Obligated to Accept as Payment in Full

Information about the primary insurer and primary payment are required for all Medicare Secondary Payer (MSP) claims. One important piece of information for MSP claims is the OTAF field. "OTAF" is the acronym for Obligated to Accept as Payment in Full. In addition to OTAF information, Palmetto GBA must also receive this information about the primary insurance payment:

  • Billed amount is the amount billed or charged by provider/supplier for a particular item or service
  • Allowed amount is the actual amount that an insurance payer will pay for (consider) a particular item or service. This amount is often referred to as the fee schedule amount or usual, customary and reasonable (UCR) amount.
  • Paid amount is the actual amount that an insurance payer has paid for a particular item or service (when Medicare is primary payer, the paid amount is usually 80 percent of the allowed amount)

How to Calculate the OTAF Amount
The OTAF amount is equal to the amount of the primary payer's payment plus any patient responsibility

  • The OTAF amount is important in any instance or circumstance when an MSP situation exists and the OTAF calculated amount is different than the billed amount.
  • Who is responsible for calculating the OTAF amount? All electronic claims submitters (billing staff, vendor, clearinghouse staff, etc.) are responsible for:
    • Reviewing the primary payer's EOB;
    • Determining if there is an OTAF amount (OTAF does not exist in all situations); and
    • Correctly transmitting this information to Palmetto GBA via the electronic claims submission process

Claims Submission
Without the correct OTAF amount, Palmetto GBA cannot make correct Medicare Secondary payments. This could result in the beneficiary being held liable for the entire billed amount.

The OTAF amount (when it exists) must be calculated and entered in Loop 2320, CN102 CN 101=09 for the claim level and Loop 2400, CN102 CN 101=09 for the line level for electronic claims. This will ensure the correct MSP reimbursement and prevent an overpayment.

Other tips for filing MSP claims:

  • If the claim is for a single service, you may submit the OTAF amount at the claim level or at the service line level
  • If the claim is for multiple services, the line levels must be used

Note: Currently, OTAF is not a requirement in accordance with the HIPAA implementation guide. Until OTAF is mandated as a billing requirement, we can only encourage you to submit this vital information. Remember, correct submission of OTAF information will decrease incorrect secondary claim payment processing and greatly decrease the number of resultant overpayments by the Medicare program. This will protect and preserve the Medicare Trust Fund.

CMS Regulation Reference: Publication 100-05, Chapter 3 (PDF, 234 KB).

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