TN 31 (06-04)
HI 00801.247 Medicare as Secondary Payer of ESRD Benefits
Prior to 1981, Medicare generally paid benefits for covered services regardless of any other health insurance coverage. Effective with September 1981, Medicare became secondary payer to group health plans (GHPs) that cover individuals who have ESRD.
The Medicare Secondary Payer (MSP) provisions for ESRD apply to individuals who are covered under GHPs based on either retirement or current employment status. This differs from the MSP provisions applicable to the aged and the disabled that apply only when group health plan coverage is based on current employment status. However, these provisions do not apply to dually entitled individuals who are covered under GHPs based on retirement (see HI 00801.247C.2.).
B. Policy — P.L.105-33 (BBA 1997)
Under P.L. 105-33, any individual whose Medicare eligibility began on or after 3/1/96, will have primary coverage from his/her GHP for the first 30 months of Medicare eligibility (the first month for which Medicare benefits would have been payable had a timely application been filed). The 30-month coordination period does not include months in the 3-month R-HI qualifying period.
P.L. 105-33 also eliminated the sunset provision that was established under OBRA 90 (see HI 00801.247D.1.) and extended by OBRA 93 (see HI 00801.247C.1.).
C. Policy – P.L.103-66 (OBRA 93)
1. 18 Month coordination period extended
Under P.L.103-66 (OBRA 93), the 18-month coordination period was extended through 9/30/98. Thus, for individuals who were entitled to, or eligible for, Medicare from 5/97 through 9/97, the period during which Medicare was secondary payer under the 18-month coordination period was scheduled to end on 9/30/98. The redefined 12-month period described in HI 00801.247D.1. would have applied to individuals who were entitled to, or eligible for, Medicare after 9/97.
2. Dual coverage
Prior to 8/10/93, Medicare was primary payer for an individual who had coverage based on age or disability and who was also eligible for, or entitled to, Medicare based on ESRD, even if he or she was also covered under a GHP. Effective 8/10/93, Medicare remains secondary payer for the full ESRD coordination period even if the individual subsequently becomes entitled to Medicare on the basis of age or disability.
If an individual who is entitled to Medicare on the basis of age or disability and covered under a GHP based on current employment status subsequently becomes eligible for R-HI (whether or not an application for R-HI is filed), Medicare becomes secondary payer for the ESRD coordination period. At the end of the coordination period, Medicare becomes primary payer even if the individual remains covered under the GHP based on current employment status.
However, if an individual entitled to Medicare on the basis of age or disability and covered under a GHP based on retirement subsequently becomes eligible for R-HI, Medicare remains the primary payer (i.e., there is no ESRD coordination period).
D. Policy – P.L. 101-508 (OBRA 90)
1. Secondary payer for up to 18 months
Under P.L.101-508 (OBRA 90), the 12-month period defined in HI 00801.247.D.2. was extended to 18 months for items and services furnished on or after 2/1/91.
In addition, anyone whose Medicare eligibility began on or after 2/1/90 had primary coverage from his/her GHP for the first 18 months of Medicare entitlement, or the first 18 months of eligibility.
(Under OBRA 90, the 18 month coordination period was to revert to 12 months after 1/1/96. However, OBRA 93 extended the sunset provision through 9/30/98 (see HI 00801.247C.1.).
2. 12 Month period is redefined
Under OBRA 90, the 12 month period was redefined as beginning with the first month of Medicare eligibility (the first month for which Medicare benefits would have been payable had a timely application for entitlement been filed). The redefined coordination period does not include months in the 3 month R-HI qualifying period. This change applied to all 12 month periods, as described in HI 00801.247E., that were in effect on November 5, 1990, the date of enactment of OBRA 90. Thus, 12 month periods (under prior law) that began before 12/89 were not affected.
E. Policy — P.L. 97-35 (OBRA 81)
Under P.L. 97-35 (OBRA 81), Medicare became secondary payer in ESRD cases for a period of up to 12 months when the patient was entitled to Medicare solely on the basis of ESRD, and was covered under a group health plan (GHP).
The period of 12 consecutive months began with a month after September 1981 and prior to February 1990 that was the earlier of:
The month in which a regular course of renal dialysis was initiated; or
The first month that the individual would have been eligible for Medicare, in the case of an individual who received a kidney transplant.
This period usually began before the month the individual became entitled to Medicare, e.g., where the individual became entitled after a waiting period. In such cases, Medicare paid secondary benefits for the portion of the 12 month period during which the individual was entitled to Medicare benefits.
F. Policy — Effect of MSP provisions on filing
Because Medicare will not be paying full benefits in many cases where there is a group health insurance plan, some individuals may not wish to enroll in R-SMI when first eligible.
It is important to remember that the special enrollment period (SEP) rules applicable to aged and disabled individuals do not apply to people entitled to R-HI. Therefore, it is extremely important to properly inform ESRD patients (including dual eligibles) who have GHP coverage about their options with respect to filing an application for R-HI. An individual may wish to:
File for both R-HI and R-SMI at initial R-HI eligibility even though Medicare can only make secondary payments until the end of the ESRD coordination period. With expenses as high as those for treatment of ESRD, an individual may consider secondary Medicare payments to be well worth the monthly SMI premium.
Defer filing for R-HI (and R-SMI) until the end of the ESRD coordination period. This will permit the individual to defer paying for SMI until Medicare becomes the primary payer of benefits.
ESRD patients with GHP coverage should be discouraged from filing for R-HI while rejecting R-SMI at initial eligibility. Once R-SMI is refused, enrollment can only take place during a GEP, with coverage effective the following July. This will usually mean a gap in coverage between the end of primary payments by the GHP and the beginning of SMI in the month of July. It may also result in a premium surcharge for late enrollment. If an individual with GHP coverage files an application for R-HI in the mistaken belief that Medicare will be primary payer of benefits, the application may be withdrawn as provided for in HI 00801.197.