Getting your claims reimbursed is no less than a battle in healthcare. Even small details that seem insignificant at first can lead to denials. One of these details that, as a healthcare provider, you will have to deal with is determining who pays first when a patient has insurance from more than one payer. Medicare Secondary Payer (MSP) Code is a solution to this issue. So, what is it?
Well, the Medicare MSP code is a specific identifier that is used on both electronic and paper claims to communicate to the Centers for Medicare & Medicaid Services (CMS) that another insurance company is the primary payer. In simple words, by using these codes, you tell Medicare: “Do not pay this full amount yet; another entity is responsible first.”
Now, you might be wondering what the Coordination of Benefits (COB) does then. Let’s explain the difference simply. When a patient is covered by Medicare and another insurance plan (such as a Group Health Plan, Workers’ Compensation, or No-Fault insurance), COB rules determine which payer is “primary” (pays first) and which is “secondary” (pays the remainder, up to limits). The MSP code identifies the reason why Medicare is secondary.
Significance of MSP Code in Medical Billing
The importance of MSP codes extends to more than just simple claim filing. They are actually the linchpin of the entire billing cycle. Incorrectly billing Medicare as primary when it should be secondary is considered overbilling. If not corrected, this can be viewed as abuse of the system. Let’s shed more light on it.
When Medicare pays a claim that should have been paid by a commercial insurer, the provider is liable to refund that money. This often happens months or, in some cases, years later, during an audit, disrupting cash flow. Conversely, billing a commercial payer when Medicare is primary results in denials from the commercial payer, delaying revenue by months.
Role of MSP Codes in Medical Billing
Now that we have discussed what MSP codes are in medical billing and why they are essential, let’s briefly discuss the role of these codes in billing.
If we want an analogy to understand the MSP codes better, think of traffic signals. Why? Well, these codes direct the flow of the claim to the correct payer sequence.
When a patient arrives, the intake staff must determine if the patient has other insurance. If they do, specific rules that are based on age, employment status, and disability dictate the order of payment. Once the primary payer is identified, the MSP code is entered in the claim (Loop 2000B, SBR segment in electronic 837P claims, or Form Locators on UB-04/CMS-1500 forms). This code prevents Medicare from automatically rejecting the claim as a duplicate or processing it erroneously as primary.
But is simply knowing the correct code enough to get reimbursement? Not necessarily. To get proper reimbursement, the selected Medicare secondary payer code must perfectly align with the patient’s record in the Common Working File (CWF). For example, if you submit a claim with MSP Code 12 (working-aged beneficiary) but Medicare’s records show the patient has retired, the claim will hit a denial wall.
So, the role of these codes is not only linked to claims, but also to front desk data collection, and in extension to every step of the billing process.
Types of MSP Codes
The MSP billing needs to be very logical. That’s why these codes are further classified into subtypes, as explained by the CGS Medicare:
- Condition codes
- Value codes
- Occurrence codes
- Primary payer codes
- Patient relationship codes
- Remarks
Here is a brief description of each of these:
- Condition Codes: Two-digit numeric or alphanumeric codes used on UB-04 claims to identify the type of Medicare Secondary Payer situation (e.g., 02 = Condition is employment related, 09 = Neither the beneficiary nor spouse is employed, D8 = Change to make Medicare the primary payer).
- Value Codes: These two-digit numerical codes are entered in the UB-04 Value Code fields to report the specific dollar amounts associated with the primary payer’s payment or the MSP-related charges.
- Occurrence Codes: These two-digit numeric codes are used to capture key dates tied to an MSP event, such as the date an accident occurred or the date a Medicare beneficiary’s other coverage became effective.
- Primary Payer Codes: These are single-digit alphabetical codes that are not reported directly on an MSP claim. Rather, these are applied when the claim is transferred to the Fiscal Intermediary Standard System (FISS). Codes A to L (except C) must match the MSP VC reported on the claim. (e.g., MSP VC 12 = Primary Payer Code A).
- Patient Relationship Codes: These are also two-digit numerical or alphanumeric codes that explain the patient’s relationship to the beneficiary. (e.g., 01 = Spouse, 39 = Organ donor, G8 = Other relationship).
- Remarks: In the case of conditional claims, these two-digit alphabetical remark codes are entered (in the Remarks field in the UB-04 forms) to explain specific circumstances. (e.g., NB = Not a covered benefit. Report with occurrence code 24 and the date the insurance was denied.)
Here is how the codes typically correspond to one another:
| Type of Coverage | Value Code | Payer Code | Occurrence Code |
|---|---|---|---|
| Working Aged | 12 | A | N/A |
| ESRD | 13 | B | 33 |
| Automobile/No-Fault | 14 | D | 01, 02, 03, 06 |
| Worker’s Compensation | 15 | E | 4 |
| Public Health Svc, Other Federal Agency | 16 | F | N/A |
| Black Lung | 41 | H | N/A |
| Veteran’s Administration | 42 | I | N/A |
| Disability | 43 | G | N/A |
| Liability | 47 | L | 01, 02, 03, 06 |
| WCMSAs | 15 | W | N/A |
| Medicare | N/A | Z | N/A |
Source: Novitas Solutions
How to Use MSP Codes?
Using MSP codes in medical billing is a complex and multi-step process. It involves intake, coding, and billing teams working in unison. Unlike what many new billers think, it is not enough to simply select a code from a dropdown menu. The supporting data on the claim must corroborate that code.
Every visit should begin with the MSP Questionnaire (MSPQ). CMS requires providers to determine if Medicare is the primary or secondary payer at every encounter. This questionnaire asks about employment status, accident history, and other insurance details.
Based on the answers to this questionnaire, the medical billers should select the appropriate condition, value, payer, patient relationship, and occurrence codes that we discussed in the previous section.
Final Thoughts
In this guide, we explained what MSP codes in medical billing are, why they are important, the types of MSP codes, and how you can use them correctly in your claims. For proper reimbursement of your claims, you must learn everything we have explained in this blog and use automated billing software that can pick the correct codes based on the provided information.
However, even with all the knowledge, medical billing can be a headache. That’s why it is better to get professional medical billing and coding services from third-party companies like NeuraBill. These companies have the knowledge, expertise, experience, and tech to achieve accuracy that in-house teams can’t.
