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Recent Articles
Note from the instructor: Medicare clarifies key components of claims processing for clinical diagnostic laboratory services
This note from the instructor is written by Judith L. Kares, JD, regulatory specialist for HCPro.
In transmittal (R3071CP) and related MLN Matters article (MM8883), CMS updated its guidelines for correct processing of certain laboratory services ("lab services"). These updates primarily focus on the appropriate claims billing jurisdiction for lab services performed by "independent laboratories," including the applicable billing jurisdiction for related specimen collection fees and travel allowance. For further information, hospitals should review the relevant sections of the Medicare Claims Processing Manual (MCPM), Chapter 16.
Definition of relevant terms
Let us begin with definitions of key terms found in Chapter 16 of the MCPM. For purposes of these billing rules, an "independent laboratory" is both independent of an attending or consulting physician's office and of a hospital that meets at least the requirements to qualify as an emergency hospital under relevant provisions of the Social Security Act. A "referring laboratory" is a Medicare-approved laboratory that receives a specimen to be tested and refers the specimen to another laboratory for performance of the laboratory test. A "reference laboratory" is a Medicare-enrolled laboratory that receives a specimen from another, referring laboratory for testing and actually performs the test.
Billing rules regarding who can bill for referred lab services provided by an independent laboratory
Medicare has special billings rules for referred lab services performed by an independent laboratory. In such cases, a referring laboratory generally may bill for certain lab services (those listed on the clinical laboratory fee schedule) when performed by a reference independent laboratory only if the referring laboratory meets certain conditions:
- the referring laboratory is located in, or is part of, a rural hospital;
- the referring laboratory is wholly owned by the entity performing such test, the referring laboratory wholly owns the entity performing such test, or both the referring laboratory and the entity performing such test are wholly-owned by a third entity; or
- the referring laboratory does not refer more than 30% of the clinical laboratory tests for which it receives requests for testing during the year (not counting referrals made under the wholly-owned condition described above)
On the other hand, claims for referred laboratory services may be made only by suppliers having specialty code 69 (i.e., independent clinical laboratories). Claims for referred laboratory services made by other entities will be returned as unprocessable. Independent laboratories should use modifier 90 to identify all referred laboratory services. The name, address, and CLIA number of both the referring laboratory and the reference laboratory should be reported on the claim.
In any event, only one entity may bill for a lab service referred to an independent laboratory. It is the responsibility of the referring laboratory to ensure the reference laboratory does not bill Medicare for the referred service if the referring laboratory does so (or intends to do so).
Please note that the above-referenced restrictions on the billing of referred lab services apply only to lab services performed by independent laboratories and do not apply to services performed in a physician office laboratory or a qualified hospital laboratory.
Updates on billing jurisdiction
Irrespective of who may bill for referred lab services, in its recent update, CMS clarified that the location where the independent laboratory performs the test determines the appropriate billing jurisdiction for the lab services, as well as for the related specimen collection fees and travel allowance. This is the case even if the sample originates in a different jurisdiction from where the sample is being tested. In addition, jurisdiction is not affected by whether or not the independent laboratory uses a central billing office or whether or not the independent laboratory provides services to customers outside its MAC's service area.
Hospitals are encouraged to review their current lab referral policies and their related claims submission and billing practices to assure they are in compliance with applicable Medicare rules, as clarified in these recent CMS releases.
CGI posts three new issues
CGI posted three new issues in three categories to its CMS list for providers in Region B. (See link for individual state applicability.)
According to the CGI website, the new issues are:
For professional services:
- Trastuzumab (Herceptin), Multi-dose vial waste: Professional Post Pay. The purpose of this post pay edit package is to perform review of appropriate billing of Trastuzumab (HerceptIn), HCPCS code J9355, for multi-dose vial waste review.
For outpatient:
- Trastuzumab (Herceptin), Multi-dose vial waste: Outpatient Post Pay. The purpose of this post pay edit package is to perform review of appropriate billing of Trastuzumab (HerceptIn), HCPCS code J9355, for multi-dose vial waste review.
For outpatient services:
- Rituximab (Rituxan), 100mg-Dose vs. Units Billed Post Pay. Rituximab, (Rituxan), 100mg (J9310) should be billed one (1) unit for every 100mg per patient administered. Hospitals need to ensure that units of drugs administered to patients are accurately reported in terms of dosage specified in the full HCPCS code descriptor.
Note from the Instructor: Updates on Related Claims Denials and Settlement Process
This Note from the Instructor is written by Kimberly Anderwood Hoy Baker, JD, CPC, regulatory specialist for HCPro.
This note will cover a couple updates to information in the last couple Medicare Insider Note from the Instructor columns. CMS has rescinded and replaced the transmittal on related claims three times since I wrote my column two weeks ago. Also the website with information on the settlement process for outstanding appealed claims, discussed by Debbie Mackaman in last week's note, was updated late last week with new information.
Two weeks ago, I reported on Transmittal 534 to the Program Integrity Manual allowing denial of related claims when an inpatient claim in denied. Subsequently, CMS published Transmittal 537 rescinding and replacing Transmittal 534, but it has now been removed from their website. Even though Transmittal 537 no longer appears on the CMS website, the substantive portion still appears as the attachment to Transmittal 534. And even though Transmittal 534 makes no indication it has been rescinded and replaced, Transmittal 540 purports to do just that and itself has been rescinded and replaced with Transmittal 541, although again Transmittal 540 makes no reference to having been rescinded and replaced.
So what does all this mean? Even though Transmittal 534 and Transmittal 540 still appear on CMS' website in their entirety and do not state they have been rescinded, they do not appear to contain current CMS policy on related claims. It appears that Transmittal 541 is the most current CMS policy on review of related claims when inpatient services are denied.
Just what did CMS change? Most importantly, they appear to have limited the policy currently to inpatient surgical claims that are denied as not reasonable and necessary. If the hospital documentation, including history and physical and progress notes, doesn't support medical necessity of an inpatient surgical procedure, the physician's Part B claim for performing the procedure would be denied. The new transmittal continues to allow the denial of the physician's claim without requesting records from the physician, meaning the physician's claim may be denied based on the hospital record.
The transmittal still applies to just MAC and ZPIC reviewers, although Recovery Auditors can request approval to review related claims through their standard issue approval process. Even the MACs and ZPICs, however, must get approval from CMS before starting these reviews and the MACs must post their intention to do so on their website 30 days prior to starting the reviews.
Also updated this last week was the Inpatient Hospital Reviews website where CMS published information about a settlement process for providers to resolve outstanding appealed claims related to patient status by accepting 68% of the amount in dispute. Debbie reported last week on a set of Frequently Asked Questions posted on September 16 as well as other details about the settlement process.
Subsequently, CMS posted the recording of the teleconference they held on September 9discussing the settlement process. Another conference will be held October 9 and readers can register at the MLN Connects website. Additionally, on September 16 they also published a revised Administrative Agreement related to the process for settlement.
For more information on review of related claims, please see the September 9 Note from the Instructor and for more information on the settlement process, please see the September 16 Note from the Instructor.
Note from the Instructor: Frequently Asked Questions Posted for the 68% Solution
CMS hosted an MLN Connects™ National Provider Call regarding the administrative agreement it is offering to acute care hospitals and critical access hospitals (CAHs) to resolve patient status denials and their related appeals with admission dates prior to October 1, 2013. A Frequently Asked Question document was also posted to the CMS Inpatient Hospital Reviews website that provided some clarity to the solution that is being put on the table.
As appeals continue to pile up and hospitals wait for another determination that may lead to payment for their services from months to years ago, the government has offered them what may be called by some a 'screaming deal'. According to CMS, any hospital willing to withdraw all of their valid pending appeals for patient status denials will receive 68% of what the net allowable amount would have been for the claims in question. This includes only denials for admissions prior to October 1, 2013, currently in the appeals process-either pending an appeal decision or the provider has not yet exhausted their appeal rights with the MAC, Qualified Independent Contractor (QIC), ALJ, or Department of Appeals Board (DAB). The net allowable amount for each claim includes any add-on payments (i.e. Disproportionate Share Hospital, Indirect Medical Education) the hospital would have received if payment in full was made and after deduction of the patient's deductible or coinsurance amounts, where applicable.
CMS is encouraging acute care hospitals paid under the prospective payment system, those receiving periodic interim payments, Maryland waiver hospitals, as well as CAHs paid under a cost-based methodology to seriously consider this offer as a way to "alleviate the administrative burden of current appeals on both the hospital and Medicare system". Unfortunately, inpatient psychiatric facilities (IPF) and inpatient rehabilitation facilities (IRF) are not part of this settlement option and CMS did not indicate if these providers would be considered at a later date.
In Round 1, hospitals will submit their signed Administrative Agreement and proposed spreadsheet of eligible claims/appeals for CMS review. CMS will review and validate the list and then notify the hospital if there are any discrepancies between their list and their contractor's eligible claims list.
In Round 2, hospitals will be able to review the discrepancies from the first round validation process. At this point, hospitals will have two choices-resubmit a revised spreadsheet and Administrative Agreement for CMS validation or scrap the entire settlement process and continue with the appeals process instead. If the provider decides to proceed with validation and CMS has signed the agreement, payment will be made through the MAC in one or two lump sum payments within 60 days. The hospital will receive a .pdf file from CMS containing a list of all claims involved in that lump sum payment for their internal accounting purposes.
Here are a few details to keep in mind regarding this settlement process.
- CMS has stated that a hospital's decision to voluntarily settle under this agreement does not indicate "fault or liability" against the providers or CMS for this one time deal.
- The Recovery Auditor who may have been involved in the revised determination will continue to be paid their contingency fees according to their current contracts without any reduction in their payment.
- If any of the appeals being settled are part of a larger Zone Program Integrity Contractor or OIG potential fraud investigation, the reviews by those agencies will continue despite a hospital taking this deal.
- A hospital will not have to submit formal withdrawals for the appeals to the MAC, QIC, ALJ or DAB since the final settlement agreement serves as the request for withdrawal of all eligible claims.
- The claims will remain as denied in the Medicare system and no claim-level adjustments will take place.
- Cost reports will remain intact and will not be adjusted for any reason based on this settlement process.
- The hospital must carefully review the refund requirements or collection process for deductible and coinsurance amounts based on when the Round 1 Administrative Agreement is signed by the provider. In some instances the patient will pay these amounts and in others the amounts will be waived.
Hospitals will have until October 31, 2014, to submit the required documents for Round 1. An extension can be requested from CMS if the deadline cannot be met. Hospitals who may be considering taking the government up on their offer should act quickly to determine if any of the current appeals should be withdrawn now before the initial Administrative Agreement is signed. This would allow the hospital to bill for expanded Part B services (i.e. TOB 121). In some cases, the hospital may be paid more for the claims than the current 68% offer. For details on the services that are billable under Part B, review the Medicare Benefit Policy Manual, Chapter 6 § 10.1, the Medicare Claims Processing Manual, Chapter 4 § 240, and MLN Matters article SE1333.
This is an 'all or nothing' proposition so hospitals need to cautiously approach the table by weighing the costs of continuing to appeal all of the claims in aggregate vs. continuing to wait and hope for payment for patient status denials that may now be several years old. Although this settlement is being touted as a 68% solution to the appeals backlog, the other side of the coin shows that this is a 32% reduction in the overall payment a hospital would have received.
For anyone who missed the call, a recording and transcript will be posted to the CMS website on September 17.
Note from the instructor: CMS Introduces Review and Denial of Related Claims
This week's note from the instructor is written by Kimberly Anderwood Hoy Baker, JD, CPC, regulatory specialist for HCPro.
Earlier this year CMS published and then rescinded a transmittal (Medicare Program Integrity Manual, Transmittal 505) allowing denial of related claims. At the time it was rescinded, CMS indicated it was being rescinded "due to the need to clarify CMS' policy and will not be replaced at this time". On August 8, CMS issued Medicare Program Integrity Manual Transmittal 534, which appears to replace Transmittal 505, although it was not issued as a replacement.
The transmittal puts in place a policy to allow MACs and ZPICs to deny physician professional claims related to hospital denied claims, with or without manual review depending on the situation. The transmittal specifies that contractors must wait for CMS approval prior to implementing related claims reviews and must post their intention on their website one month prior to starting such reviews. The rescinded Transmittal 505 included Recovery Auditors in this policy. However, in the new Transmittal 534, they must request approval from CMS as provided under their Scope of Work.
The transmittal defines claims as related if the documentation from one claim can be used to validate another claim. The transmittal provides one specific example for denial of physician claims related to denied inpatient admissions. For admissions denied because they are not appropriate for Part A payment, but would have been appropriate for Part B, the contractor can recode the claim to the appropriate outpatient evaluation and management (E/M) code. However, if documentation does not support medical necessity for the procedure, the contractor can recoup the Part B payment for the performing physician's claim.
New Transmittal 534 leaves out an example that was included in Transmittal 505. It included an example of a diagnostic test deemed not reasonable and necessary, allowing the denial of the professional claim for that test.
The transmittal specifically states contractors are not required to request additional documentation for the related claims before denying them and states that these related claims can be denied automatically or after manual review. The transmittal further specifies that appeals of these related claims will be processed separately.
This new policy, if implemented by contractors, may align hospital and physician incentives to ensure complete documentation of the medical necessity of procedures performed at hospitals. Hospital surgical claims have come under greater and greater scrutiny. Many hospitals have been concerned that if only their claims were reviewed and denied, physicians did not have incentives to provide them with the documentation they needed to withstand these reviews. Under the new policy, a physician's claim can be automatically denied if the hospital's claim is denied, meaning the physician's claim is essentially denied based on the documentation in the hospital's record. This should provide physician's with a greater incentive to provide documentation from their files to the hospital to ensure the hospital's claim is supported by documentation of medical necessity in the event of an audit.
However, because of the ability of contractors to simply change the E/M code from inpatient to outpatient if inpatient status is not supported, this policy does not provide incentives to physicians for the documentation of general appropriateness of inpatient status. If a physician fails to document their expectation of two midnights of care or support that expectation with documentation in the medical record, the hospital's claim is still subject to denial but the physician's claim can simply be recoded. Of course, if the hospital discovers this deficit of documentation through utilization review prior to the expiration of timely filing, they can submit a claim and also get Part B payment similar to if the case had been outpatient. Nevertheless, it seems to leave the hospital holding the bag if the physician fails to properly document the medical necessity and general appropriateness of inpatient care.
It is also important to note that some Recovery Auditors had obtained approval for parallel review of physician and hospital claims for some surgeries with high numbers of denials. However, the Recovery Auditors had been instructed to wrap up their reviews by June 1. The latest information on the CMS website indicates CMS has made modifications to the Recovery Auditor's contracts to allow them to continue reviews on a limited basis due to delays in the re-contracting process. The limited reviews are supposed to be primarily automated, but may include some complex reviews like those of hospital surgical claims.
Note from the instructor: New Codes to Replace Modifier 59-New Medically Unlikely Edits (MUE) Guidance
This week's note from the instructor is written by Kimberly Anderwood Hoy Baker, JD, CPC, regulatory specialist for HCPro.
CMS released two One Time Notice transmittals, effective January 1, 2015, significantly affecting the National Correct Coding Initiative (NCCI). One of the transmittals on MUEs provides further details on the MUE Adjudication Indicator (MAI). See Debbie Mackaman's prior Medicare Insider note on MAIs here. The other transmittal introduces four new modifiers that will replace modifier 59 in many cases, which will require significant education to coders to ensure correct application.
One Time Notice Transmittal 1421 details the new MAI that was introduced in a Special Edition MLN Matters article published in July regarding bilateral procedures. The MAI is also included in the July 2014 quarterly version of the MUE file, along with a column indicating the rationale for the MUE number. Although MAIs were added in July and a discussion referred to them in the Special Edition MLN Matters article, this is the first detailed description of the policy and implementation of the MAIs.
As discussed in Debbie's article, mentioned above, there are three MAIs indicating whether the edit will be applied by line on the claim or by date of service, as well as whether the date of service edits can be appealed or not. For those applied by line (MAI of 1), providers can use modifiers to override the edit by moving excess units to another line. They can also appeal excess units if there is no applicable modifier or if they are providing more than the modifier lines will allow.
For the date of service edits, the new transmittal makes clear that not only does the edit sum all units on the claim, regardless of modifier, but also sums all units in other claims processed for that date of service to prevent providers from overriding the edit by simply submitting multiple claims. The date of service edits with an MAI of 2 may not be overridden by the contractor either in initial determinations or appeals (redeterminations), thus they were originally presented as "un-appealable". However, the transmittal points out that higher level contractors can override this "sub-regulatory" guidance and approve higher units in limited cases and the processing contractor can override the edit if directed to do so by these contractors. Contractors can override date of service MAIs of 3 if presented with documentation showing the units were provided and reasonable and necessary.
CMS pointed out one matter regarding ABNs that I thought was rather odd. They have previously stated, and repeated in this transmittal, that the edits are coding edits and therefore the provider cannot give an ABN for excess units over the MUE. However, they acknowledged that the claims contractor could review a MUE denial and determine that the excess number were in fact provided, and therefore there was no coding error, but that the excess units were not reasonable and necessary. This would change the edit reason to not reasonable and necessary, but because of the limitation on provision of ABNs for these edits, the provider would be prohibited from anticipating this situation and giving the patient an ABN. This means that the excess units will be denied as not reasonable and necessary and the patient will be protect from liability because no ABN was issued, leaving the facility responsible for these units with no recourse to be paid by either CMS or the patient, even though CMS acknowledges they did provide the service and it was not a coding error.
Other new guidance directs contractors on application of the edits to CAH claims to ensure that the edits are applied separately to the units of service provided by the facility, the physician/primary surgeon, and assistant surgeon.
The other transmittal significantly affecting NCCI, released this week, introduces new replacement modifiers for modifier -59 in many cases. Modifier 59 is the most commonly use modifier hospitals use to override procedure to procedure (i.e. bundling) edits in the NCCI. HCPro's Steven Andrews wrote an article about this change, available here. The new modifiers are collectively referred to as "-X{EPSU}" modifiers by CMS. They are defined as follows:
- -XE: Separate Encounter, A Service That Is Distinct Because It Occurred During A Separate Encounter
- -XS: Separate Structure, A Service That is Distinct Because It Was Performed On A Separate Organ/Structure
- -XP: Separate Practitioner, A Service That is Distinct Because It Was Performed By A Different Practitioner
- -XU: Unusual Non-Overlapping Service, The Use Of A Service That Is Distinct Because It Does Not Overlap Usual Components Of The Main Service
CMS will continue to recognize modifier -59, but modifier -59 is normally a modifier of last resort when no more specific modifier applies. These new modifiers will provide more specific information regarding why the two services are appropriately reported and, therefore, if one of them applies, they will take precedence over modifier -59.
The transmittal indicates that at this time CMS will continue to accept either 59 or the more specific modifiers, but that they encourage providers to make a "rapid migration" to the new modifiers. They are also allowing local contractors to require the modifiers, which will be valid modifiers effective January 1, in certain cases where the contractor has identified they may be needed for compliance or program integrity.
The transmittal provided very little guidance on the specific use of the modifiers and does not provide any examples. The NCCI manual update for January 2015 may provide additional information, including examples of their use in specific situations, when it is published in December. I also wonder if CMS may use modifier XE (Separate Encounter) in place of modifiers 76 through 79 for overriding the multiple procedure discount for surgical services occurring in separate sessions at hospitals. Currently, providers are instructed to use the 70s series modifiers, but XE seems to more accurately describe the situation CMS is trying to capture with a single modifier, in order to know when to override the multiple procedure discount for surgical procedures.
These two transmittals have very different implications for providers. The MAIs give providers additional information regarding MUEs, but arguably may require little operation adjustment. On the other hand, use of the new –X{EPSU} modifiers may require significant education to coders and others in the hospital and may even require adjustment to chargemaster processes currently in place. In addition, because contractors may require the modifier in some jurisdictions and not others, providers will have to be vigilant watching for coding policies that may require them to use these modifiers in specific situations in their own jurisdictions. I would encourage business offices and coding departments to watch for further updates from their contractor and in the NCCI Manual for 2015.
Note from the instructor: Medicare change processes, Part II: Medicare appeals
We continue our discussion on several Medicare processes involving changes to claims as originally submitted and/or adjudicated. This week we will review the five-level Medicare appeals process (Appeals Process) and the relationship of that process to claim adjustments (Adjustments) and reopenings (Reopenings).
Overview of prior discussion on Adjustments and Reopenings
In the last note we focused on timely claim Adjustments and the Reopening of claims. Before we explore the Medicare Appeals Process, let us quickly summarize our prior discussion. That will make it easier for us to distinguish the Adjustment and Reopening processes from the Appeals Process. With respect to Adjustments, when a provider needs to correct or supplement a claim, the provider generally may correct the error or omission by submitting an Adjustment claim, so long as the submission is within the timely filing limits for those items or services (generally one year from the date of service). When the need for a correction is discovered beyond the timely filing limits, however, an Adjustment bill is not allowed, and a provider must utilize the Reopening process to correct the error or omission. (See Medicare Claims Processing Manual (MCPM), Chapter 1, Section 70.5, for more information on Adjustments.)
For Medicare purposes, "a reopening is a remedial action taken to change a final determination or decision that resulted in either an overpayment or an underpayment, even though the determination or decision was correct based on the evidence of record." Traditionally, CMS has permitted A/B Medicare Administrative Contractors (A/BMACs) to develop their own reopening processes, potentially subjecting providers to different processes in different jurisdictions. To ease the administrative burden, Medicare has developed a new streamlined, standardized process for providers to request the Reopening of a claim. In three recent releases—Medicare Claims Processing Transmittal R3022CP and related MLN Matters articleMM8581 and MLN Matters article SE1426—CMS set out the details for this new process, including a new Type of Bill (fourth digit "Q") and various Condition Codes for providers to use to designate the type of Reopening being requested. (See MCPM, Chapter 34, for more information on Reopenings.)
Medicare Appeals Process
Once certain decisions or determinations have been made by a contractor (A/BMAC, Recovery Auditor, etc.) or an adjudicator (Qualified Independent Contractor [QIC], Administrative Law Judge [ALJ] or Appeals Council [AC]), a party (beneficiary, provider, supplier) to that decision has certain appeal rights under the Medicare Appeals Process. The current Medicare Appeals Process, which has been in effect for a number of years, has five levels of appeal, as follows:
- First level—A/BMAC Redetermination
- Second level—QIC Reconsideration
- Third level—ALJ Hearing
- Fourth level—Appeals Council Review
- Fifth level—Judicial Review
We will explore each level of review in more detail below.
CMS decisions subject to the Appeals Process
Not all final Medicare decisions give rise to appeal rights, only those that Medicare defines as "initial determinations" or "revised determinations." A prime example of an initial determination that gives rise to appeal rights is a decision by an A/BMAC that certain items or services are not covered under Medicare, Parts A or B, resulting in a denial of payment for those items or services. Other examples of initial determinations that give rise to appeal rights include, but are not limited to, the following:
- Whether the beneficiary or supplier knew, or could reasonably have been expected to know, at the time the items or services were furnished that the items or services were not covered;
- Whether the deductible has been met;
- The computation of the coinsurance amount;
- The beginning and ending of a spell of illness; and
- The medical necessity of services, or the reasonableness or appropriateness of placement of an individual at an acute level of patient care made by the Quality Improvement Organization on behalf of the A/BMAC.
On the other hand, Medicare defines a revised determination as an initial determination or decision that is reopened and results in the issuance of a revised decision. A revised determination is a separate and distinct determination that also gives rise to appeal rights. A prime example of a revised determination that gives rise to appeal rights is a decision by a Recovery Auditor, after reopening a formerly paid claim for certain services, to deny coverage for those services and to recoup the previously paid overpayment.
As noted above, not all final decisions by Medicare contractors or adjudicators are appealable. Actions that are not considered initial determinations and, therefore, are not appealable under Medicare include, but are not limited to, the following:
- The coinsurance amounts prescribed by regulation for outpatient services under the prospective payment system;
- A contractor's, QIC's, ALJ's, or Appeals Council's determination or decision to reopen or not to reopen an initial determination, redetermination, reconsideration, hearing decision, or review decision; and
- Determinations that a provider or supplier failed to submit a claim timely or failed to submit a timely claim despite being requested to do so by the beneficiary or the beneficiary's subrogee.
A prime example of a decision that is not appealable is an A/BMAC's refusal to reopen a claim determination.
Multi-level Appeals Process
The chart below sets out key timeframes and other particulars for each level of appeal:
|Level of Appeal
|Decision Maker
|Individuals or Entities Authorized to Appeal
|Timeframe to Request
|Format of Request
|Timeframe for Decision
|Level One—Redetermination
|A provider, supplier, beneficiary, other party, or a representative of the above
|Within 120 calendar days from date of notice of initial or revised determination
|CMS Form 20027
|Within (w/n) 60 calendar days, with 14-day extension if additional information is submitted
|Level Two—Reconsideration
|A provider, supplier, beneficiary, other party, or a representative of the above
|Within 180 calendar days from date of notice of redetermination decision
|CMS Form 20033
|W/n 60 calendars days; if QIC fails to make its decision timely, provider may request escalation, which may occur if QIC fails to make their decision w/n 5 days of request
|Level Three—Administrative Law Judge (ALJ) Hearing
|A provider, supplier, beneficiary, other party, or a representative of the above, so long as amount in controversy threshold is met ($140), and CMS
|Within 60 calendar days from date of notice of reconsideration decision; provider must notify all parties to the QIC reconsideration of the hearing request
|CMS Form 20034
|W/n 90 calendar days; if ALJ fails to make their decision timely, provider may request escalation, which will occur if ALJ fails to make its decision w/n five days of request
|Fourth Level—Appeals Council Review
|Appeals Council
|Any party not satisfied with ALJ's decision, including CMS
|Within 60 days of notice of ALJ's decision
|DAB Form 101
|W/n 90 calendar days; if AC fails to make its decision timely, provider may request escalation, which will occur if AC fails to make its decision w/n five days of request
|Fifth Level—Judicial (Federal District Court) Review
|Federal District Court
|Any party, if amount in controversy ($1430) is met
|Within 60 days of notice of AC decision
|Request must follow Federal and local rules for federal district court
|Court follows Federal Rules of Civil Procedure and local rules for federal district court
Additional resources on the Medicare Appeals Process can be found, as follows:
Please reference the Medicare Learning Network brochure entitled "The Medicare Appeals Process," for detailed information.
Relationship among change processes
With respect to the relationship of Adjustments to Reopenings, as stated at the beginning of this note, the Adjustment process is generally restricted to claim changes that are made within the respective timely filing limitations. When a provider needs to correct or supplement a claim, the provider generally may correct the error or omission by submitting an Adjustment claim, so long as the submission is within the timely filing limits for those items or services. When the need for a correction is discovered beyond the timely filing limits, however, an Adjustment bill is not allowed. In this case, a provider must utilize the Reopening process to correct the error or omission, assuming that the Request for Reopening is timely and meets other applicable requirements. Even if this Reopening is filed in a timely manner, the decision to reopen is at the discretion of the contractor or adjudicator. In addition, within the parameters established, contractors and adjudicators also have the right to initiate the Reopening of certain prior determinations and to override those prior determinations.
With respect to the relationship of Reopenings to Appeals, in Transmittal R3022CP, CMS noted that Reopenings are "separate and distinct" from the Medicare Appeals Process. The principal difference is that providers have certain rights to appeal under the Appeals Process, whereas the decision to Reopen is at the discretion of the contractor or adjudicator. For example, an A/BMAC's denial of a claim is an initial determination, which gives the provider certain rights to appeal that denial. On the other hand, an A/BMAC's refusal to reopen a claim determination is not an initial determination and, therefore, is not appealable.
In addition, a Request for Reopening does not toll the timeframe to request an Appeal. For example, if the A/BMAC refuses to reopen a claim, the original initial determination stands as a binding decision, with the same timely filing requirements for Appeal as if the Reopening had not been requested (120 days from receipt of notice of the initial determination). If, however, an A/BMAC reopens and revises or adjusts an initial determination, that revised determination gives rise to new appeal rights, subject to otherwise applicable timely filing requirements (120 days from receipt of notice of the revised determination).
Generally, a claim determination may not be appealed and Reopened at the same time. For example, if a Reopening is pending when a subsequent timely Appeal is filed, the Reopening will be refused in order for the Appeal to proceed. Therefore, in most instances, a provider does not request a Reopening unless and until its appeal rights have been exhausted or the timely filing period for an Appeal has expired. In Chapter 34 of the MCPM, CMS notes two exceptions to this rule:
- Cases where Medical Review (MR) requested documentation, did not receive it, and issued a denial based on no documentation. Subsequently, if the party requests an appeal and submits the requested documentation with that appeal, it shall be treated as a Reopening if certain specific conditions are met; and
- Clerical errors (which include minor errors and omissions) shall be treated as Reopenings.
Please note, however, with respect to those cases denied for failure to respond to document requests, CMS included the following warning in both recently released MLN Matters articles (MM8581 and SE1496) relating to Reopenings:
Providers are reminded that submission of adjustment bills or reopening requests in response to claim denials resulting from review of medical records (including failure to submit medical records in response to a request for records) is not appropriate. Providers must submit appeal requests for such denials.
Hospitals are encouraged to review the relevant sections of the MCPM, Chapter 34, along with the above-referenced MLN Matters Articles, and to contact their respective A/BMACs to clarify any potential conflict between these multiple sources of Medicare guidance on this issue.
More generally, hospitals are encouraged to review their existing policies and procedures with respect to all three of the change processes discussed—Claim Adjustments, Reopenings and Appeals—to assure that they are updated and compliant, both in policy and practice.
Note from the instructor: Medicare change processes Part I: Claim adjustments and Reopenings
This week's note from the instructor is written by Judith L. Kares, JD, regulatory specialist for HCPro.
This note will begin a two-part discussion on several Medicare processes involving changes to claims as originally submitted and/or adjudicated. We will focus on timely claims adjustments and the reopening of claims by contractors and adjudicators, as well as by providers and beneficiaries. Next week we will review the five-level Medicare appeals process and the relationship of that process to claim adjustments and reopenings.
Recent guidance
CMS recently released Medicare Claims Processing Transmittal R3022CP, which sets out a new streamlined, standardized process for providers to request the reopening of a claim (Reopening). Prior to this, A/B Medicare Administrative Contractors (A/BMACs) were permitted to create their own reopening processes, subjecting providers to different processes in different jurisdictions. To prepare for the new process, CMS sought permission and approval from the National Uniform Billing Committee to create:
- A new Type of Bill frequency code ("Q") for providers to use to identify a Request for Reopening; and
- Several series of Condition Codes for providers to use to designate the type of Reopening being requested and other key facts.
In addition to Transmittal R3022CP, CMS also released two related MLN Matters articles: MM8581 and SE1426. Both provide helpful information, but MLN Matters article SE1426, in particular, provides a comprehensive list of the new Condition Codes and examples of appropriate coding, depending upon the type of Reopening being requested. Hospitals are encouraged to review these recently released documents, along with Chapter 34 of the Medicare Claims Processing Manual (MCPM), which focuses on Reopenings, to answer any questions they might have.
Claim adjustments
Before we focus on Reopenings, we need to review the Medicare rules relating to claim adjustments. A provider's ability to adjust its initial claim is limited to the following:
- If the provider failed to include a particular item or service on the initial claim, an adjustment claim to include the item or service is subject to the timely filing limitation for the item or service (generally, one year from the date of service).
- With respect to IPPS claims, there is an even shorter time frame. If the adjustment would result in a change to a higher paying DRG, the adjustment must be submitted within 60 days of the date of the remittance for the initial claim.
- If, however, an adjustment claim otherwise corrects or supplements information previously submitted on a timely claim about specified services or items furnished to a specified individual, it is subject to the rules governing administrative finality, rather than the otherwise applicable timely filing limitations. The rules governing administrative finality include Reopenings and are found in the MCPM, Chapter 34. For claims submitted on and after January 1, 2015, such claims must be submitted with a "Q" in the fourth position of the Type of Bill to identify them as a Reopening. (See MCPM, Chapter 1, Section 70.5 for more information.)
Let us now review Reopenings, in general, and the new Request for Reopening process, in particular. As defined by Medicare, "a reopening is a remedial action taken to change a final determination or decision that resulted in either an overpayment or an underpayment, even though the determination or decision was correct based on the evidence of record."
In Transmittal R3022CP and relevant sections of Chapter 34 of the MCPM, CMS notes Reopenings are "separate and distinct" from the Medicare appeals process. The principal difference is providers have certain rights to appeal under the Medicare appeals process, whereas the decision to Reopen is generally at the discretion of the contractor or adjudicator. For example, an A/BMAC's denial of a claim is an initial determination, which gives the provider certain rights to appeal that denial. On the other hand, an A/BMAC's refusal to reopen a claim determination is not an initial determination and, therefore, is not appealable. Generally, a claim determination may not be appealed and Reopened at the same time. For example, if a Reopening is pending when a subsequent timely appeal is filed, the Reopening will be refused in order for the appeal to proceed. There are also different time limitations and conditions that apply to a provider's right to appeal and a provider's right to Request a Reopening.
With respect to Reopenings, whether initiated by a contractor or adjudicator or requested by a party (a provider or beneficiary), the time limitations also vary depending upon who is initiating or requesting the Reopening and whether the decision maker is a contractor or adjudicator.
A contractor may reopen and revise its initial determination or redetermination on its own motion, as follows:
- Within one year from the date of the initial determination or redetermination for any reason; or
- Within four years from the date of the initial determination or redetermination for good cause as defined in §10.11; or
- At any time if:
- There exists reliable evidence the initial determination was procured by fraud or similar fault as defined in 42 CFR §405.902; or
- The initial determination is unfavorable, in whole or in part, to the party (provider or beneficiary), but only for the purpose of correcting a clerical error on which the determination was based. Third party payer error does not constitute clerical error for these purposes.
A party (provider or beneficiary) may request a contractor to reopen and revise its initial determination or redetermination under the same circumstances, except a party may not request a contractor to reopen its initial determination or redetermination at any time upon reliable evidence of fraud or similar fault. In addition, although in certain circumstances a contractor can reopen at any time, CMS does not expect a contractor would regularly grant such requests, especially for older claims where the claims history is not readily available.
An adjudicator, either a Qualified Independent Contractor (QIC), an Administrative Law Judge (ALJ) or the Appeals Council (AC), may only reopen and revise its reconsideration, hearing decision or review, respectively, under the following conditions:
- Within 180 days from the date of its decision for good cause in accordance with 42 CFR §405.986; or,
- At any time if the reconsideration or hearing decision or review was procured by fraud or similar fault.
A party may only request an adjudicator (QIC, ALJ or the AC) to reopen and revise its reconsideration, hearing decision or review within 180 days from the date of the reconsideration or hearing decision or review, as applicable, for good cause in accordance with 42 CFR §405.98.
New Request for Reopening process
As noted above, when a provider needs to correct or supplement a claim within the timely filing limits for those items or services, providers may submit an adjustment claim. When the need for a correction is discovered beyond the timely filing limits, however, an adjustment bill is not allowed, and a provider must utilize the Reopening process to correct the error. In MLN Matters article SE1426, CMS provides guidance on the new Reopening process, including the new Type of Bill and Condition Codes to be reported and examples of appropriate coding. With respect to Requests for Reopening submitted on and after January 1, 2015, providers are required to report the following codes and related information:
- Type of Bill xxxQ
- An applicable Reopening Condition Code (R1-R9) to identify the nature/circumstances of the error or mistake to be corrected
- An applicable Adjustment Condition Code (D0, D1, D2, D4, D9, E0) to identify what was changed on the claim, if appropriate
- A Condition Code W2 to attest there is no appeal in process
- An Adjustment Reason Code (for DDE claims only)
- R1 = less than one year from Initial Determination
- R2 = one to four years from Initial Determination
- R3 = more than four years from Initial Determination
- Reopenings that require "Good Cause" to be documented must have a Remark/Note from the provider to that effect.
To facilitate the Reopening process, CMS recommends any Reopening request that contains changes or additions from the original claim should contain a remark/note explaining what has been changed. If the change or addition affects a line item instead of a claim item, CMS recommends providers indicate which lines are being changed in the remark/note.
The next note will review the five-level Medicare appeals process and the relationship of that process to claim adjustments and Reopenings in more detail.
Note from the instructor: Multiple Final Rules Result in Payment Increase to Most Providers except General Acute Care Hospitals
This week's note from the instructor is written by Kimberly Anderwood Hoy Baker, JD, CPC, regulatory specialist for HCPro.
CMS published a number of final rules in the Federal Register for various hospital and other payment systems. They published rules for general acute care hospitals, long term acute care hospitals (LTACH), inpatient psychiatric facilities (IPF) and inpatient rehabilitation facilities (IRF). In addition, the hospice and skilled nursing facility final rules were also published this week. Overall, most provider types included in these rules will see a payment increase in FY 2015, not only to operating rates, but also to their overall payments to their industries.
The IRFs will see an overall increase of $180 million attributable to a 2.2% update in their operating rates. The IPFs will see an overall increase of $120 million attributable to a 2.1% update in their operating rates including to the Federal Per Diem Base Rate and rates for Electroconvulsive Therapy (ECT). In the final rules, there was also information on the ICD-9 to ICD-10 transition for both these payment systems. For IRFs, there was information on General Equivalency Mapping for conditions affecting the inpatient grouper (e.g. comorbidities) and presumptive compliance rules. For IPFs, CMS discussed the elimination of 156 non-specified conditions for comorbidity adjustments.
The LTACH industry will see an increase of $62 million with an update of 2.2% in their operating rates. The SNF industry will also see an increase of $750 million resulting from a 2.0% update to their operating rates and hospice will see an increase of $230 million resulting from a 2.1% update to their operating rates.
The exception to the overall growth in payment rates for FY 2015 is general acute care hospitals paid under the IPPS system. Although they will see a 1.4% update to their payment rates, overall CMS projects that payments will decrease by $756 million. The IPPS will also see a change in how the Inpatient Quality Reporting (IQR) adjustment is applied to the standardized amounts and the addition of a reduction to the standardized amount for non-compliance with Electronic Health Record (EHR) requirements. Failure to meet each of these will result in a .25% reduction in the market basket update for these hospitals, which could total ½ the total market basket update they would otherwise be entitled.
Other quality adjustments include the new Hospital Acquired Condition (HAC) reduction program which will result in a 1% reduction for hospitals with the highest rate of HACs (highest quartile) compared to other hospitals. The Hospital Readmission Reduction Program penalty will increase to a maximum of 3% for FY 2015 and chronic obstructive pulmonary disease and hip/knee arthroplasty will be added to the list of monitored conditions this year. Coronary artery bypass graft procedures to be added to that list in 2017. The pool for the Value Based Purchasing program, in which hospitals can be rewarded or penalized for meeting certain quality based measures, will increase to 1.5% this year as well.
Also affecting rates for FY 2015 is the change to the Labor Markets that CMS uses to establish wage indices. CMS is implementing changes in labor markets based on Office of Budget and Management labor areas from 2010 census data. This will result in a decrease in the wage index for some hospitals and skilled nursing facilities. For those providers negatively affected, CMS is implementing a one year 50/50 blend of the wage index calculated under the old labor market areas and the new areas. A very few hospitals were moved from urban designation to rural, resulting in a lower wage index. These hospitals will have a three year transition period to the new wage indices. Additionally, for critical access hospitals (CAH) located in formerly rural areas that are now designated urban, they will have a two year transition period to apply to be reclassified to retain their CAH status.
2014 Medicare Compliance Forum-Wednesday, August 20 is last day for early bird pricing!
The top five reasons to attend the 2014 Medicare Compliance Forum
The 2014 Medicare Compliance Forum (October 23–24) is the only seminar that will teach you how to respond to the sweeping changes CMS implemented for inpatient and outpatient services. Learn how the changes will impact operations from utilization review to billing and coding, and gain the information needed to predict the impact on your revenue stream for 2015.
The speakers discuss why these MCF sessions are important:
- Practical Strategies for Enhancing Your UR Committee
This session is "going to give people the opportunity to not only see how they need to change their policies but it's a chance to talk to other people and find out what they picked up from the sessions and what they already incorporated into their policies." Kimberly A. Hoy Baker, JD, CPC
- Updates to the Outpatient Prospective Payment System APCs: How Comprehensive Can You Get?
"Be the first one in your hospital to understand the difference between the current outpatient hospital Ambulatory Payment Classifications (APCs) and comprehensive APCs and be able to explain it to management." Gina M. Reese, Esq., RN
- Rise to the Challenge of Medicare's "Inpatient-Only" Procedure List
"The 2-midnight rule may be overly confusing to surgeons and interventionists who perform inpatient-only procedures. Having an effective plan for education and case management assistance will reduce the risk of unpaid claims." Deborah K. Hale, CCS, CCDS
- An Inside Look at the Probe and Educate Audits of Inpatient Claims
"What has the probe and educate period actually shown? By taking a deep dive into real-life examples, this session provides an understanding of the framework under which probe and educate reviews are taking place." Ralph Wuebker, MD, MBA
The Physician Advisor: Strategies That Affect the Success of This Key Player on Your UR Committee
"A physician advisor is a critical component of your UR committee and can have a significant positive impact on both your Medicare denials and appeals. This presentation will discuss how to select, train, and engage your physician advisor with your medical staff." Mark Michelman, MD, MBA
Don't miss two exciting pre-conferences on October 22!
- Inpatient versus Outpatient: A Soup to Nuts Menu for Success
- Tricks of the Trade: Uncovering and Optimizing Medicare Resources
Click here or call 800-780-0584 for agenda and registration information. Register by August 20, 2014, to enjoy the early bird pricing!


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