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February 19, 2013

Splitting a "Lump Sum" Primary Payment for Medicare Secondary Payer (MSP) Claims

In some situations, Medicare providers will submit global charges to another primary payer, but Medicare guidelines require the global charge to be split into a technical component (TC) and a professional component (PC). One example is pathology services provided to hospital inpatients; while other insurers may reimburse global charges for these services, current Medicare guidelines require these services to be split. The PC is submitted to Medicare Part B, and the TC must be submitted under Part A (reference: CMS MLN Matters article MM7767).

For MSP claims, when the primary insurer's Explanation of Benefits (EOB) reflects payment for the global code, your Medicare claim must reflect a split payment from the primary insurer. Follow these instructions to split a primary insurer's payment into separate line items:

  • Calculate the percentage of the total billed charges for each line item on your claim.
  • Use these percentages to split the primary payment.

Example: CPT code 88305.

  • Total billed to primary insurer: $125.00.
  • Primary insurer's payment: $80.00.
  • Total billed charge on claim: $125.00. (Decide how you will split the total billed charges on your claim into the PC and TC; they will add up to $125.00.) In our example, we split this into $80.00 for the professional component and $45.00 for the technical component.
  Billed charge (split into components) % of total billed charges Formula Calculated primary payment amount
CPT code/modifier 88305-26 $80 64% $80 x 64% $51.20
CPT code/HCPCS modifier 88305-TC $45 36% $80 x 36% $28.80

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