Q&A: Billing secondary insurance for observation services

Q: We have a case in which there was an observation order for a patient with Medicare Part B as a primary insurance and Cigna as a secondary insurance. If this is billed to Medicare and denied, can the secondary insurance be billed?

A: There are two things that need to be addressed in this question. If it was an outpatient procedure, then you need to double-check why you have the patient in observation. Unless there is something that was abnormal in that situation, the patient shouldn't have been in observation to begin with. The patient should have been an outpatient in a bed only.

Then, you would need to check with the secondary insurance. In some cases, the secondary would also want to be notified prior to the surgery to make sure that medical necessity is met.

You still are obligated to follow the payer’s billing rules. Generally, if it's a secondary insurer, the payer is only going to pay what Medicare didn't based on the Medicare policy.

For more informaiton, see "Mastering the Inpatient-Only List: Strategies to Ensure Compliance and Avoid Denials."