Medicare

Medicaid Beneficiary

A person covered by Medicare. Some beneficiaries qualify through the Social Security Administration. Others are eligible through the Railroad Retirement System.

Medicare Private Fee-for-Service (PFFS)

Under a Medicare private fee-for-service plan, patients receive services from Medicare-approved providers or facilities of their choosing. The plan is operated by a private insurance company that contracts with Medicare but pays on a fee-for-service basis.

Medically Unnecessary Edits (MUEs)

Units of service edits used in order to lower the Medicare fee-for-service paid claims error rate. CMS has also established units of service edits, referred to as medically unlikely edits (MUEs), in order to lower the Medicare fee-for-service paid claims error rate. MUEs are intended to reduce the number of health care claims that are sent back simply because of clerical or practice management program errors. MUEs are edits that test a claim for the same beneficiary, CPT code, date of service, and billing provider against Medicare's rule. The initial set of MUEs is based on anatomical considerations. An example is an edit that rejects a claim for a hysterectomy on a male patient. MUEs also automatically reject claim items containing units of service billed in excess of Medicare allowances.

Physician Quality Reporting System (PQRS)

Voluntary reporting program in which physicians or other professionals collect and report their practice data. The PQRS is a voluntary quality reporting program established by CMS in which physicians or other eligible professionals collect and report their practice data in relation to a set of patient-care performance measures that are established annually. The program's goal is to determine best practices, define measures, support improvement, and improve systems. Physicians who successfully report are eligible for an additional 1.5 percent payment from CMS. The PQRS incentive is an all-or-nothing lump-sum payment. The provider must meet the basic requirement of reporting at least 80 percent of the time on up to three measures applicable to the professionals' practice. If more than three quality measures are applicable, the professional need only report on three.

Urgently Needed Care

A Medicare beneficiary's unexpected illness or injury requiring immediate treatment.

Medicare Internet-Only Manuals (IOM)

A collection of manuals that have day-to-day operating instructions, policies, and procedures based on statutes and regulations.

Medicare Learning Network (MLN)

An online collection of articles explaining all Medicare topics. It is searchable by topic or by year.

Crossover Claims

Claims for a Medicare or Medicaid beneficiary.

Physician Participation in Medicare (PAR providers)

Annually, physicians choose whether they want to participate in the Medicare program. Participating physicians agree to accept assignment for all Medicare claims and to accept Medicare's allowed charge according to the Medicare Physician Fee Schedule as payment in full for services. A PAR physician may bill the patient for coinsurance and deductibles but may NOT collect amounts higher than the Medicare amount allowed by the fee schedule. Medicare is responsible for paying 80 percent of this allowed charge (AFTER patients have met their annual deductibles). Patients are responsible for the other 20 percent. The physician writes off the difference between the usual fee and the Medicare allowed charge. The physician may bill the patient for services not covered by Medicare. For example, if the provider's usual fee is $200 and the Medicare allowed charge for the service is $84, Medicare pays $67.20 (80 percent of the $84) and the patient pays $16.80 (20 percent of the $84). The physician writes off the $116 difference.

Medicare Claims

CMS mandates electronic transmission of Medicare claims. Medicare law requires claims to be filed within one calendar year after the date of service.

Medical Savings Account (MSA)

Medicare health savings account program that is similar to a private medical savings account. It combines high-deductible fee-for-service plan with a tax-exempt trust to pay for qualified medical expenses. The maximum annual MSA plan deductible is set by law. CMS pays premiums for the insurance policies and makes a contribution to the MSA; the beneficiary puts in the rest of the fund. Beneficiaries use the money in their MSAs to pay for their health care before the high deductible is reached. At that point, the Medicare Advantage plan offering the MSA pays for all expenses for covered services.

Timely Filing

Medicare law requiring claims to be filed within one calendar year. Medicare law sets specific guidelines for timely filing of claims for benefits. The health reform law (Patient Protection and Affordable Care Act, or PPACA) required a change in Medicare timely filing of claims for Part B providers. The new law requires claims to be filed within one calendar year after the date of service. When filing a late claim, be sure to include an explanation of the reason for the late filing and have evidence to support it. Late claims may be paid if the lateness is due to good cause, such as a Medicare administrative error, unavoidable delay, or accidental record damage.

Medicare Advantage Plans

Medicare offers Medicare Advantage plans. Beneficiaries can choose to enroll in one of the following types of plans instead of in the Original Medicare Plan: (1) Medicare coordinated care plans (CCPs); (2) Medicare private fee-for-service plans; and (3) Medical Savings Accounts (MSAs). The Medicare Advantage program is administered by the Center for Beneficiary Choices, a department of CMS.

Medicare Part D

Medicare prescription drug reimbursement plans. Medicare Part D, authorized under the MMA, provides voluntary Medicare prescription drug plans that are open to people who are eligible for Medicare. All Medicare prescription drug plans are private insurance plans, and most participants pay monthly premiums to access discounted prices. A prescription drug plan has a list of drugs it covers, called a formulary, often structured in payment tiers.

Medicare Part B

Part B helps pay for physician services, outpatient hospital services, durable medical equipment, medical services, clinical laboratory services, home health care, and blood supply. Many preventive services are also covered. Every year, more preventive services are included, as the provisions of the Affordable Care Act are implemented gradually. All Medicare providers MUST file claims on behalf of patients at no cost to the patients. Medical administrative assistants file claims under Part B for physician services, even if the services are performed in hospital settings. They do not usually file claims for Part A benefits. Part B coverage is optional. Everyone who is eligible for Part A may choose to enroll in Part B by paying monthly premiums (usually deducted automatically from Social Security retirement benefit payments). They are also subject to an annual deductible and coinsurance, which are established by federal law. The two basic types of plans available under Medicare Part B are the Original Medicare Plan and Medicare Advantage plan. If a person chooses not to participate in Part B, that person must pay out-of-pocket for all services included in Part B.

Medicare Part C

Part C is available to individuals who are eligible for Part A and enrolled in Part B. Under Part C, private health insurance companies can contract with CMS to offer Medicare benefits through their own policies. In 2003, under the Medicare Prescription Drug, Improvement, and Modernization Act, Medicare Advantage became the new name for Medicare + Choice plans, and certain rules were changed to give Part C enrollees better benefits and lower costs.

Voluntary ABNs

Participating providers may bill patients for services that are not covered by the Medicare program, such as routine physicals and many screening tests. Giving a patient written notification that Medicare will not pay for a service before providing it is a good policy, although it is not required. When patients are notified ahead of time, they understand their financial responsibility to pay for the service. The ABN form may be used for this type of voluntary notification. In this case, the purpose of the ABN is to advise beneficiaries, before they receive services that are not Medicare benefits, that Medicare will not pay for them and to provide beneficiaries with an estimate of how much they may have to pay.

Diagnostic Lab Billing

Physicians MUST accept assignment for clinical diagnostic laboratory services (generally, procedures with CPT codes in the 80000s). A physician may NOT bill Medicare patients for these services. If the physician does not accept Medicare assignment for them, the right to bill the patient is forfeited. The physician may accept assignment for laboratory services only and refuse to accept assignment for other services. In this case, two separate claims may be filed. Once claim accepts assignment for laboratory services, and the other refuses assignment for other services.

Medicare Claim Completion

Physicians who treat Medicare beneficiaries MUST file claims for their patients even if they do NOT participate and do NOT accept assignment on the claims. CMS mandates electronic transmission of Medicare claims using the HIPAA 837 format, except by very small practices.

National Coverage Determination (NCD)

Policy stating whether and under what circumstances a service is covered.

Medi-Medi Beneficiary

Some individuals are eligible for both Medicare and Medicaid (Medi-Medi Beneficiary). Claims for these patients are first submitted to Medicare. Then they are sent to Medicaid along with the Medicare Remittance Notice. Most Medicare carriers transmit these crossover claims to the state Medicaid payer automatically.

Medicare Charges

The Medicare Physician Fee Schedule (MPFS) is the basis for payments for all Original Medicare Plan services. This national system is based on the Resource-Based Relative Value Scale (RBRVS) system using cost factors that represent the physician's time and how much it costs to run a practice.

Medicare Administrative Contractor (MAC)

The federal government does not pay Medicare claims directly. Instead, it contracts with insurance organizations to process claims on its behalf. Insurance companies that process claims are called Medicare administrative contractors (MACs). Providers are assigned to a MAC based on the state in which they are physically located. Durable Medical Equipment (DME) MACs handle claims for durable medical equipment, supplies, and drugs billed by physicians.

Limiting Charge

The highest fee nonparticipating physicians may charge for a particular service.

3 Common Reasons for Medicare Noncoverage

These include: (1) Medicare does not pay for this test for your condition; (2) Medicare does not pay for this test as often as this (denied as too frequent); and (3) Medicare does not pay for experimental or research use tests.

CCI Edits

CPT code combinations used to check Medicare claims.

Formulary

List of a plan's selected drugs and their proper dosages.

Medicare's Correct Coding Initiative (CCI)

Computerized Medicare system that prevents overpayment. Medicare's National Correct Coding Council develops correct coding guidelines in order to control improper procedural coding in Part B claims. This council issues policies, called the Correct Coding Initiative (CCI), to correct two types of errors: (1) unintentional coding errors resulting from a misunderstanding of coding, and (2) intentional incorrect coding done to increase payments. CCI guidelines are part of the automatic edits for electronic claims. CCI is updated every QUARTER, and has many thousands of CPT code combinations called CCI edits that are used by computers in the Medicare system to check claims. The CCI edits are available on a CMS website. CCI edits apply to claims that bill for more than one procedure performed on the same patient (Medicare beneficiary), on the same date of service, by the same performing provider. Claims are denied when codes reported together do not "pass" an edit. CCI prevents billing two procedures that, according to Medicare, could not possibly have been performed together. For example, reporting the removal of an organ both through an open incision and with laparoscopy and reporting female-specific and male-specific codes for the same patient. CCI edits also test for unbundling. A claim should report a bundled procedure code instead of multiple codes that describe parts of the complete procedure. For example, since a single code is available to describe removal of the uterus, ovaries, and fallopian tubes, physicians should not use separate codes to report the removal of the uterus, ovaries, and fallopian tubes individually. CCI requires physicians to report only the more extensive version of the procedure performed and disallows reporting of both extensive and limited procedures. For example, only a deep biopsy should be reported if both a deep biopsy and a superficial biopsy are performed at the same location. Since CCI has been in place, Medicare claim rejections have multiplied. Selecting the correct codes to be reported on claims saves the medical office time and money in resubmitting rejected claims. Correct Coding Initiative Updates www.cms.gov/NationalCorrectCodInitEd/ Medically Unlikely Edits www.cms.gov/NationalCorrectCodInitEd/08MUE.asp

Medicare Integrity Program (MIP)

Designed to identify and address fraud, waste, and abuse. The Medicare program makes about $500 billion in payments per year and has a significant amount of improper payments. The CMS Medicare Integrity Program (MIP) is designed to identify and address fraud, waste, and abuse, which are all causes of improper payments. The MIP has a number of initiatives related to review of documentation and billing.

Health Insurance Claim Number (HICN)

Each Medicare enrollee receives a health insurance card. This card lists the beneficiary's name, sex, and Medicare number and the effective dates for Part A and Part B coverage. The Medicare number, called the Medicare health insurance claim number (HICN), is assigned by CMS and usually consists of the Social Security number followed by a numeric or alphanumeric ending. The letter at the end provides additional information about the patient. For example, "A" stands for wage earner, "B" stands for spouse's number, and "D" stands for widow or widower. When the beneficiary's card shows a prefix (such as A, MA, WA, or WD) instead of a suffix, the patient is eligible for railroad retirement benefits, and claims must be submitted to the Railroad Medicare Part B claim office. www.palmettoGBA.com Be sure to use the patient's name and HICN EXACTLY as they appear on the Medicare card. This information MUST match Medicare's Common Working File (CWF), the Medicare claim processing system. Advise patients who insist that their cards are not correct to contact the local Social Security field office or to use online access to get a correct card.

Collecting the Medicare Deductible

Each calendar year, beginning January 1 and end December 31, Medicare enrollees must satisfy a deductible for covered services under Medicare Part B. The date of service generally determines when expenses are incurred, but expenses are allocated to the deductible in the order in which Medicare receives and processes the claims. If the enrollee's deductible has previously been collected by another office, this could cause the enrollee an unnecessary hardship in raising this excess amount. Medicare advises providers to file their claim first and wait for the remittance advice (RA) BEFORE collecting any deductible.

Medicare

Federal health insurance program for people who are sixty-five or older and also provides benefits to people with some disabilities and end-stage renal disease (ESRD), which is permanent kidney failure. The Medicare program was established in 1965 under Title XVIII of the Social Security Act. Medicare is managed by the Centers for Medicare and Medicaid Services (CMS) under the Department of Health and Human Services (HHS). Although it has just four parts, it is arguably the most complex program that medical practices deal with, involving numerous rules and regulations that must be followed for claims to be paid. To complicate matters, these rules change frequently, and keeping up with the changes is a challenge for providers and medical administrative assistants alike.

Medicare Secondary Payer (MSP)

Federal law requiring private payers to be the primary payers for Medicare beneficiaries' claims. In general, if a patient has additional insurance coverage, after the primary payer's RA has been posted, the next step is billing the second payer. The primary claim, of course, gave that payer information about the patient's secondary insurance policy. The secondary payer now needs to know what the primary payer paid on the claim in order to coordinate benefits. Benefits for a patient who has both Medicare and other coverage are coordinated under the rules of the MSP program. The Medicare coordination of benefits contractor receives inquiries regarding Medicare as second payer and has information on a beneficiary's eligibility for benefits and the availability of other health insurance that is primary to Medicare. The medical administrative assistant is responsible for identifying the situations where Medicare is the secondary payer and for preparing appropriate primary and secondary claims. A form for this purpose is used to gather and validate information about Medicare patients' primary plans during the patient check-in process. Medicare is the secondary payer when: (1) the patient is covered through an employer's group health plan or the spouse's employer's group health plan; (2) the services are for treatment of a work-related illness or injury covered by workers' compensation or federal black lung benefits; (3) no-fault insurance or liability insurance covers the services, such as those for illness or injury resulting from an automobile accident; and (4) a patient with end-stage renal disease is covered by an employer's group health plan -- in this case, Medicare is the secondary payer for the first 18 months.

Advance Beneficiary Notice of Noncoverage (ABN)

Form used to inform patients that a service is not likely to be reimbursed. Medicare does not provide coverage for certain services and procedures. Claims will be denied for services that are not considered reasonable and necessary for the patient and for services that are excluded by Medicare. The ABN must be provided in advance of the service to allow the beneficiaries or their representatives time to consider options and make an informed choice. Via the ABN, beneficiaries may choose to receive an item/service and pay for it out of pocket, rather than have a Medicare claim submitted. The ABN must be specific to the service and date, signed and dated by the patient, and filed. Use the GY modifier to speed Medicare denials so the amount due can be collected from the patient (or a secondary payer).

Mandatory Advance Beneficiary Notice of Noncoverage (ABN)

If a provider thinks that a procedure will not be covered by Medicare because it is not reasonable and necessary, the patient is notified of this before the treatment by means of a standard advance beneficiary notice of Noncoverage (ABN) from CMS. A filled-in form is given to the patient to review and sign. The ABN form is designed to identify the service or item that Medicare is unlikely to pay for, state the reason Medicare is unlikely to pay, and show the patient an estimate of how much the service or item will cost the beneficiary if Medicare will not pay. The purpose of the ABN is to help the beneficiary make an informed decision about services that might have to be paid out-of-pocket. A provider who could have been expected (by Medicare) to know that a service would not be covered and who performed the service without informing the patient could be liable for the charges. When provided, the ABN must be verbally reviewed with the beneficiary or his/her representative and questions posed during that discussion must be answered before the form is signed. The form must be provided in advance to allow the beneficiary or representative time to consider options and make an informed choice. The ABN may be delivered by employees or subcontractors of the provider, and is not required in an emergency situation. After the form has been completely filled in and signed, a copy is given to the beneficiary or his or her representative. In all cases, the provider must retain the original notice on file.

Medigap (Plans for Original Medicare Plan Beneficiaries)

Individuals enrolled in the Original Medicare Plan often have additional insurance, either Medigap insurance that they purchase or insurance provided by a former employer. These plans frequently pay the patient's Part B deductible and additional procedures that Medicare does not cover. If Medicare does not pay a claim because of a lack of medical necessity, Medigap and supplemental carriers are not required to pay the claim either. Medigap is private insurance that beneficiaries may purchase to fill in some of the gaps -- unpaid amounts -- in Medicare coverage. These gaps include the annual deductible, any coinsurance, and payment for some noncovered services. Even though private insurance carriers offer Medigap plans, coverage and standards are regulated by federal and state law. Medigap policyholders pay monthly premiums. There are a number of standard plans with varying coverage; however, they must all cover certain basic benefits. Generally, subscribers in gap plans that are "retired" -- that is, closed to new beneficiaries -- can keep their plans, which then do not accept new members. Monthly premiums vary widely across the different plan levels, as well as within a single plan level, depending on the insurance company selected. If a beneficiary has Medigap insurance, Medicare is the primary payer. That means that Medicare pays first, and then the Medigap carrier determines its obligations. File the claim with Medicare first. After a MAC processes a claim for a patient with Medigap coverage, the MAC automatically forwards the claim to the Medigap payer, indicating the amount Medicare approved and paid for the procedures. Once the Medigap carrier adjudicates the claim, the provider is paid directly, eliminating the need for the practice to file a separate Medigap claim. The beneficiary receives copies of the Medicare Summary notices that explain the charges paid and due.

LCDs and NCDs

Local coverage determinations (LCDs) and national coverage determinations (NCDs) issued by Medicare help sort out medical necessity issues. LCDs and NCDs contain detailed and updated information about the coding and medical necessity of specific services including a description of the service, a list of indications (instances in which the service is deemed medically necessary), the appropriate CPT/HCPCS code, the appropriate ICD-10-CM code, and a bibliography containing recent clinical articles to support the Medicare policy.

Medicare Coordinated Care Plans (CCPs)

Many Medicare beneficiaries are enrolled in Medicare Advantage coordinated care plans. A coordinated care plan includes providers who are under contract to deliver the benefit package approved by CMS. Many CCPs are run by the same major payers that offer private (commercial) coverage. CCPs may use features to control utilization, such as requiring referrals from primary care providers (PCPs), and may use methods of paying providers to encourage high-quality and cost-effective care. A plan may require the patient to receive treatment within the plan's network. If a patient goes out of the network for services, the plan will NOT pay; the patient must pay the entire bill at the time of service. This restriction does NOT apply to emergency treatment (which may be provided anywhere in the United States) and urgently needed care (care provided while temporarily outside the plan's network area). CCP plans include HMOs, generally capitated, with or without a point-of-service option, POSs, which are the Medicare version of independent practice associations (IPAs), PPOs, special needs plans (SNPs), and religious fraternal benefits plans (RFBs). To maintain uniform coverage within a geographic area, CMS requires managed care plans to provide all of the Medicare benefits available in the service area. Beyond that restriction, plans are free to offer coverage for additional services not covered under fee-for-service plans, such as prescription drugs, preventive care (including physical examinations and inoculations), eyeglasses and hearing aids, dental care, and care for treatment received while traveling overseas.

Medicare Parts A, B, C, and D

Medicare Part A provides coverage for care in hospitals, skilled nursing facilities, home health, and hospice care. Medicare Part B provides outpatient medical coverage. Medicare Part C offers plans provided by private health insurance companies called Medicare Advantage, as an option to coverage under the Original Medicare Plan. Medicare Part D is a prescription drug plan.

Nonparticipation in Medicare (NonPAR providers)

Nonparticipating physicians decide whether to accept assignment on a claim-by-claim basis. Providers who elect not to participate in the Medicare program, but who accept assignment on a claim, are paid 5 percent less for their services than PAR providers. For example, if the Medicare-allowed amount for a service is $100, the PAR provider receives $80 (80 percent of $100), and the nonPAR provider receives $76 ($80 minus 5 percent or $80 minus $4). NonPAR providers who do not accept assignment are subject to Medicare's charge limits. They may NOT charge a Medicare patient more than 115 percent of the amount listed in the Medicare nonparticipating fee schedule. This amount -- 115 percent of the fee listed in the nonPAR MFS -- is called the limiting charge. For a claim that is not assigned, the provider can collect the full payment of the limiting charge from the patient at the time of the visit. The claim is then submitted to Medicare. If approved, Medicare will pay 80 percent of the allowed amount on the nonPAR fee schedule -- NOT the limiting amount. Medicare sends this payment directly to the patient, since the physician has already been paid.

Local Coverage Determination (LCD)

Notices sent to physicians with information about the coding and medical necessity of a service. Participating physicians agree to not bill patients for services that Medicare declares as being not reasonable and necessary unless the patients were informed ahead of time in writing and agreed to pay for the services.

Medicare Part A

Program that pays for inpatient hospitalization services, care in a skilled nursing facility, home health care, and hospice care. Fees paid by Medicare Part A for inpatient hospital services are based on groupings of diagnoses. Hospital cases across the country have been analyzed to arrive at the fixed fees Medicare pays for hospital services. The payment is based on the principal diagnosis. People who are eligible for Social Security benefits are automatically enrolled in Medicare Part A. They do NOT have to pay insurance premiums for Part A. Although people age sixty-five or older who do not qualify for Social Security benefits have the option of enrolling in Part A, technically they MUST pay premiums to get benefits. Most people, in fact, do not pay a premium for Part A because they or their spouse has 40 or more quarters of Medicare-covered employment.

Original Medicare Plan

The Original Medicare Plan is a fee-for-service plan. It is administered by the Center for Medicare Management, a department of CMS. Medicare beneficiaries who enroll in the Medicare fee-for-service plan (called by Medicare the Original Medicare Plan) can choose any licensed physician certified by Medicare. They must pay a premium, the coinsurance (which is 20 percent), and the annual deductible specified each year by the Medicare law, which is voted on by Congress. The amount of a patient's medical bills that has been applied to the annual deductible is shown on the Medicare Remittance Notice (MRN), which is the Remittance Advice (RA) that the office receives, and also on the Medicare Summary Notice (MSN) that the patient receives. Each time a beneficiary receives services, the fee is billable. Because of Medicare rules, most offices bill the patient for any balance due after the MRN is received, rather than at the time of the appointment. The Original Medicare Plan is a fee for service plan that allows beneficiaries the freedom to choose from any licensed provider or specialist certified by Medicare. Patients are responsible for an annual deductible and a coinsurance. Patients receive a Medicare Summary Notice (MSN) detailing their services and charges. Patients enrolled in the Original Medicare Plan often have Medigap insurance to pay for annual deductibles and coinsurance.

Medicare Summary Notice (MSN)

The Remittance Advice (RA) the beneficiary receives from Medicare.

Medicare Remittance Notice (MRN)

The Remittance Advice (RA) the medical office receives from Medicare.