When the secondary pays more than the Medicare allowed amount

[CatchTheWind]

If a patient has Medicare plus a commercial insurance and Medicare is primary, Medicare pays 80% of the allowed amount, and then the secondary pays MORE than the remaining 20% (perhaps because their fee schedule is higher than Medicare's). Can you keep the difference, or do you have to refund it so that you aren't getting more than the Medicare allowance?

 

[b.cobuzzi]

I am confused. Did the secondary pay as if they are primary? Secondary insurances base their payments on the primary payment (remittance advice) and pay based on what was not paid by the primary. The Secondary insurance should not have paid without knowing what the primary paid.

I think you need to determine if the other insurance is paying as primary and then contact the patient and get to the bottom if Medicare is primary or secondary to this non-medicare insurance. Once you find that out, you may find out that you have a refund to medicare.

I would like to know more about the case before I give you advice. But I can tell you that practices are not allowed to keep more money than what is due them. Every state has escheat laws that prevents that. If you do not refund moneys, eventually, the practice has to escheat credit balances to the state who keeps track of unclaimed funds. Please get back with more investigation and we can discuss further.

 

[cgaston]

The rule is that you cannot accept more than your contracted amount:


So, for example, say your charge is $200:

Medicare allowed amount is $100. They pay $80 and you bill the balance to "carrier B" for the $20

Your contract with carrier B allows $150. Since you are allowed to collect your contracted amount you would be able to accept the Carrier B allowed amount of $150 even though the balance after Medicare payment was only $20.

Carrier B allows $150 so the maximum total you can collect is $150. Since Medicare already paid $80 the most you would be able to accept is $70 ($150 - $80 = $70).


I will say that this is a rare occurrence but it can happen.

 

[b.cobuzzi]

"Carrier B" cannot be a medigap because they base their payment on what medicare allows
"Carrier B" is not really a Carrier because carriers are Medicare claims processors and will only allow the Medicare allowable, not more than the medicare allowable
If the B insurance is a secondary insurance, they should not be processing without the remittance advice from Medicare, the primary and should be paying based on the allowables and co-insurance from the primary insurance. So, this scenario, still does not make sense, unless the second insurance is processing as a primary insurance.

 

[cgaston]

Nowhere on this thread was it stated that the secondary payor is a Medigap plan.

I have been in this industry since 1999 and I can tell you that I can count on one hand the number of times that it has happened, but it HAS happened. Usually the patient has a commercial plan that is NOT a managed care plan. Like I said, it is not a normal situation but people should be aware that it can happen.

If anything is taken away from my post it should be that we are bound by the contracted rates we negotiate with each insurance carrier. If you are unsure whether or not the second payment is indeed correct you can always contact the insurance carrier and they can explain the rationale for the payment.

 

[b.cobuzzi]

cgaston, I discussed both cases, if this was a medigap or if this was a secondary insurance.

Either case, processes the claim based on the primary remittance advice. There is something wrong with the processing of the secondary insurance that does not process their payment in context of the primary payment and what the remittance advice says, which has the allowable, paid amount and patient responsibility. Secondary insurances are only supposed to pay up to what the primary did not pay based on that remittance advice. If they paid more, be prepared for a refund request. And if they paid more, you have unearned funds that if not returned to the payer will be required to be escheated to the state. (As I indicated in my posting before). Secondary insurance is still secondary to the primary, tied to the primary’s remittance.

 

[trarut]

Oddly, we had a few plans who used to do this and the overpayments were legit. The secondary plan was calculating their payment from their primary allowed amount less the Medicare payment and paying the difference.

I always pushed it back to the plan as an overpayment for investigation so we would get written confirmation that the claim was processed correctly. Once we had that, we posted an adjustment to offset the overpayment amount.