assigned claim if they submitted a
claim to Medicare, may pursue liability insurance but the amount may not exceed the
limiting charge.
Charges to Beneficiaries for Services Not Covered by Medicare
• 	For services for which there is no Medicare coverage available regardless of
who furnishes them, providers, physicians, and other suppliers may charge
and collect actual charges from beneficiaries without regard to whether the
proceeds of the liability insurance are available to the beneficiary.
• 	For services of foreign hospitals that have no election to bill Medicare,
providers may charge and collect actual charges from beneficiaries without
regard to whether the proceeds of the liability insurance are available to the
beneficiary.
• 	For services of foreign physicians and other suppliers, the physician or other
supplier may charge and collect actual charges from beneficiaries without
regard to whether the proceeds of the liability insurance are available to the
beneficiary.
E – Provider, Physician, or Other Supplier Bills Medicare and Maintains
Claim/Lien Against the Liability Insurance/Beneficiary’s Liability Insurance
Settlement
As cited above in B, providers, physicians, and other suppliers must withdraw all
claims/liens against liability insurance/beneficiary’s liability insurance settlement (except
for claims related to services not covered by Medicare and for Medicare deductibles and
coinsurance) when they bill Medicare. A/B MACs and DME MACs may learn of a
situation where the provider, physician, or other supplier billed Medicare but did not
withdraw the claim/lien. In such situations, A/B MACs and DME MACs must:
• 	Advise the provider, physician, or other supplier and beneficiary that the act
of billing Medicare limits the payment that the provider, physician, or other
supplier may receive for the services billed to the Medicare approved amount.
This applies even if Medicare did not pay the claim or the provider, physician,
or other supplier refunded the Medicare payment to Medicare.
• 	If the provider, physician, or other supplier collected on a claim/lien after
billing Medicare, advise the provider, physician, or other supplier and
beneficiary that:
o 	The provider, physician, or other supplier must refund the Medicare
payment in instances where the amount collected on the claim/lien is
for the full charges of the claim/lien and the Medicare payment is
greater than or equal to the full charges of the claim/lien and greater
than or equal to the amount collected on the claim/lien (see example
one below for an illustration of this policy); or
o 	The provider, physician, or other supplier must refund the lesser of
the amount collected on the claim/lien or the Medicare payment in
instances where the amount collected on the claim/lien is less than

the full charges of the claim/lien due to policy limits (see example
two below for an illustration of this policy); and
o 	The provider, physician, or other supplier must refund to the
beneficiary the difference between the amount collected on the
claim/lien and the Medicare payment if the provider, physician, or
other supplier received payment for services not covered by Medicare
and for Medicare deductibles and coinsurance (see example three
below for an illustration of this policy); or
o 	The provider, physician, or other supplier must refund to the
beneficiary the difference between the amount collected on the
claim/lien and the Medicare payment less any amounts due from the
beneficiary for services not covered by Medicare and for Medicare
deductibles and coinsurance (see example four below for an
illustration of this policy).
o 	Nothing within this manual, or the respective regulations cited herein,
prevents a provider, physician, or other supplier, from maintaining a
claim or lien against the liability insurance or beneficiary’s liability
insurance settlement once the Medicare timely filing period has lapsed.
EXAMPLES
EXAMPLE 1: Charges from the facility are $5,000. Medicare is billed. The facility
receives $8,000 from Medicare. The facility receives $5,000 from the liability
insurance. The facility must repay Medicare $8,000.
EXAMPLE 2: Charges from the facility are $150,000. Medicare is billed. The facility
receives $110,000 from Medicare. The facility receives $100,000 (due to policy
limits) from the liability insurance. The facility must repay Medicare $100,000.
EXAMPLE 3: Charges from the facility are $1,000. Medicare is billed. The Medicare
allowable is $800.00. The Medicare deductible has been satisfied. The Medicare
coinsurance of $160.00 has been paid. There are no charges for non-covered Medicare
services. The facility receives $640.00 from Medicare. The facility receives $1,000 from
the liability insurance. The facility must repay Medicare $640.00 and send $360.00 to the
Medicare beneficiary.
EXAMPLE 4: Charges from the facility are $1,000. Medicare is billed. The Medicare
allowable is $800.00. The Medicare deducible has been satisfied. The Medicare
coinsurance of $160.00 has not been paid. There are $50.00 in charges for non-covered
Medicare services. The facility receives $640.00 from Medicare. The facility receives
$1,000 from the liability insurance. The facility must repay Medicare
$640.00. The facility may retain $210.00 for the unpaid Medicare coinsurance and charges
for the non-covered Medicare services. The facility must send to the Medicare beneficiary
the remainder of the liability insurance payment ($150.00).
F – Permissible Liens
The MSP provisions do not create lien rights when those rights do not exist under State

law. Where permitted by State law, a provider, physician, or other supplier may file a
lien for full charges against a beneficiary’s liability settlement. (A lien against a
beneficiary will be considered a lien against a liability settlement if there is a binding
agreement that the lien will only be enforced if there is a settlement and will be
withdrawn otherwise.)
• 	The provider, physician, or other supplier may enforce a permissible lien up to
the lesser of the amount of the settlement and charges for the services
incorporated in the lien. The provider, physician, or other supplier may not
charge interest, lien filing, and administrative fees to the beneficiary or against
the lien.
50 - Workers' Compensation (WC)
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
A - General
Under §1862(b)(2) of the Act, (42 U.S.C. 1395y(b)(2)), and outlined in 42 CFR §
411.40, payment under Medicare may not be made for any items and services to the
extent that payment has been made or can reasonably be expected to be made for such
items or services under a WC law or plan of the United States or any State. If it is
determined that Medicare has paid for items or services that can be or could have been
paid for under WC, the Medicare payment constitutes an overpayment.
This limitation also applies to the WC plans of the District of Columbia, American
Samoa, Guam, Puerto Rico, and the Virgin Islands. It also applies to the Federal WC

plans provided under the Federal Employees' Compensation Act, the U.S.
Longshoremen's and Harbor Workers' Compensation Act and its extensions, and the
Federal Coal Mine Health and Safety Act of 1969 as amended (the Federal Black Lung
Program).
These Federal programs provide WC protection for Federal Civil Service employees and
certain other categories of employees not covered, or not adequately covered, under State
WC programs, for example:
• 	Coal miners totally disabled due to pneumoconiosis;
• 	Maritime workers (with the exception of seamen);
• 	Employees of companies performing overseas contracts with the United States
government;
• 	Employees of American companies who are injured in an armed conflict;
• 	Employees paid from non-appropriated Federal funds (such as employees of
post- exchanges);
• 	Offshore oil field workers; and
• 	Qualified claimants under the Department of Labor’s Energy Employees
Occupational Illness Compensation Program.
The Federal Employers' Liability Act, which covers merchant seamen and employees of
interstate railroads, is not a WC law or plan for purposes of this exclusion. Similarly,
some States have employers' liability acts. These also are not considered WC acts for
purposes of this exclusion. However, they are considered liability insurance and the MSP
liability rules apply.
All WC acts require that the employer furnish the employee with necessary medical and
hospital services, medicines, transportation, apparatus, nursing care, and other necessary
restorative items and services. However, in some States there are limits to the amount of
medical and hospital care provided. For specific information regarding the WC plan of a
particular State or territory, contact the appropriate agency of that State or territory. If
payment for services cannot be made by WC because they were furnished by a source not
authorized by WC, such services can be paid for by Medicare.
The beneficiary is responsible for taking whatever action is necessary to obtain payment
under WC where payment under that system can reasonably be expected (e.g., timely
filing a claim, furnishing all necessary information). If failure to take proper and timely
action results in a loss of WC benefits, Medicare benefits are not payable to the extent
that payment could reasonably have been expected under WC.

B. - Workers’ Compensation Medicare Set-Aside Arrangements (WCMSAs)
A WCMSA is an agreement between CMS and the CMS beneficiary surrounding the
allocation of funds from a workers’ compensation (WC) settlement, judgment or award for
future medical and/or future prescription drug expenses related to the WC injury and/or
illness/disease. A WCMSA identifies the conditions that must be met before Medicare will
resume primary payment of all settled WC injuries or illnesses. Where a WC settlement
specifies that a portion of the settlement is for future medical care, Medicare may not pay
for future medical and/or prescription drug services until the administrator of the WCMSA
allocated funds provides evidence that payments were made appropriately for services that
Medicare would otherwise reimburse and that the funds deposited in the WCMSA account
were appropriately exhausted (disbursed only for services related to the WC injury or
illness/disease). In addition, Medicare will not pay conditionally for diagnosis codes related
to the set-aside occurrence. Once the set-aside amount is exhausted and accurately
accounted for as set forth in the following sections, Medicare will pay primary for future
Medicare covered medical and/or prescription drug expenses related to the WC injury or
illness/disease. For additional information on WCMSAs, please visit the following website
on CMS.gov: https://www.cms.gov/Medicare/Coordination-of-Benefits-and-
Recovery/Workers-Compensation-Medicare-Set-Aside-Arrangements/WCMSA-Overview.
The WCMSA Reference Guide, located in the Downloads section, details the CMS
WCMSA approval process used by CMS while serving as a reference for those choosing to
submit a WCMSA for CMS approval.
NOTE: There are situations where WCMSA benefits may terminate, or deplete, during a
beneficiary’s provider facility stay or upon a physician’s visit and a residual payment is
due. Under these circumstances Medicare may make a residual Medicare secondary
payment. The term “residual payment” is defined as: a payment Medicare makes on a
claim where available funds have been exhausted from the WCMSA benefit or
responsibility for payment terminates mid-service. The shared systems, the A/B MACs,
and DME MACs may pay this residual secondary payment by sending the primary payer
amounts to the MSPPAY module and calculate Medicare’s payment if such services are
covered and reimbursable by Medicare.
50.1 50.1 - Effect of Payments Under WC Plan
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
No Medicare payment may be made if WC has paid an amount:
• 	Which equals or exceeds the gross amount payable by Medicare;
• 	Which equals or exceeds the provider's charges for Medicare covered services; or
• 	The provider, physician or other supplier is either obligated to accept, or
voluntarily accepts, a primary plan’s payment as full payment.
NOTE: In general, WC medical benefits constitute a service benefit, i.e., the payment
constitutes full discharge of the patient's liability for services. In such cases, providers
are obligated to accept the WC payment as payment in full, and no secondary Medicare
benefits are payable. If WC pays for Medicare covered services and under the WC law
or plan the provider is not obligated to accept the payment as payment in full, Medicare

secondary benefits may be payable as described in Pub. 100-05, Chapter 5. If the
beneficiary has an open WCMSA on CWF, Medicare will not make any payment
related to the WC accident or injury.
A - Secondary Medicare Payments
When a primary plan’s payment for Medicare covered services is less than the provider's
charges for those services and less than the gross amount payable by Medicare, and the
provider does not accept and is not obligated to accept the primary plan’s payment as full
payment, then Medicare secondary payment can be made as appropriate. In general, the
Medicare secondary payment is the least of:
• 	The Medicare gross payable amount minus the amount paid by the primary plan
for Medicare covered services; or,
• 	The gross amount payable 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 that the provider is
obligated to accept as payment in full), minus the amount paid by the primary
plan for Medicare covered services.
NOTE: Medicare uses the amount the provider is obligated to accept as payment in full
when:
1. 	The provider is obligated to accept an amount that is less than its charges (e.g.,
under the terms of a preferred provider agreement), and
2. 	The primary payer pays less than charges and less than the amount the provider is
obligated to accept as payment in full for reasons other than failure to file a proper
claim (e.g., because of the imposition of a primary payer deductible and/or
copayment).
In the absence of a lower amount that the provider is obligated to accept as payment in
full, the amount of the provider's actual charges is used in determining Medicare's
secondary payment.
If WC pays a physician's or other supplier's full charges for medical services or pays a
lesser amount based on its reasonable charge screen or fee schedule which must be
accepted as payment in full, secondary Medicare benefits may not be paid to supplement
the amount paid by WC. In addition, the physician or other supplier cannot charge the
beneficiary or any other party for the services. This is because WC medical benefits
constitute a service benefit, i.e., the payment constitutes full discharge of the patient's
liability for the services.
B - Workers' Compensation Does Not Pay for All Services

As stated in 42 CFR § 411.40(b)(2), where WC does not cover and therefore pay for
all services furnished to a beneficiary, Medicare benefits may be paid for those
services. For example, the services of a physician not authorized to furnish medical
care under WC, may be reimbursed under Medicare. 	However, where a WCMSA
exists, CMS may not pay for any treatments, services or medications related to the
settled injury or illness until the fund administrator demonstrates complete and total
exhaustion of the WCMSA funds, regardless of whether the treatment, service or
medication might not have been covered under the WC plan.
C - Charges Included Non-Work Related Items or Services
If WC does not pay all of the charges because only a portion of the services is
compensable, i.e., the patient received services for a condition which was not work
related concurrently with services which were work-related, Medicare benefits may be
paid to the extent that the services are not covered by any other source which is primary
to Medicare. A physician/supplier is permitted under WC law to charge an individual or
the individual's insurer for services that are not work related. (See 42 CFR § 411.43(d)).
D - WC Cases Involving Liability Claims
Most State laws provide that, if an employee is injured at work due to the negligent act of
a third party, the employee cannot receive payments from both WC and the third party for
the same injury. If the individual is covered by a GHP and is age 65 or over, or is eligible
or entitled to Medicare based on ESRD and covered by a GHP, or is under age 65 and has
LGHP coverage and entitled to Medicare based on disability, the GHP may also be
primary to Medicare. Generally, WC benefits are paid while the third party claim is
pending. However, once a settlement of the third party claim is reached or an award has
been made, WC may recover the benefits it paid from the third party settlement and may
deny any future claims for that injury up to the amount of the liability payment made to
the individual.
If WC does not pay for services or recovers benefits it previously paid for services solely
because a third party is determined to be liable, Medicare is not secondary under this
provision, to the extent of the nonpayment or recovery by WC. However, Medicare may
be secondary for services covered under the liability insurance provision. Consider these
cases under the policies within this chapter and Pub. 100-05, Chapter 7.
E - Possible Coverage of Work Related Services Under No-Fault Insurance or
Group Health Plan
Where services are covered in part by WC and also under no-fault insurance, WC pays
first, the no-fault insurance pays second and Medicare would be the residual payer. If the
individual is covered by a GHP and is age 65 or over; or is under age 65 and entitled to
Medicare solely because of ESRD, or is entitled as an active individual, including the
member of the family of such individual, who is entitled to benefits on the basis of
disability, the employer plan coverage may also be primary to Medicare.
Accordingly, whenever WC pays in part for services, and the physician or other supplier
does not accept and is not obligated to accept such payment as payment in full, and there

is information which indicates that the services may also be reimbursable under no-fault
insurance or under a GHP, the A/B MAC or DME MAC follows the instructions in Pub.
100-05, Chapter 5.
If there is no coverage under no-fault insurance, but another insurer is shown on the bill,
and there is indication of primary GHP coverage under §10, §20, or §30, the other insurer
is to be billed for the services not paid for by WC. The other insurer is billed because, in
the case of a beneficiary who is injured on the job and who is covered by private health
insurance, it is assumed that the individual is employed and that the other insurance is a
GHP.
If the services provided to the Medicare beneficiary are not related to an automobile
accident (see §60) and there is no indication of primary group health plan coverage under
§10 or §20, Medicare may pay benefits for the services not covered under WC.
F - Workers' Compensation Pays Only for Services of Certain Physicians
In some States, physicians' services are covered under WC only if furnished by a
physician selected by the employer or the WC carrier or if furnished by a member of a
panel of physicians authorized to furnish care in WC cases. In such cases, if the
individual engages the services of another physician (for whose services the individual is
not entitled to receive WC benefits), Medicare payment for such services is not
precluded.
G - Contested Workers' Compensation Claims
An employee may appeal the refusal of an employer to pay WC benefits, or an employer
may appeal the award of benefits to an employee by the WC agency. Such appeals are
generally heard by a hearing officer or judge of the agency, with further appeal from such
decision to the WC agency or appeals board and from there to the courts. Sometimes
contested claims are settled by compromise agreement between the parties with the
approval of the WC agency.
In general, a decision by a State WC agency on a contested claim, or a compromise
settlement that has been approved by the agency should be accepted as a basis for
applying the WC exclusion, except where the settlement did not make reasonable
provision for payment under WC of all work-related medical expenses. Thus, where an
individual has been denied WC benefits for a particular illness or injury, the A/B MAC or
DME MAC allows claims for treatment of that condition unless the decision or
settlement is clearly inconsistent with the medical facts and applicable State law and has
the effect of shifting to the Medicare program liability for medical expenses which are the
responsibility of the State WC program. Where it is clear that an attempt was made to
shift responsibility to the Medicare program, the A/B MAC or DME MAC denies the
Medicare claim. The conclusions should be explained in detail in the denial notice and
state that the beneficiary may wish to request a reopening under the WC law.
60 - No-Fault Insurance
Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
Under §1862(b)(2) of the Act, (42 U.S.C. 1395y(b)(1)), Medicare does not make payment

for covered items or services to the extent that payment has been made, or can reasonably
be expected to be made under no-fault insurance. Medicare is secondary to no-fault
insurance even if State law or a private contract of insurance stipulates that its benefits are
secondary to Medicare benefits or otherwise limits its payments to Medicare beneficiaries.
Under certain circumstances, Medicare may make conditional payments if the no-fault
insurance will not pay or will not pay promptly (i.e., 120 days after receipt of the claim).
Conditional payments are conditioned on reimbursement to the Medicare program to the
extent that payment with respect to the same items or services has been made, or could be
made, under no-fault insurance.
If services are covered under no-fault insurance, that insurance must be billed first. If the
insurance does not pay all of the charges, a claim for secondary Medicare benefits can be
submitted. Medicare can pay for services related to an accident if benefits are not
available under the individual's no-fault insurance coverage because that insurance has
paid maximum benefits for the accident on items or services not covered by Medicare or
on non-medical items such as lost wages.
The question in each case involving accident-related medical expenses is whether no-
fault benefits can be paid for these particular services. If so, the no-fault insurance is
primary. If not, Medicare may be primary. Primary Medicare benefits cannot be paid
merely because the beneficiary wants to save insurance benefits to pay for future services
or for non-covered medical services or non-medical services. Since no-fault insurance
benefits would be available in that situation, they must be used before Medicare can be
billed.
If there is an indication that the individual has filed, or intends to file a liability claim
against a party that allegedly caused an injury, the A/B MAC or DME MAC follows
the procedures related to MSP liability insurance situations once the no-fault
insurance is exhausted.
Pursuant to §1862(b)(2)(A)(ii) of the Social Security Act (42 U.S.C.
1395y(b)(2)(A)(ii)), Medicare is precluded from making payment where payment
“has been made, or can reasonably be expected to be made...” under liability
insurance (including self-insurance), no-fault insurance, or a workers’ compensation
law or plan, hereafter, referred to as Non-Group Health Plan (NGHP). Where
Ongoing Responsibility of Medicals (ORM) has been reported, the primary plan has
assumed responsibility to pay, on an ongoing basis, for certain medical care related
to the NGHP claim. Consequently, Medicare is not permitted to make payment for
such associated claims absent documentation that the ORM has terminated or is
otherwise exhausted. See IOM 100-05, Chapter 5, Section 20.4 for detailed
instructions regarding ORM.
60.1 – Medicare’s Recovery Rights
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
Medicare has a statutory direct right of recovery from the no-fault insurance as well as any
entity that has received payment directly or indirectly from the proceeds of a no-fault
insurance payment. Medicare's recovery rights take precedence over the claims of any
other party, including Medicaid. Medicare's recovery right is superior to other entities
including Medicaid because Medicare’s direct right of recovery is explicitly prescribed in
Federal law and other entities’ recovery rights are based on either State law or subrogation

rights.
In addition to its direct rights of recovery, Medicare also has subrogation rights.
"Subrogation" literally means the substitution of one person or entity for another. If
Medicare exercises its subrogation rights, Medicare is a claimant against the no-fault insurer to the
extent that Medicare has made payments to or on behalf of the beneficiary for services related to
claims against the no-fault insurer. Medicare can be a party to any claim by a beneficiary or other
entity against no-fault insurance and can participate in negotiations concerning the total no-fault
insurance payment and the amount to be repaid to Medicare.
70 – Interest on MSP Recovery Claims
(Rev.11755, Issuance:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
Section 1862(b)(2)(B)(i) of the Social Security Act (the Act) and 42 C.F.R. 411.24(m)
provide express authority to assess interest on MSP debts. Interest is calculated on the
MSP debts using the method applicable to Non-MSP Medicare overpayments and
underpayments as stated in 42 C.F.R. 405.378. For Medicare overpayments and
underpayments and MSP debts, interest is calculated in full 30-day periods. Interest
instructions for Medicare overpayments and underpayments are found in Chapter 4, Pub.
100-06, Medicare Financial Management Manual.
80 – Prohibitions Applicable to Employers Offering GHP
Coverage
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
80.1- Financial Incentives
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
An employer or other entity is prohibited from offering Medicare beneficiaries financial
or other benefits as incentives not to enroll in or to terminate enrollment in a GHP or
LGHP that is or would be primary to Medicare, pursuant to 42 CFR § 411.103. This
prohibition precludes the offering of benefits to Medicare beneficiaries that are
alternatives to the employer's primary plan (e.g., prescription drugs) unless the
beneficiary has primary coverage other than Medicare. An example would be primary
plan coverage through his/her own or a spouse's employer. This rule applies even if the
payments or benefits are offered to all other individuals who are eligible for coverage
under the plan. It is a violation of the Medicare law every time a prohibited offer is
made regardless of whether it is oral or in writing. Any entity that violates the
prohibition is subject to a civil money penalty of up to $5,000 for each violation
80.2 - Discrimination in Offering Equal Benefits for Older and Younger
Employees and Spouses
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
Section 1862(b)(1)(A)(i)(II) of the Act provides that GHPs of employers of 20 or more
employees must provide to any employee or spouse age 65 or older the same benefits
under the same conditions that they provide to employees and spouses under 65 if those 65
or older are covered under the plan on the basis of the individual's current employment
status or the current employment status of a spouse of any age. The requirement applies
regardless of whether the individual or spouse 65 or older is entitled to Medicare. (See 42

CFR § 411.100 and 102.)
80.3 - Differentiation for ESRD
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
A GHP may not take into account that an individual is eligible for or entitled to
Medicare benefits on the basis of ESRD during a coordination period described
earlier in this chapter. The following are examples of potential taking into account
the Medicare eligibility or entitlement of ESRD patients:
• 	The plan does not cover routine maintenance dialysis services or kidney
transplants;
• 	The plan excludes benefits, makes itself secondary to government benefits, or
charges a higher premium for individuals with ESRD;
• 	The plan imposes limitations on benefits for persons with ESRD which are not
applicable to others, e.g., a higher deductible or coinsurance, a longer waiting
period or a lower annual or lifetime benefit limit.
Section 1862(b)(1)(C)(ii) of the Act provides that GHPs may not differentiate in the
benefits they provide between individuals who do not have ESRD and other individuals
covered under the plan on the basis of the existence of ESRD, the need for renal dialysis,
or in any other manner. Actions that constitute differentiation in plan benefits (and that
may also constitute "taking into account" Medicare eligibility or entitlement) include, but
are not limited to, the following:
• 	Terminating coverage of individuals with ESRD for reasons that would not be a
basis for terminating individuals who do not have ESRD;
• 	Imposing benefit limitations (such as less comprehensive health plan coverage,
reductions in benefits, exclusion of benefits, a higher deductible or coinsurance,
a longer waiting period, a lower annual or lifetime benefit limit, or more
restrictive preexisting illness limitations) on persons who have ESRD but not on
others enrolled in the plan;
• 	Charging individuals with ESRD higher premiums;
• 	Paying providers/suppliers less for services furnished to individuals who have
ESRD than for the same services furnished to those who do not have ESRD, such
as paying 80 percent of the Medicare rate for renal dialysis on behalf of a plan
enrollee who has ESRD and the usual, reasonable, and customary charge for renal
dialysis on behalf of an enrollee who does not have ESRD; and
• 	Failing to cover routine maintenance dialysis or kidney transplants when a plan
covers other dialysis services or other organ transplants.
A plan is not prohibited from limited covered utilization of a particular service as long as
the limitation applies uniformly to all plan enrollees. For instance, if a plan limits its
coverage of renal dialysis sessions to 30 per year for all plan enrollees, the plan would
not be differentiating in the benefits it provides between plan enrollees who have ESRD

and those who do not.
80.3.1- Paying Benefits Secondary to Medicare
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
The nondifferentiation provision does not prohibit a plan from paying benefits
secondary to Medicare after the coordination period. However, a plan may not
otherwise differentiate, as described in §70.2 and §70.3, in the benefits it provides.
EXAMPLE 1:
Mr. Smith works for employer A and he and his wife are covered through employer A's
GHP (Plan A). Neither is eligible for Medicare nor has ESRD. Mrs. Smith works for
employer B and is also covered by employer B's plan (Plan B). Plan A is more
comprehensive than Plan B and covers certain items and services, such as prescription
drugs, which Plan B does not cover. If Mrs. Smith obtains a medical service, Plan B pays
primary and Plan A pays secondary. That is, Plan A covers Plan B copayment amounts
and items and services that Plan A covers but that Plan B does not.
Mr. Jones also works for employer A and he and his wife are covered by Plan A. Mrs.
Jones does not have other GHP coverage. Mrs. Jones develops ESRD and becomes
entitled to Medicare on that basis. Plan A pays primary to Medicare during the first 30
months of Medicare entitlement based on ESRD. When Medicare becomes the primary
payer, the plan converts Mrs. Jones' coverage to a Medicare supplemental policy. That
policy pays Medicare's deductible and coinsurance amounts but does not pay for items
and services not covered by Medicare which Plan A would have covered. That
conversion is impermissible because the plan is providing a lower level of coverage for
Mrs. Jones who has ESRD than it provides for Mrs. Smith who does not. In other words,
if Plan A pays secondary to primary payers other than Medicare, it must provide the same
level of secondary benefits when Medicare is primary in order to comply with the
nondifferentiation provision.
80.4 - Taking Into Account Medicare Entitlement
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
Sections 1862(b)(1)(A), (B), and (C) of the Act provide that GHPs and LGHPs may
not take into account that an individual is entitled to Medicare in any of the following
situations:
• 	Beneficiaries age 65 or older who are covered by a GHP (of employers who
employ at least 20 employees) by virtue of the individual's current employment
status or the current employment status of a spouse of any age (see Chapter 2,
§10);
• 	Beneficiaries who are eligible for or entitled to Medicare on the basis of ESRD
and who are covered by a GHP (without regard to the number of individuals employed
and regardless of current employment status) during the first 30 months of ESRD-based
Medicare eligibility or entitlement (See Pub. 100-05, Chapter 2, §20); or
• 	Beneficiaries under age 65 who are entitled to Medicare on the basis of disability

and who are covered under a LGHP (i.e., a plan of an employer who employs at least 100
employees) and are covered under the plan by virtue of the individual's or a family member's
current employment status. (See Pub. 100-05, Chapter 2, §30)
A. Examples of Actions that Constitute "Taking Into Account" Medicare
Entitlement
Actions by GHPs or LGHPs that constitute taking into account that an individual is
entitled to Medicare on the basis of ESRD, age, or disability (or eligible on the basis of
ESRD) include, but are not limited to, the following:
• 	Failing to pay primary benefits;
• 	Offering to individuals entitled to Medicare coverage that is secondary to
Medicare;
• 	Terminating coverage because the individual has become entitled to Medicare,
except as permitted under COBRA continuation coverage provisions (see 26 U.S.C.
Section 4980B(f)(2)(B)(iv); 29 U.S.C. Section 1162(2)(D); and 42 U.S.C. Section 300bb-
2 (2)(D));
• 	In the case of a LGHP, denying or terminating coverage because an individual is
entitled to Medicare on the basis of disability without denying or terminating coverage
for similarly situated disabled individuals who do not meet the Social Security definition
of disability;
• 	Imposing limitations (such as providing less comprehensive health care coverage,
excluding benefits, reducing benefits, charging higher deductibles or coinsurance, or
providing for lower annual or lifetime benefit limits or more restrictive preexisting illness
limitations) on benefits for a Medicare-entitled individual that do not apply to others
enrolled in the plan;
• 	Charging the Medicare-entitled individual higher premiums;
• 	Requiring a Medicare-entitled individual to wait longer for coverage to begin;
• 	Paying providers and suppliers no more than the Medicare payment rate for
services furnished to a Medicare beneficiary but making payments at a higher rate for the
same services to an enrollee who is not entitled to Medicare;
• 	Providing misleading or incomplete information that could have the effect of
inducing a Medicare-entitled individual to reject the employer plan, thereby making
Medicare the primary payer. (An example of this would be informing the beneficiary of
the right to accept or reject the employer plan but failing to inform the individual that if
he/she rejects the plan, the plan will not be permitted to provide or pay for secondary
benefits.);
• 	Including in its health insurance cards, claims forms, or brochures distributed to
beneficiaries, providers, and suppliers instructions to bill Medicare first for services
furnished to Medicare beneficiaries without stipulating that such action may be taken
only when Medicare is the primary payer; and

• 	Refusing to enroll an individual for whom Medicare would be secondary payer
when enrollment is available to similarly situated individuals for whom Medicare would
not be secondary payer.
80.5 - Permissible Distinctions in Coverage Allowed a GHP or LGHP
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
A plan is not prohibited from limiting covered utilization of a particular service as long as
the limitation applies uniformly to all plan enrollees. For instance, if a plan limits its
coverage of renal dialysis sessions to 30 per year for all plan enrollees, the plan would
not be differentiating in the benefits it provides between plan enrollees who have ESRD
and those who do not.
If a GHP or LGHP makes benefit distinctions between various categories of individuals
(distinctions unrelated to the fact that an individual is entitled to Medicare but based, for
instance, on length of time employed, occupation, or marital status), the GHP or LGHP
plan may make the same distinctions between the same categories of individuals entitled
to Medicare whose plan coverage is based on current employment status. For example, if
a GHP or LGHP does not offer coverage to employees who have worked less than one
year and who are not entitled to Medicare on the basis of disability or age, the GHP or
LGHP is not required to offer coverage to employees who have worked less than one
year and who are entitled to Medicare on the basis of disability or age.
• 	A GHP or LGHP may pay benefits secondary to Medicare for an aged or disabled
beneficiary who has current employment status if the employer employs fewer than 20 or
100 employees, respectively.
• 	A GHP or LGHP may pay benefits secondary to Medicare for an aged or disabled
beneficiary who has current employment status if the plan coverage is COBRA
continuation coverage because of reduced hours of work. Medicare is primary payer for
this beneficiary because, although he/she has current employment status, the GHP or
LGHP coverage is by reason of the COBRA law rather than by virtue of current
employment status.
• 	A GHP may terminate COBRA continuation coverage of an individual who
becomes entitled to Medicare on the basis of ESRD when permitted under the COBRA
provisions. The only exception in the COBRA law (see 29 U.S.C.1162(2)(D)(ii))
prohibits GHPs from terminating COBRA coverage for retirees and dependents who are
entitled to Medicare when the employee retired before the employer effectively
terminated the regular plan coverage by filing for bankruptcy.
90 - Actions Resulting from GHP or LGHP Nonconformance
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
A. Determination [See 42 CFR § 411.110]
A determination of nonconformance is a CMS determination that a GHP or LGHP is a
nonconforming plan as provided in this section. The CMS may make a finding of
nonconformance for any GHP or LGHP that at any time during a calendar year fails to

comply with any of the following statutory provisions:

• 	The prohibition against taking into account that a beneficiary who is covered or
seeks to be covered under the plan is entitled to Medicare on the basis of ESRD, age, or
disability or eligible on the basis of ESRD (see §70.4 above);
• 	The equal benefits clause for the working aged (see §70.5 above);
• 	The non-differentiation clause for individuals with ESRD (see §70.3 above); or
• 	The obligation to refund conditional Medicare primary payments.
The CMS may make a finding of nonconformance for a GHP or LGHP that fails to
provide correct, complete, and timely information, either voluntarily or in response to a
CMS request, on the plan's primary payment obligation with respect to a given
beneficiary if that failure contributes to:
• 	Medicare mistakenly making a primary payment; or
• 	A delay or foreclosure of CMS's ability to recover a mistaken primary payment.
If CMS determines that a GHP fails to comply with the provision that prohibits taking
into account entitlement to Medicare (see §70.4 above) in a particular year, the GHP is
nonconforming for that year. If, in a subsequent year, that plan fails to repay the
resulting mistaken primary payments, the plan is also nonconforming for the subsequent
year. For example, if a plan paid secondary for the working aged in 2019, that plan was
nonconforming for 2019. If in 2022 CMS identifies mistaken primary payments
attributable to the 2019 violation and the plan refuses to repay, it is also nonconforming
for 2022.
B. Starting Dates for Determination of Nonconformance [See 42 CFR § 411.114]
The CMS's authority to determine nonconformance of GHPs and LGHPs begins on the
following dates:
• 	January 1, 1987, for MSP provisions that affect the disabled;
• 	December 20, 1989, for MSP provisions that affect ESRD beneficiaries and the
working aged; and
• 	August 10, 1993, for failure to refund mistaken Medicare primary payments.
C. Notice to GHP or LGHP of Determination of Nonconformance [See 42 CFR §
411.115(a)]
If central office determines that a GHP or a LGHP is nonconforming with respect to a
particular calendar year, CMS will mail a written notice to the plan with the following:
• 	The determination;

• 	The basis for the determination;
• 	The right of the parties to request a hearing. (The Parties are the GHP or LGHP
for which CMS determined the nonconformance and any employers or
employee organizations that contributed to the plan during the calendar year for
which CMS determined nonconformance.);
• 	An explanation of the procedure for requesting a hearing;
• 	The tax that may be assessed by the IRS in accordance with §5000 of the IRC; and
The fact that, if none of the parties requests a hearing within 65 days from the date on
the notice, the determination is binding on all parties unless it is reopened.
The notice also states that the plan must submit to CMS, within 30 days from the
date on its notice, the names and addresses of all employers and employee
organizations that contributed to the plan during the calendar year for which CMS
has determined nonconformance.
D. Notice to Contributing Employers and Employee Organizations [See CFR 42
§v 411.115(b)]
The CMS mails written notice of the determination, including all the information
specified in subsection C, above, to all contributing employers and employee
organizations already known to CMS or identified by the plan in accordance with
subsection C. Employer and employee organizations have 65 days from the date of
their notice to request a hearing.
E. Penalties
Any entity that violates the prohibition described in subsection A is subject to a
civil money penalty of up to $5,000 for each violation.
If CMS Central Office determines that a plan has been a nonconforming GHP in a
particular year, it refers its determination, including the identity of the contributors
that it has identified, to the IRS, but only after the parties have exhausted all appeal
rights with respect to the determination. Section 5000 of the Internal Revenue
Code of 1986 imposes an excise tax penalty on employers and employee
organizations that contribute to nonconforming GHPs. They are taxed 25 percent of
the employer's or employee organization's expenses incurred during the calendar
year for each GHP (conforming as well as nonconforming) to which they
contribute. This tax penalty does not apply to Federal and other governmental
employers. The IRS administers Section 5000 of the IRC, which imposes the tax
on employers (other than governmental entities) or employee organizations that
contribute to a nonconforming GHP mentioned in §80.

100 - GHP or LGHP Actions to Document Conformance
(Rev. 11755, Issued:12-21-2022, Effective: 01-23-2023, Implementation: 01-23-23)
A GHP or LGHP may be required to demonstrate that it has complied with the MSP
prohibitions and requirements, set forth in §70 of this chapter, and to submit
supporting documentation. If the GHP or LGHP fails to provide acceptable
documentation, the GHP or LGHP could be found to be nonconforming. The A/B
MAC or DME MAC must notify the RO and furnish complete information.
A. Examples
The following are examples of acceptable documentation:
• 	A copy of the employer's plan or policy that specifies the services covered,
conditions of coverage, and benefit levels and limitations with respect to persons
entitled to Medicare on the basis of ESRD, age, or disability for whom Medicare is
secondary payer, as compared to the provisions applicable to other enrollees and
potential enrollees; and
• 	An explanation of the plan's allegation that it does not owe CMS any
amount CMS claims the plan owes as refund for conditional or mistaken Medicare
primary payments. The plan must include all information requested by the A/B
MAC or DME MAC.

Transmittals Issued for this Chapter
Rev # 	Issue Date 	Subject 	Impl Date 	CR#
R12436MSP 12/28/2023 Update to Internet Only Manual 100-05,
Chapter 2, Section 40.2 to Clarify the
Liability Insurance Settlement Provisions
01/20/2024 	13475
R11755MSP 12/21/2022 Significant Updates to Internet Only Manual
(IOM) Publication (Pub.) 100-05 Medicare
Secondary Payer (MSP) Manual, Chapters 1
and 2
01/23/2023 	13000
R118MSP 	04/28/2016 	Individuals Not Subject to the Limitation on
Medicare Secondary Payment (MSP)
05/31/2016 	9576
R113MSP 	08/06/2015 	Instructions for the Shared Systems and
Medicare Administrative Contractors
(MACs) to follow when a Medicare
Residual Payment must be Paid on
Workers’ Compensation Medicare Set-aside
Arrangement (WCMSA) or for Ongoing
Responsibility of Medicals (ORM) Non-
Group Health Plan (NGHP) Medicare
Secondary Payer (MSP) Claims
01/04/2016 	9009
R65MSP 	03/20/2009 	New Common Working File (CWF)
Medicare Secondary Payer (MSP) Type for
Workers Compensation Medicare Set-Aside
Arrangements (WCMSAs) to Stop
Conditional Payments
04/06/2009/
07/06/2009
5371
R64MSP 	01/09/2009 	New Common Working File (CWF)
Medicare Secondary Payer (MSP) Type for
Workers Compensation Medicare Set-Aside
Arrangements (WCMSAs) to Stop
Conditional Payments - Rescinded and
replaced by Transmittal 65
04/06/2009/
07/06/2009
5371
R49MSP 	04/07/2006 	Manualizing Long-Standing Medicare
Secondary Payer (MSP) Policy
05/08/2006 	4024
R45MSP 	12/16/2005 	Interest on MSP Debts 	01/17/2006 	4125

R33MSP 	08/12/2005 	Working Aged Exception for Small
Employers in Multi-Employer Group Health
Plans (GHPs)
05/20/2005 	3768
R28MSP 	04/28/2005 	Working Aged Exception for Small
Employers in Multi-Employer Group Health
Plans (GHPs)
05/20/2005 	3768
R25MSP 	02/25/2005 	Changes Included in the Medicare
Modernization Act (MMA)
04/25/2005 	3219
R18MSP 	08/27/2004 	Application of Medicare Secondary Payer
Provisions for the Working Aged, Disabled
Former Spouses and Certain Family
Members with Coverage Under the Federal
Employees Health Benefits (FEHB)
Program
11/29/2004 	3120
R02MSP 	10/17/2003 	Individuals Not Subject to the Limitation on
Payment
04/01/2004 	2252
R01MSP 	10/01/2003 	Initial Issuance of Manual 	N/A 	N/A
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