MSP validation: How much are underpaid Medicare Advantage premiums costing you?

When it comes to premiums, many Medicare Advantage (MA) plans are being underpaid because of incorrect Medicare Secondary Payer (MSP) adjustments.

It’s a known problem – Commercial plans mandatory Section 111 reporting creates instances of other coverage for a member. This flags the MA plan as the secondary payer for that member resulting in a negative MSP adjustment. Meanwhile, in some instances the MA plan could continue to pay the member’s claims as primary.

Though most MA plans have a process in place to attempt to correct the records and restore underpaid premiums, many don’t realize just how much it could be costing them. In many cases, efforts fall far short of what is possible. Would you be surprised to hear that a 30,000-member MA plan could restore more than $4 million in underpaid premiums? Or that a 50,000-member MA plan could restore more than $6.5 million? While individual plan results may vary depending on existing processes, proven results have been staggering.

Based on our work with several MA plans to validate MSP records and restore underpaid premiums, my colleagues and I have designed a simple calculator to determine how much a plan can restore on average:

  • 4% of MA membership has open MSP records
  • 50% of those records have premium restoration potential
  • Each member typically has 15 months of premium that can be restored from initial validation
  • The average monthly premium adjustment is $450 (this varies slightly by state)

If you’re not achieving these results, it’s probably because of hidden challenges inherent in the MSP process, which can stand in the way of maximizing revenue from MSP.

  • Focused and skilled resources. Validating open MSP records and restoring the underpaid premiums is a time-consuming effort that requires focus and skill. And who is not resource constrained these days? If a plan does focus on identifying and restoring underpaid premiums, it’s lucky to have one or two people managing the effort as one of multiple aspects of their jobs.
  • A narrow view of open records. If you focus only on open MSP records for actively enrolled members or examine only a portion of MSP records per member, you may miss many opportunities to restore premium dollars. Though members may be deactivated, don’t forget that you can restore premiums back to 72 months.
  • Validation dead ends. When I say time-consuming effort, do you automatically think, “validation?” How many hours have been wasted trying to find the right telephone number or learn the right key pad options to get to the right person or department at another insurer to validate a member’s coverage? It’s inefficient, and when it doesn’t work, it leads to escalations, member outreach (abrasion), or dead ends.
  • The long road to update CMS records.  Or maybe, when I say time-consuming effort you think, “CMS updates.” Whether you submit updates by batch file or ECRS Web, it takes time and requires resources skilled in the nuances of CMS systems. Success here is partially dependent on the completeness of information gathered during the validation effort. Also key is the method you choose to submit your updates. Hint: ECRS Web may require more time and focus at first, but it typically yields more acceptances after first submittal – up to 99.9%. Batch updates are known to have a 60% – 70% acceptance rate.

Whatever the size of your MA plan, it pays to actively look at open MSP records and premium restoration potential. If you want to learn more about how to evaluate your potential, improve your process, learn best practices, or enhance your team’s skills, we’ll be happy to talk you through it.


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Discovery Health PartnersMSP validation: How much are underpaid Medicare Advantage premiums costing you?