Medical billing is an important part of healthcare. It uses codes and rules to make sure providers get paid for medical services. One area that can be confusing is the Medicare Secondary Payer (MSP) code. These codes tell us when Medicare is not the first insurance to pay a patient’s bill.
In this simple guide, we’ll explain MSP codes, what terms like “stage renal disease ESRD” and “workers compensation” mean, and why following rules from the Centers for Medicare & Medicaid Services (CMS) and Federal Acquisition Regulation clauses is so important.
Understanding MSP Codes and Their Role in Medical Billing
What is Medicare Secondary Payer (MSP)?
Medicare Secondary Payer (MSP) means that Medicare is the second insurance to pay for someone’s medical service. This happens when another insurance—like employer health plans, liability insurance, automobile insurance, or workers compensation—has to pay first. Medicare pays any remaining amount.
For example, If a patient has liability insurance because of an accident or worker’s compensation, those payers must pay before Medicare. It’s important to know who the primary payer is. This helps follow CMS fee schedules, basic unit values, and Federal Acquisition Regulation guidelines.
What are MSP Codes?
MSP codes are two-digit numbers used on claims. They show why Medicare is not the primary payer. MSP codes help send claims to the right insurance company and follow CMS rules. Using the wrong MSP code can cause delays, lost money, and extra reviews.
Getting MSP codes wrong—or not following the “agreement creating any modified” insurance duties—can cause money problems or legal action. Correct MSP codes also show your practice meets the fitness for Medicare Medicaid services CMS expects.
Why are MSP Codes Important?
MSP codes are very important in medical billing. Here’s why:
Make Billing More Accurate: MSP codes make sure the right insurance pays first and prevent mistakes.
Follow Federal Rules and CMS Guidance: You must follow the applicable Federal Acquisition Regulation clauses and CMS rules to avoid fines.
Protect Against Claim Denial: Wrong MSP codes can lead to denied or delayed claims.
Keep Payment Fast and Simple: Correct codes help speed up payments and reduce paperwork.
Avoid Legal Problems: Right coding helps protect your business from legal problems with groups like the American Medical Association or ADA copyright notices.
Common Medicare Secondary Payer (MSP) Codes and Simple Examples
Let’s look at the most common MSP codes you may use. These include codes for working aged people, stage renal disease ESRD, auto and liability insurance, and workers compensation.
MSP Type 12 (Working Aged):
Patient over 65 with a job-based plan. Medicare pays second.
MSP Type 13 End-Stage Renal Disease (ESRD):
A person with stage renal disease ESRD and employer plan is still primary.
MSP Type 14 (No-Fault):
Medical costs from a car accident, paid by auto insurance first.
MSP Type 43 (Disabled Beneficiary with LGHP):
Person under 65 with a disability using a job-based insurance.
MSP Type 47 (Liability Insurance/Liability Set Aside):
Medicare is secondary to liability insurance (such as homeowners, malpractice, or product liability).
How to Use MSP Codes the Right Way
Using MSP codes correctly helps your practice get paid and follow the law.
Check Insurance Often: Always check a patient’s insurance at every visit.
Know Who Pays and What the Rules Are: Make sure you know when each type of insurance—like worker’s compensation or liability insurance—should pay first. Follow CMS fee schedules and rules.
Send All Needed Documents: Include things like accident reports or employer verification when you send claims.
Watch for Rule Changes: CMS and federal regulators often update rules, including those for the Federal Acquisition Regulation.
Teach Patients and Staff: Help your staff and patients understand who should pay first. This avoids confusion and billing errors.
Respect Copyright and Data Use: Any use or sharing of code or software from the American Medical Association must follow all rules.
What Happens If MSP Codes Are Wrong?
Bad MSP coding can cause:
Lost Money: Denied or delayed payments cause cash flow problems.
Regulatory Reviews: Bad coding can trigger audits from CMS, the AMA, or legal teams.
Patient Confusion: If the wrong insurance pays, patients may get unexpected bills.
If you break rules for federal acquisition regulation clauses or copyright, like those for CPT® codes, you may face big penalties.
Frequently Asked Questions (FAQs)
What is an MSP Claim?
An MSP claim is any claim where Medicare is the second payer. Correct MSP codes help follow fee schedules, units, and rules for billing different payers, including liability insurance and workers compensation.
What If I Break AMA CPT® Rules?
If you break AMA CPT® copyright, especially for using or sharing technical data, you may face legal problems. Intellectual Property Services handle these issues.
Who Checks MSP Coding?
Groups like the Centers for Medicare & Medicaid Services (CMS), American Medical Association (AMA), and government regulators check coding through audits.
Final Thoughts
It’s important for everyone in medical billing to understand MSP codes. Whether you deal with stage renal disease ESRD, working aged patients, liability insurance, or CMS fee schedules, learning how to use these codes helps you get paid correctly and avoid problems.
Always follow Federal Acquisition Regulation clauses, protect intellectual property, and stay up to date with CMS rule changes. Good MSP coding keeps your practice safe and helps you meet the standards for fitness for Medicare Medicaid services CMS wants.
If you have questions about MSP claims, billing rules, or insurance, check official CMS resources or get help from legal experts or contact the American Medical Association.
