CMS clarifies Medicare priority relative to FEHBP for federal annuitants receiving OWCP benefits

What happened

CMS issued October 2 Transmittal 13981, CR 14603, with November 2 effectiveness and implementation. It states Medicare is primary relative to FEHBP for federal annuitants who also receive federal workers-compensation benefits through OWCP. CMS explains that a 2022 OPM booklet change suggesting the reverse order conflicts with CMS’s current-employment guidance. The revised manual describes compensation recipients treated as annuitants who are deemed unable to return to work after six months, rather than treating every person receiving an OWCP benefit as a current employee.

This is the relative order between Medicare and FEHBP in that situation. The same manual section preserves Medicare’s separate exclusion where workers compensation has paid or can reasonably be expected to pay for the item or service, and notes that Medicare payment in such a case may be an overpayment. Beneficiaries also retain responsibilities to pursue available compensation benefits. As of October 4, registration and billing teams should prepare the November manual update while distinguishing annuitant/FEHBP status from whether the particular service belongs to a compensable injury claim; a single payer-order shortcut would miss that second inquiry.

Why it matters

Coverage order can be wrong if retiree status and OWCP receipt are conflated with current employment or if separate injury-related payment rules are ignored.

Implementation playbook

1. Review federal-annuitant payer-order scripts and refer unusual workers compensation claims for separate MSP analysis. Patient Access · Due 2026-11-02
2. Record the applicability assessment and validate the affected workflow with its operational owner. This is an internal review target, not an additional statutory deadline. Compliance · Due 2026-10-12

Sources

• CMS Transmittal R13981MSPOfficial · Centers for Medicare & Medicaid Services · 2026-10-02 · Source review 2026-10-04