CMS to begin reprocessing claims denied in error for incarcerated Medicare beneficiaries

December 11, 2013
Area(s) of Interest: Payor Issues and Reimbursement Practice Management 

From June through August 2013, the Centers for Medicare & Medicaid Services (CMS) initiated recoveries from providers and suppliers based on potentially incorrect data that indicated a beneficiary was incarcerated on the date of service. CMS announced that it has restored the original data on the Medicare Enrollment Data Base, is identifying all of the claims that were incorrectly demanded or collected, and is making changes to claims processing system utilities to effectuate the necessary changes. This automated process will identify the claims that were denied in error and reprocessing is expected to be completed by the Medicare Administrative Contractors by the end of December. 

Contractors will not issue remittances for the corrected claims, but rather will provide physicians with a letter and spreadsheet containing details of the claims being reprocessed. Claims that were appealed will continue through the appeal process.

CMS has established a web page containing an updated Frequently Asked Questions and an example of the letter and spreadsheet that will be used. The California Medical Association encourages physicians who have been affected by this issue to read the FAQs to ascertain the complete impact to your office.

In October, CMS revised the “Medicare Coverage of Items and Services Furnished to Beneficiaries in Custody Under a Penal Authority” Fact Sheet (ICD 908084), which is designed to provide education on Medicare’s policy to generally not pay for medical items and services furnished to beneficiaries who are incarcerated or in custody at the time the items and services are furnished. It includes the following information: policy background, including the definition of individuals who are in custody (or incarcerated) under a penal statute or rule; determining whether a beneficiary is in custody under a penal statute or rule; Medicare claims processing for items and services for incarcerated beneficiaries; exception to Medicare policy; and Informational Unsolicited Response (which occurs after a claim has been paid).


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