Medicare secondary payer (MSP) is the term used by Medicare when Medicare is not responsible for paying first. MSP regulations for beneficiaries entitled to Medicare due to age or disability require information on employer size to determine the correct primary payer.[1] Employer size is based on the number of employees during specified time periods, not the number of individuals covered under the Group Health Plan.
[1] Employer size is not a factor if the beneficiary is entitled to Medicare due to ESRD.
As your insurer, HAP is required by law to report employer size data to the Centers for Medicare and Medicaid Services (CMS)[2] through Section 111 reporting. This reporting ensures proper coordination of benefit payments and protection of the Medicare Trust.
[2] Federal agency that oversees the Medicare program.
Failing to report the accurate employer group size, or changes in employer size, may result in incorrect primary payment errors. Per CMS, if there are errors in primary payments, the group health plan (employer) or issuer (HAP) may have to reimburse Medicare.
It's important to report changes in your employer size that may impact the coordination of benefits. Failing to report employer size or changes in employer size may result in the GHP having to reimburse Medicare for primary payments made in error.
Employer group size is determined by answering the following questions:
- Under the MSP provisions, an employee is an individual who works for an employer, on a full or part-time basis, and receives remuneration for their work. This includes anyone for whom a W-2 form was filed under the Employer Identification Number (EIN)/Federal Tax ID, including intermittent and/or seasonal employees.
- Subsidiaries of foreign companies must count the number of employees in the organization worldwide.
- If the employer is part of a multi-employer/multiple employer plan, this field should reflect the size of the largest employer in the plan.
- Does an employer have less than 20 full-time and/or part-time employees on their “payroll” and are not part of a multi-employer group health plan?
- Does an employer have 20 or more full-time and/or part-time employees on their “payroll” for each working day in each of 20 or more calendar weeks in the current or preceding calendar year? The 20 weeks do not have to be consecutive.
- Does an employer have 100 or more full and/or part-time employees during the prior calendar year for 50% or more of the employer’s business days?
Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) mandates reporting requirements with respect to Medicare beneficiaries who have coverage under a group health plan (GHP) as well as for Medicare beneficiaries who receive settlements, judgments, awards, or other payment from liability insurance (including self-insurance), no-fault insurance, or workers’ compensation, collectively referred to as Non-Group Health Plan (NGHP) or NGHP insurance.
Section 111 reporting enables Medicare to correctly pay for the health insurance benefits of Medicare beneficiaries by determining primary versus secondary payer responsibility.
