Like good barbecue, a smooth, predictable Medicare Secondary Payer program requires managing a long list of dynamic variables.
A few weeks ago, I made tomahawk steaks for my kids. Like any good cook, I started with the fundamentals. I chose a quality cut of meat, the right seasoning blend, and a cooking process designed to bring out the best in both—low and slow over hardwood coals, with just enough smoke to add depth and character without overwhelming the flavor. Everything went to plan, and the smiles on my kids’ faces more than justified the investment of time, attention, and preparation.
Of course, no one who has spent time around a grill expects conditions to remain static. The wind shifts, the fire burns hotter than expected, people have different definitions of done, and one steak cooks faster than another. A skilled pitmaster navigates these changes successfully because they continuously observe what is happening and adjust accordingly.
In a perfect world, Medicare Secondary Payer would work much the same way. Instead, we collect the right inputs—demographics, eligibility records, risk indicators, and location, among others—and load them into the systems designed to make accurate payment decisions. The ingredients are correct, and the system is built to function well. The problem is that members’ lives do not remain static any more than a live fire in a barbecue grill stays the same. People move, they change jobs, they marry and divorce, they gain and lose insurance coverage, and they develop new health concerns, recover from others, and age into new eligibility categories.
When those changes fail to reach the systems responsible for Medicare Secondary Payer decisions, the process continues operating on outdated information, and payers miss out on funds they need to provide care for their members. It’s the equivalent of grilling a steak according to the conditions that existed when it first touched the grate. The original inputs may have been correct, but the variables that determine the outcome shift.
Let’s unpack why this happens.
What is the Medicare Secondary Payer program, and why does it affect premium payments?
Medicare Secondary Payer (MSP) is a federal law established to protect the Medicare Trust Fund (MTF). The MTF reimburses health payers that administer Medicare Advantage (MA) plans. Some Medicare beneficiaries have other health coverage, such as a group health plan (GHP) through their employer. When that is the case, the GHP should be the primary payer—meaning it covers the cost of care first—and Medicare, along with the payer administering the MA plan, should pay only after the GHP benefit is exhausted.
When the MA plan’s responsibility is secondary to another other coverage, the Centers for Medicare and Medicaid Services (CMS) reduces the monthly premium it pays to the MA plan for any member flagged as having an alternative primary payer on record.
This reduction can be substantial. When a Medicare Secondary Payer flag is active for a member, it can suppress the MA plan’s monthly premium payment by up to 85%. Given the substantial suppression, it’s important to monitor and validate the information used to arrive at the determination. If that flag is based on outdated information, the payer may be owed significantly more revenue to cover the cost of care for that member. Multiplied across a population, plans risk substantial revenue leakage that compounds with every billing cycle.
The mechanism that triggers this reduction is a record in the Common Working File (CWF), a federal database maintained by CMS that serves as the authoritative coordination-of-benefits record for beneficiaries. When that record indicates a member has active GHP coverage that is primary to Medicare, the reduced payment is applied automatically, immediately, and without notification to the plan.
How Medicare Secondary Payer records get into the Common Working File
Medicare Secondary Payer records come from external reporting entities such as employers, insurers, and third-party administrators. They submit these records through a compliance mechanism known as Section 111 mandatory reporting.
Established under the Medicare, Medicaid, and SCHIP Extension Act (MMSEA), Section 111 requires entities providing primary coverage to Medicare beneficiaries to report that coverage to CMS. The report flows into CMS coordination of benefits systems, is processed, and, if accepted, creates or updates a Medicare Secondary Payer record in the CWF. From that point forward, the record helps to determine how the MA plan gets paid.
The architecture is functional, but neither the system nor the organizations feeding it are perfect. Section 111 governs what information must be submitted, but it was never designed to guarantee data quality. Reporting entities vary considerably in the accuracy, timeliness, and completeness of what they provide.
For example, when a member’s group health plan coverage terminates, that event does not always trigger a timely termination report. When that happens, the MA plan may continue receiving payments as though it is secondary when it has actually become the primary payer. The result is both a payment error in the traditional sense and a data reliability problem.
What Medicare Secondary Payer can learn from other industries about data validation
We have the opportunity to learn from decades of experimentation elsewhere. For example, manufacturers developed quality assurance processes because production systems could efficiently produce defects. One damaged mold could easily produce thousands of defective parts a day if left unchecked. Similarly, financial institutions developed reconciliation frameworks because transaction systems could efficiently propagate inaccuracies. In both cases, leaders discovered that visibility into operations was helpful, but confidence in the underlying data is essential.
The same lesson increasingly applies to Medicare Secondary Payer data. The traditional view of payment integrity focuses on identifying errors after money has changed hands. Payment integrity teams look for incorrectly paid claims, overlooked contract provisions, coding discrepancies, and duplicate charges.
The Medicare Secondary Payer program reveals a growing category of leakage that has nothing to do with the presence of a claim. Instead, it stems from the data. This shift has significant implications for how payers evaluate technology partners. Historically, organizations often selected vendors based on per-member-per-year recovery rates, operational capacity, or time from implementation to value. Those metrics made sense in a pre-pay versus post-pay landscape. Today, they tell only part of the story.
A vendor may recover dollars successfully, but do they provide insight into why the inaccuracies occurred? Can they identify and fix errors before they affect premium payments? Do they have the ability to continuously validate payment-driving information as member circumstances change?
These questions are becoming increasingly important, and they’re ones we’ve borrowed from other industries:
- How does the organization determine whether payment-driving indicators reflect reality?
- How frequently are records reconciled against new information?
- What data sources are compared?
- What methodologies identify discrepancies?
- How quickly can issues be surfaced and corrected?
These may sound like technical questions, but they are reshaping conversations around Medicare Secondary Payer and healthcare operations more broadly. They point toward a future built on data quality, signal detection, and intelligence rather than periodic audits alone.
What technology can do for Medicare Secondary Payer premium accuracy
The shift from payment integrity to healthcare intelligence may well begin with Medicare Secondary Payer data. The most sophisticated strategies combine data expertise with automated validation processes capable of identifying patterns that would be nearly impossible to detect manually at scale. The goal is confidence—confidence that the information driving premium payments is accurate, confidence that payment reductions are truly justified, confidence that administrative records reflect real-world circumstances, and confidence that revenue reflects reality.
Medicare Secondary Payer premium accuracy starts with sourcing and onboarding data. Selection algorithms led by human experts validate records, review the results, and perform additional verification where necessary. The role of the human is to investigate specific issues and oversee the quality of the process—no different than the pitmaster who carefully monitors the steaks on the grill.
Humans excel at detail work and nuances that require subject matter expertise. They do not excel at reviewing millions of records for subtle inconsistencies. Technology was built for that task.
Once adjustments are identified, those updates are initiated through CMS’ Electronic Correspondence Referral System (ECRS) Web, where updates and reversals can be monitored.
Technology makes the difference for Medicare Secondary Payer premium adjustments because it allows for ongoing updates to member status. It supports population-wide monitoring, automated triggers for verification and reverification, and continuous oversight of payment-driving information. These are the same principles that transformed manufacturing, finance, and other industries, and they’re now making their way into healthcare.
The Medicare Secondary Payer program is ultimately about accuracy
Historically, many plans viewed the Medicare Secondary Payer program primarily as a recovery opportunity. The focus was on dollars identified and revenue restored. Those outcomes still matter, and they still have a place in payment integrity. However, they represent the final chapter of a much larger story that now begins with accuracy.
Every recovered dollar represents a situation when reality and recorded information diverged and were later reconciled. Every correction reflects a successful effort to bring the system back into alignment with the truth.
With modern technology, member data can be monitored and validated with each monthly reporting cycle. That shifts Medicare Secondary Payer from a revenue initiative into a case study in how healthcare organizations manage truth. When all stakeholders are working from accurate information, the system produces more correct payments, better financial outcomes, and a greater confidence for everyone involved.
MSP premium accuracy lets us have our steak and eat it too
In barbecue, success comes from paying attention as conditions change, even if all the inputs were correct at the outset. The pitmaster who walks away after lighting the fire is trusting that nothing will change. That’s rarely the case. Checking the temperature, adjusting airflow, and responding to what the grill and the meat are signaling is far more likely to deliver a great meal.
The Medicare Secondary Payer program works the same way. The industry has the data—in fact, we have more data than ever before. The challenge is knowing whether that data still reflects reality as member circumstances evolve. That’s where healthcare intelligence and modern validation technology make the difference. They allow us to continuously ask a simple but important question—how do we know this information is still true?
By combining human expertise with technology-driven validation, Medicare Secondary Payer can continue using the systems that already work while improving confidence in the information that drives them. And, just like great barbecue, better outcomes come not from perfect conditions, but from paying attention when conditions change.
My team restores accuracy and revenue for payers serving Medicare Advantage members. Contact us to explore how we can implement and drive value within 60 days.
Michael Feid is the Senior Vice President of Eligibility and Recovery Services at Machinify. He has 20 years of healthcare experience with progressively responsible roles and a history of leading successful payment integrity programs for COB, Medicare Secondary Payer, §111 reporting, data mining, and eligibility management. His experience includes leveraging operational, process-oriented expertise to transform client implementations and program delivery into accelerated growth and revenue while ensuring a positive client experience.
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