Claims Paid Under the Medicare Physician Fee Schedule - News From CMS

To the extent possible, the Centers for Medicare & Medicaid Services (CMS) is working with Congress, health care providers and the beneficiary community to avoid disruption in the delivery of health care services and payment of claims for physicians, non-physician practitioners and other Fee-For-Service (FFS) providers of services paid under the Medicare physician fee schedule, beginning July 1. In this regard, CMS has instructed its contractors to hold these claims for the first 10 business days of July, for dates of service in July. This should have minimum impact on provider cash flow because, under current law, electronic claims are not paid any sooner than 14 days (29 days for paper claims) after the date of receipt. Meanwhile, all claims for services delivered on or before June 30 will be processed and paid under normal procedures.

After 10 business days, contractors will begin releasing claims into processing under the fee schedule which implements current law. This, of course, could result in claims being processed with the negative 10.6 percent update. If a new law is enacted which changes the negative 10.6 percent update, retroactive to July 1, CMS is prepared to automatically reprocess most of those claims which have already been processed.

Under the Medicare statute, Medicare pays the lower of submitted charges and the Medicare fee schedule amount. Claims with dates of service July 1 and later billed with a submitted charge at least at the level of the January 1-June 30, 2008, fee schedule will be automatically reprocessed if Congress retroactively reinstates the update that was in effect for that time period. Any lesser amount will likely require providers to re-submit a revised claim.

To the extent possible, providers may hold claims in-house until it becomes clearer as to whether new legislation will be enacted or until cash flow becomes problematic. This will reduce the need for providers to reconcile two payments (i.e., the initial claim and the reprocessed claim), and it will simplify provider billings of beneficiary coinsurance and payment calculations for payers which are secondary to Medicare.

In addition, be on the alert for more information about other legislative provisions which may affect Medicare FFS providers.

August 2008 Coding Tip (View More 2008 Coding Tips)

Medicare Recovery Audit Program

Congress has mandated the Medicare Recovery Audit Program to detect and correct improper Medicare payments. A three-year demonstration program, implemented by CMS, began in March 2005. The program, designed to use Recovery Audit Contractors (RACs), will go nationwide no later than January 2010. Chosen by a competitive process and organized into jurisdictions; RACs are paid on a contingency fee, that is, the RACs receive payment based on the number of errors (underpayment and overpayment) they find.

If improper payments are found the RACs will contact the provider to either collect for over payments or pay any underpayments. This is called an automated review. If there are errors found the RAC will request medical records from the provider to further review the claim. The RAC would determine how the claim was incorrect (over, under, or correct payment). This is called complex review. The provider has 30 days to pay or appeal before the overpayment amount begins accruing interest and Medicare starts deduction from future reimbursement.