A semiconductor device has a first semiconductor die and a first encapsulant deposited over the first semiconductor die. An interconnect structure is formed over the first semiconductor die and first encapsulant. A modular interconnect structure including a conductive via is disposed adjacent to the first semiconductor die. The first encapsulant is deposited over the modular interconnect structure. An opening is formed in the first encapsulant extending to the modular interconnect structure or to the interconnect structure. A second semiconductor die is disposed over the first semiconductor die. A bond wire is formed over the second semiconductor die and extends into the opening in the first encapsulant. A cap is formed over an active region of the second semiconductor die. A second encapsulant is deposited over the second semiconductor die and bond wire. Alternatively, a lid is formed over the second semiconductor die and bond wire.