Definition

• As of 2011, the Centers for Medicare and Medicaid Services (CMS) administers three of the four parts that make up Medicare. These include Part A, the hospital insurance portion, Part B, the medical insurance portion and Part D, the prescription drug portion. Private insurance companies administer a comprehensive policy that combines Parts A and B and optionally, Part D into a single policy called Medicare Part C, or a Medicare Advantage Plan.
  
  

General Information

• Coordination of benefits, also called order of payment, applies when you have private insurance in addition to coverage under Medicare. The insurance provider paying first, whether Medicare or a private insurer, is the primary payer. If a balance remains, any additional provider or providers that the patient may have are secondary payers. When medical charges can apply to more than one insurance carrier, CMS determines order of payment via coordination of benefit rules that stipulate whether Medicare is the primary or secondary payer.
  
  

Coordination of Benefit Rules

• Although Medicare generally tries to be a secondary payer, in certain situations Medicare pays first. Medicare is the primary payer when you are over the age of 65 and in addition, hold retiree coverage under an employer group health insurance plan. Medicare also pays first in certain situations where you or your spouse are currently working and have a group health insurance policy through your employer. If you are under the age of 65 and on Medicare because of a disability or the presence of kidney disease, Medicare pays first if your employer has 100 or more employees. If you are over the age of 65, Medicare pays first if your employer has 20 or more employees. Finally, if you are on Medicare because of kidney disease, once you reach a 30-month threshold, Medicare also pays first. In most any other situation, Medicare is the secondary payer. If you have questions, CMS recommends calling its customer service department (see Resources).
  
  

Important Points

• Make sure to let your doctor or hospital know if you carry both Medicare and private insurance. This can reduce the possibility of order of payment billing errors and ensure timely payment of claims. Another point to keep in mind regarding coordination of benefits is that these rules only apply to costs your insurance normally covers. If your medical costs fall outside those your policy defines, you could end up with an outstanding bill no matter how many policies you have in effect.