Two Updates from CMS

Mandatory Payment Reductions in the Medicare Fee-for-Service (FFS) Program – “Sequestration”

The Budget Control Act of 2011 requires, among other things, mandatory across-the-board reductions in Federal spending, also known as sequestration. The American Taxpayer Relief Act of 2012 postponed sequestration for 2 months. As required by law, President Obama issued a sequestration order on March 1, 2013. The Administration continues to urge Congress to take prompt action to address the current budget uncertainty and the economic hardships imposed by sequestration.

This listserv message is directed at the Medicare FFS program (i.e., Part A and Part B). In general, Medicare FFS claims with dates-of-service or dates-of-discharge on or after April 1, 2013, will incur a 2 percent reduction in Medicare payment. Claims for durable medical equipment (DME), prosthetics, orthotics, and supplies, including claims under the DME Competitive Bidding Program, will be reduced by 2 percent based upon whether the date-of-service, or the start date for rental equipment or multi-day supplies, is on or after April 1, 2013.

The claims payment adjustment shall be applied to all claims after determining coinsurance, any applicable deductible, and any applicable Medicare Secondary Payment adjustments.

Though beneficiary payments for deductibles and coinsurance are not subject to the 2 percent payment reduction, Medicare’s payment to beneficiaries for unassigned claims is subject to the 2 percent reduction. The Centers for Medicare & Medicaid Services encourages Medicare physicians, practitioners, and suppliers who bill claims on an unassigned basis to discuss with beneficiaries the impact of sequestration on Medicare’s reimbursement.

Questions about reimbursement should be directed to your Medicare claims administration contractor. As indicated above, we are hopeful that Congress will take action to eliminate the mandatory payment reductions.

Problem Impacting Crossover of Medicare Part B Outpatient Therapy Claims

Parties that bill for Medicare participating outpatient therapists, physicians, and non-physician practitioners (NPPs) may have recently noticed an increase in the incidence of the Health Insurance Portability and Accountability Act (HIPAA) rejection codes denoted below on their provider notification letters.  Medicare routinely mails these letters out to providers, physicians/practitioners, and suppliers when various identified claims cannot be successfully crossed over to their patients’ supplemental insurance companies.

  • H51000: The Procedure Code ____ is not a valid CPT or HCPCS Code for this Date of Service
  • H51061: ‘Procedure Modifier 1’ ___ is not a valid CPT or HCPCS Modifier Code
  • H51062: ‘Procedure Modifier 2’____ is not a valid CPT or HCPCS Modifier Code
  • H51063: ‘Procedure Modifier 3’ ____ is not a valid CPT or HCPCS Modifier Code
  • H51064: ‘Procedure Modifier 4’ ____ is not a valid CPT or HCPCS Modifier Code
  • H51108:  _______ is not a valid ‘Line Level Adjustment Reason Code.’

Note:  Where you see “_____” directly above, the value (for example, G8978; modifier CH; or CARC 246) was reported, when applicable, on the outbound provider notification letter that billing offices would have received.

Unfortunately, the new functional G-codes, new severity/complexity modifiers, and new Claim Adjustment Reason Code (CARC) 246 for the January 2013 Healthcare Common Procedure Coding System (HCPCS) and CARC updates were inadvertently not loaded. As a result, a moderate number of Part B outpatient therapy claims (claims for physical, speech, and occupational therapy) were rejected in error. The newly added severity/complexity modifiers were as follows:  CH, CI, CJ, CK, CL, CM, and CN.  The new functional G-codes fall within the following ranges:

  • G8978—G8999
  • G9158—G9176
  • G9186

Actions Taken To Remedy the Issue

The Coordination of Benefits Contractor (COBC) HIPAA validation vendor added the new G-codes to its HCPCS table as of January 28, 2013. The vendor then added the new severity/complexity modifiers to its HCPCS table as of February 11. Lastly, the vendor added the new CARC 246 to its table as of February 25. Thus, Medicare participating therapists, physicians, and NPPs should now see a drastic decrease in the incidence of error codes H51000, H51061—H51064, and H51108 reflected on their provider notification letters.

Affected Claims Need to be Billed Directly to Supplemental Insurers

If your billing office received a provider notification letter from Medicare indicating that claims could not be crossed over due to one of the H-series error messages described above, there unfortunately is not a way for Medicare to re-transmit the affected claims to your patients’ supplemental insurers. Therefore, you will need to bill your patients’ supplemental insurers directly. CMS regrets that this is necessary.

Please know that to help mitigate this kind of problem in the future, CMS will implement a fail-safe strategy well in advance of the scheduled installation of new HCPCS or other code updates. This will ensure that any incorrectly rejected Medicare crossover claims will be repaired by all A/B MACs, thus appropriately minimizing the impact to the provider community.

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