New York State seal

March 10, 1987

SUBJECT: INSURANCE

CIRCULAR LETTER NO. 3 (1987)

TO: ALL INSURERS LICENSED TO WRITE ACCIDENT & HEALTH INSURANCE IN NEW YORK STATE, INCLUDING ARTICLE 43 CORPORATIONS, AND CORPORATIONS WITH CERTIFICATES OF AUTHORITY UNDER ARTICLE 44 OF THE PUBLIC HEALTH LAW

RE: MEDICARE AS SECONDARY PAYOR

Enclosed are copies of a letter to me from John C. Berry of the United States Health Care Financing Administration and an accompanying explanatory memorandum on the provisions of various Federal Statutes and Regulations which serve to make the Medicare program secondary to other sources of payment. It is expected that all entities subject to the jurisdiction of this Department will become familiar with and comply with the provisions of these Federal laws. Any contractual modifications required to comply with these federal laws should be expeditiously submitted to this Department for review and approval.

Very truly yours,

[SIGNATURE]

JAMES P. CORCORAN

Superintendent of Insurance

Encl.

Refer to: BPO-P33

Mr. James P. Corcoran

Superintendent of Insurance

New York Department of Insurance

160 West Broadway

New York, New York 10013

Dear Mr. Corcoran:

We are writing regarding the provisions of the Social Security Act which make Medicare a secondary payer to other insurers. While we have generally been pleased with the support shown by most of the insurance industry as we have implemented these rules, we are concerned about those insurers who are still not coordinating benefits properly with the Medicare program. Since there have been a number of recent changes affecting the Medicare Secondary Payer (MSP) provisions, we are taking this opportunity to provide each State Insurance Commissioner with some important information on this program. We would also like to enlist your support in assuring that private insurers pay primary benefits in those situations where Federal law requires that Medicare is the secondary payer.

Notwithstanding those exclusions which have been part of the Medicare program since its inception (Workers' Compensation, Black Lung, Veterans Administration), Medicare's role as a secondary payer of health insurance benefits is a relatively new one. In 1980 Congress mandated that Medicare pay only secondary benefits where payment for services is available under automobile medical or no fault insurance or any liability insurance. Since that time, additional MSP provisions have been added. Medicare is now secondary to employer group health plans (EGHPs) of "working aged" beneficiaries age 65 and older and is the secondary payer for beneficiaries age 65 and older who have working spouses of any age with EGHP coverage. The working aged and "spousal" provisions previously applied only to beneficiaries age 65-69, but were extended to cover those over age 69 under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) effective May 1, 1986. Medicare is also the secondary payer for a period of up to 12 months for those beneficiaries entitled to benefits solely on the basis of end stage renal disease (ESRD) who also have EGHP coverage. Effective January 1, 1987, Medicare will be the secondary payer for disabled beneficiaries who elect to be covered by an EGHP of certain large employers. The "disabled" amendments are contained in Section 9319 of the Omnibus Budget Reconciliation Act of 1986.

We have enclosed a document entitled "Medicare As A Secondary Payer" which explains each of the MSP provisions and includes a chart which summarizes the

Medicare As A Secondary Payer

Until 1980, when Congress mandated that Medicare pay only secondary benefits in certain situations, the program had generally assumed a position of primary payer responsibility for its beneficiaries. Since that time there have been other changes in the Medicare Law which have added new circumstances under which Medicare is a secondary payer. A chart of Medicare secondary payer (MSP) legislative and regulatory references follows the text below. MSP is essentially the same concept known in the private insurance industry as coordination of benefits and refers to those situations where Medicare does not have primary responsibility for paying the medical expenses of a Medicare beneficiary. The main purpose of this document is to clarify those circumstances under which Medicare is a secondary payer.

MSP is not a completely new concept, since some other programs have been primary to Medicare since its inception. Services for which benefits are payable under workers' compensation plans, the Federal Black Lung Program or authorized by the Veterans Administration have always been excluded from payment under Medicare. The Medicare program can, however, pay secondary benefits in certain situations where these programs do not pay for services in full. Since our main purpose here is to summarize the more recent changes to the law which make Medicare a secondary payer, these exclusions will not be discussed further, but are included in the chart of legislative and regulatory references.

Basically, there are four areas addressed by recent legislation making Medicare the secondary payer:

(1) Where services are reimbursable under automobile medical, no fault or any liability insurance.

(2) Where a Medicare beneficiary age 65 or older has employer group health plan (EGHP) coverage through his own employment or the employment of a spouse (of any age).

(3) Where a beneficiary is entitled to Medicare solely on the basis of end stage renal disease (ESRD), Medicare is secondary to an EGHP for a period of up to 12 months after the individual has been determined eligible for ESRD benefits.

(4) Where a disabled beneficiary (except ESRD beneficiary) elects to be covered by an EGHP as a current employee of certain large employers or family member of such employee.

Where an employer group plan pays benefits as primary payer, but does not pay in full for the services, secondary Medicare benefits based on Medicare reimbursement levels may be paid to supplement the amount paid by the employer plan. Also, if an employer plan denies payment for particular services because they are not covered by the plan, primary Medicare benefits may be paid for them subject to Medicare program coverage requirements. Claims for Medicare primary benefits will be denied, however, when an employer plan denies payment based solely on an assertion that such plan pays only secondary benefits for services covered by Medicare. This action is specified in 42 CFR 405.341(C)(1) of the Federal regulations which states that Medicare will not pay primary benefits for otherwise covered services even though the employer plan states that its benefits are secondary to Medicare's or otherwise excludes or limits its payments to Medicare beneficiaries.

The legislative history of the working aged provisions includes three separate satutes. The Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) required Medicare to be secondary payer for workers age 65-69 and their spouses age 65-69, who are covered by their employer's group health plan. Under the Deficit Reduction Act of 1984 (DEFRA) the working aged provisions were expanded to spouses age 65-69 of employees under age 69 who must be offered dependent group health coverage. The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) amendments removed the age 69 limit for employees and spouses; it became effective May 1, 1986.

In addition to amending the Social Security Act, the acts dealing with the working aged provisions amended the Age Discrimination in Employment Act (ADEA). Questions regarding ADEA compliance should be directed to:

Executive Secretariat

Equal Employment Opportunity Commission

2401 E Street, N.W., Room 214

Washington, D.C. 20506

Telephone: (202) 634-6592 or (202) 634-6690.

LIMITATIONS ON PAYMENT FOR SERVICES TO INDIVIDUALS ENTITLED TO BENEFITS SOLELY ON THE BASIS OF END STAGE RENAL DISEASE WHO ARE COVERED BY EMPLOYER GROUP HEALTH, PLANS

Medicare benefits are secondary to benefits payable under an employer group health plan in the case of individuals who are entitled to benefits solely on the basis of End Stage Renal Disease (ESRD) during a period of up to 12 consecutive months. The 12-month period begins with the earlier of:

(1) The month in which a regular course of renal dialysis is initiated or,

(2) In the case of an individual who receives a kidney transplant, the first month in which the individual becomes entitled to Medicare.

November 1986

 

MEDICARE SECONDARY PAYER LEGISLATIVE/

 

REGULATORY REFERENCE

 
 

Legislative

 

Provision

Authority

 

Auto Medical, No-

953 of ORA 1980

 

Fault or any

   

Liability Insurance

1862(b)(1) of

 
 

Social Security Act

 
     

Subrogation

2344 of DEFRA 1984

 
     
 

1862(b)(3) of

 
 

Social Security Act

 
     

Working Aged

   
     

Workers Compensation

1814(c),

 

Black Lung, Veteran's

1835(d),

 

Administration (VA)

1862(b)(1) of

 

Benefits

Social Security Act

 
     

Disabled

9319 of OBRA 1986

 
     
 

1862(b)(4)(A)(i) of

 
 

Social Security Act

 

* TEFRA: effective 1/1/83 for workers

 

(age 65-69) and their spouses (age 65-69).

 

DEFRA: effective 1/1/85 for spouses

 

(age 65-69) who have health insurance

 

through employment of younger (under

 

65) spouse.

 

COBRA: effective 5/1/86 for workers and

 

spouses over age 69.

 

November 1986

 

MEDICARE SECONDARY PAYER LEGISLATIVE/REGULATORY REFERENCE

 

Legislative

Regulatory

Effective

 

Requirements

Citations

Date

 

- Payment is to be denied

42 CFR 405.322-325

12/5/80

 

when payment can reasonably

     

be expected from an automobile

     

or liability insurance plan.

     
       

- Applies to liability,

     

automobile no-fault, automobile

     

medical (personal injury

     

protection), insurance.

     
       

- Includes self-insured plans.

     
       

- Secretary may waive recovery

     

action if not warranted.

     
       

- Clarifies the Federal Government's

7/18/84

   

subrogation rights to recover Medicare

     

benefits directly from any payer who is

     

primary to Medicare or from any entity

     

that has been paid by the primary payer.

     
       

- Allows Medicare to collect in place

     

of the beneficiary or to file an

     

independent claim.

     
       

. Employer Responsibilities

 

*

 
       

- Applies to employers with 20 or more

     

employees.

     
       

- Requires employers to offer aged

     

employees and aged dependents of

     

employees (of any age) health

     

coverage equivalent to that

     

offered to their younger

     

employees.

     
       

- Employer may not offer Medicare

     

supplemental packages.

     
       

- Prohibits payment for services

42 CFR 405.311a

1966

 

authorized or provided by a

     

Federal agency.

42 CFR 405.316-321

   
       

- Prohibits payment for items or

     

services paid by a governmental

     

agency.

     
       

- Prohibits payment for items or

     

services to the extent payment

     

has been made under a workers'

     

compensation law or plan.

     
       

- Individual is responsible for filing

     

the workers' compensation claims.

     
       

- Applies to disabled beneficiaries

1/1/87

   

(except ESRD beneficiaries) who elect

     

to be covered by an employer group

     

health plan as a current employee or

     

family member of such employee.

     
       

- Applies to employers with 100 or more

     

employees.

     
       

- Medicare is secondary payer when employee

     

accepts group coverage.

     

* TEFRA: effective 1/1/83 for workers (age 65-69) and their

 

spouses (age 65-69). DEFRA: effective 1/1/85 for spouses

 

(age 65-69) who have health insurance through employment

 

of younger (under 65) spouse.

 

COBRA: effective 5/1/86 for workers and spouses over age 69.

 

November 1986

HEALTH CARE FINANCING ADMINISTRATION

MEDICARE SECONDARY PAYER

REGIONAL OFFICE CONTACT PERSONS

       

REGION

STATES

NAME/TITLE

TELEPHONE NO.

 

SERVED

   

Boston

CT, MA, ME,

Norma Burke, ARA for Program

(617) 223-6871

   

Operations

 
 

NH, RI, VT

Justin Dowling, MSP Coordinator

(617) 223-7746

       

New York

NY, NJ,

Theodore Shulman, ARA for Program

(212) 264-8517

   

Operations

 
 

PR, VI

Debra Smith, MSP Coordinator

(212) 264-2595

       

Philadelphia

DC, DE, MD,

Hampton D. Jesse, Jr., ARA for

 
 

PA, VA, WV

Program Operations

(215) 596-6828

   

Mark Vogel, MSP Coordinator

(215) 596-6839

       

Atlanta

AI, FL, GA,

Richard L. Morris, ARA for Program

(404) 221-2163

   

Operations

 
 

KY, MS, NC,

Glenn Smith, MSP Coordinator

(404) 221-0141

 

SC, TN

   
       

Chicago

IL, IN, MI,

Judith D. Stec, ARA for Program

(312) 353-9840

   

Operations

 
 

MN, OH, WI

Toni Bradley, MSP Coordinator

(312) 353-4937

       

Dallas

AR, LA, NM,

James R. Merryman, ARA for Program

(214) 767-6418

   

Operations

 
 

OK, TX

Judy Brown, MSP Coordinator

(214) 767-6441

       

Kansas City

IA, KS,

Dean R. Mordy, ARA for Program

(816) 374-3539

   

Operations

 
 

MO, NE

Bill Fischer, MSP Coordinator

(816) 374-5033

       

Denver

CO, MT, ND,

Darrel Muhr, ARA for Program

(303) 844-6149

   

Operations

 
 

SD, UT, WY

Chuck Hynden. MSP Coordinator

(303) 844-6137

       

San Francisco

AZ, CA,

John L. O'Hara, ARA for Program

(415) 556-2645

   

Operations

 
 

HW, NV

Agnes Summers, MSP Coordinator

(415) 556-6566

       

Seattle

AK, ID,

Norman V. Meyer, ARA for Program

(206) 442-0438

   

Operations

 
 

OR, WA

Don Ille, MSP Coordinator

(206) 442-0449

ARA - Associate Regional Administrator