UB04 Condition Codes Code D7: Change to Make Medicare the Secondary Payer

Overview

The code D7 is distinct from other MSP-related condition codes, particularly codes 28 (Patient’s and/or spouse’s EGHP is secondary to Medicare) and 29 (Disabled beneficiary and/or family members’ LGHP is secondary to Medicare), which indicate that Medicare is already the primary payer and the other coverage is secondary. The code should be applied only when the provider has verified that another payer (e.g., employer group health plan, workers’ compensation, or liability insurance) has primary responsibility. Using D7 incorrectly may lead to claim rejections, payment delays, or MSP audit findings where Medicare seeks reimbursement for claims it paid incorrectly as primary ^[1].

When to Use

Code D7 should be used in specific clinical and coverage scenarios where the provider has confirmed that another insurer has primary payment responsibility over Medicare. The most common situations include:

• New employer group health plan (EGHP) coverage: When a Medicare beneficiary or their spouse becomes covered by an active employer group health plan that is primary to Medicare, such as when a person aged 65+ continues working for an employer with 20+ employees. Code D7 notifies Medicare that the EGHP is primary, making Medicare secondary ^[1].

• End of Medicare’s primary ESRD period: For End-Stage Renal Disease (ESRD) patients, Medicare is primary for the first 30 months only if no employer group health plan exists. If an EGHP becomes available after the 30-month coordination period has ended, D7 would be used to signal that Medicare should be secondary to that plan.

• Workers’ compensation or liability settlement: When a beneficiary receives a workers’ compensation settlement, liability insurance payment, or no-fault insurance that assumes primary responsibility for medical expenses related to the injury or illness. Code D7 indicates Medicare should recede to secondary payer status for these services ^[1].

• Correcting a prior claim: If a provider previously submitted a claim with Medicare as primary but later discovers that another insurer was primary, code D7 can be used to request adjustment and re-coordination. This often occurs in MSP corrections.

Providers must not use D7 when:

• Medicare is clearly the primary payer (use codes 28 or 29 instead)
• The beneficiary is in the first 30 months of ESRD entitlement with EGHP (use code 06 instead)
• The patient has submitted the claim to Medicare already and the provider is merely billing for informational purposes

Documentation of the other insurance coverage—such as an employer’s insurance card, workers’ compensation claim number, or liability settlement letter—must be maintained in the patient record to support the use of code D7 ^[2].

Step-by-Step Claim Example

Scenario: A 67-year-old Medicare beneficiary works for a company with 300 employees. The patient receives a covered knee replacement surgery at a hospital. The patient’s employer group health plan (EGHP) is primary to Medicare, but the provider initially billed Medicare as primary. The provider must now submit a corrected claim with condition code D7 to make Medicare secondary.

Step 1: Verify Primary Coverage

• Confirm with the patient that they have employer group health plan coverage through their own active employment (or their spouse’s).
• Obtain proof of the EGHP (insurance card, employer affidavit, or MSP questionnaire).
• Document that the employer has 20+ employees, making the EGHP primary to Medicare.

Step 2: Complete the UB-04 with Condition Code D7

• In Fields 18–28 (Condition Codes), enter code D7 as the first condition code to indicate “Change to Make Medicare the Secondary Payer.”
• If other condition codes apply (e.g., code 03 for insurance not reflected here), enter them in subsequent positions.
• Ensure the “Primary Payer” information in Field 50 (Payer A) reflects the EGHP, not Medicare.
• In Field 39–41 (Value Codes and Amounts), report any amounts paid by the primary payer (e.g., value code 12 for working aged beneficiary/spouse with EGHP).

Step 3: Submit the Claim

• Submit as a corrected claim (frequency code 7 in Field 4) or as an original claim with the correct condition code.
• Use electronic submission (837I) or paper UB-04 with D7 in condition code field.
• Include the EGHP’s primary payment amount in Field 44 (Total Charges) and Field 50 (Primary Payer).

Step 4: Follow-Up

• Monitor remittance advice for Medicare’s response. If approved, the EGHP will process first, and Medicare will pay secondary benefits (coinsurance/deductible amounts) after the EGHP pays.
• If denied, review the MSPBC (Medicare Secondary Payer Billing Code) returned and correct as needed.

Example UB-04 Fields: Field 4: Type of Bill – 131 (Corrected Claim) Field 18–28: Condition Codes – D7, 03 (if other insurance not reflected) Field 39–41: Value Codes – 12 (Working Aged Beneficiary w/ EGHP) Field 50: Payer A – Name of EGHP

This approach ensures Medicare coordinates benefits correctly, avoids duplicate payment, and protects the provider from MSP overpayment liability ^{[1] [2]}.

Common Mistakes & Audit Red Flags

Mistake 1: Using D7 Without Verifying Primary Payer Status

• Error: Providers use D7 based only on patient verbal statements without obtaining proof of EGHP or other primary coverage.
• Audit Risk: Medicare’s MSP system may pay as primary if no proof exists, leading to recoupment demand letters. Red flags include claims where the provider cannot produce an employer affidavit or insurance card.

Mistake 2: Confusing D7 with Code 28 or 29

• Error: Using D7 when the provider intends to indicate that Medicare is already the primary payer and the other coverage is secondary (codes 28 or 29).
• Audit Risk: This causes claims to be rejected or re-coordinated incorrectly, delaying payment. The correct code for “EGHP is secondary to Medicare” is 28, not D7.

Mistake 3: Failing to Report the Primary Payer’s Payment

• Error: Submitting D7 without indicating the primary payer’s paid amount in the value codes (e.g., not reporting the EGHP’s payment in Field 39–41).
• Audit Risk: Medicare cannot calculate its secondary payment correctly, resulting in improper payment denials or under/overpayments. The remittance advice will show MSPBC code 01 (Requires primary payer payment amount).

Mistake 4: Using D7 on Inpatient Claims Without Prior Authorization

• Error: Applying D7 without ensuring that the primary payer has pre-authorized the inpatient stay.
• Audit Risk: If the primary payer denies coverage, Medicare may also deny the claim due to lack of coordination, potentially leaving the provider unpaid.

Mistake 5: Using D7 for End-Stage Renal Disease (ESRD) Patients Incorrectly

• Error: Applying D7 for ESRD patients before the 30-month coordination period has expired.
• Audit Risk: Medicare will reject the claim because code 06 (ESRD patient in first 30 months covered by EGHP) is the correct code. D7 should only be used after the 30-month period if a new primary payer becomes available.

Audit Red Flags:

• Multiple D7 codes on a single claim without supporting documentation
• D7 used on claims for beneficiaries under age 65 without disability or ESRD documentation
• D7 used on claims for non-covered services (Medicare never pays)
• D7 used without corresponding value codes (12, 13, 14, 15, 16) in Field 39–41

Providers should maintain a log of all D7 usage with documentation of primary payer verification to survive MSP audits ^{[1] [2]}.

Related Codes/Fields

Code/Field	Description	Relevance to D7
Code 06	ESRD patient in first 30 months of entitlement covered by EGHP	Used instead of D7 for ESRD patients with EGHP during the coordination period
Code 28	Patient’s and/or spouse’s EGHP is secondary to Medicare	Opposite scenario: Medicare is primary; D7 makes Medicare secondary
Code 29	Disabled beneficiary and/or family member’s LGHP is secondary to Medicare	Similar to 28 but for LGHP; D7 is for making Medicare secondary
Code 03	Patient is covered by an insurance not reflected here	Often used with D7 when the primary payer is not listed in Fields 50–66
Code 02	Worker’s compensation related	Can be used with D7 to indicate primary payer is workers’ comp
Code 05	Lien has been filed	Relevant when liability insurance is primary; used with D7
Field 39–41 (Value Code 12)	Working Aged Beneficiary Spouse with EGHP	Should be reported when using D7 for working aged scenario
Field 39–41 (Value Code 13)	ESRD beneficiary in MSP period	Used with D7 for ESRD cases after 30 months
Field 39–41 (Value Code 14)	No-fault insurance, including auto	Use with D7 for auto accident claims
Field 39–41 (Value Code 15)	Worker’s compensation	Use with D7 for workplace injury claims
Field 39–41 (Value Code 16)	Liability insurance	Use with D7 for liability claims
Field 50	Payer A	Must identify the primary payer (EGHP, workers’ comp, liability) when using D7
Field 54	Payer B	Optional: Medicare may be listed here as secondary payer
Field 4 (Type of Bill)	Frequency code 7 (correction)	Use with D7 if correcting a prior claim’s MSP status

This table shows how D7 works in coordination with other condition codes, value codes, and payer fields to ensure proper MSP billing. Providers should reference the complete list of condition codes from Noridian and the MassHealth UB-04 guide for full context on related codes ^{[1] [2]}.

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References

[1] Noridian Condition Codes — https://med.noridianmedicare.com/web/jea/topics/claim-submission/condition-codes

[2] MassHealth UB-04 Guide — https://www.mass.gov/doc/ub-04-billing-guide-0/download