Upcoming Changes to the Medicare Program

Payment Adjustments for Unsuccessful Electronic Prescribers

Providers that were considered unsuccessful electronic prescribers (e-prescribers) during the time frame January 1, 2011 to June 30, 2011 and did not submit a hardship exemption request on or before November 8, 2011 may be subject to a 1 percent payment reduction on their Medicare physician fee schedule payments starting on January 1, 2012.

Providers that are subjected to the payment adjustment will see remittance advice remark code N545 on all claims affected by the adjustment.


For more information, please visit www.cms.gov/ERxIncentive.


Please Note: The National Government Services Provider Contact Center may only assist with questions related to the following issues: remittance advice questions, incentive payments, incentive payment adjustments, and National Provider Identifier (NPI) feedback reports.


Related Centers for Medicare & Medicaid Services (CMS) Site Resource Link: Medicare Learning Network (MLN) Matters Special Edition article SE1141

Remittance Changes for Part B Overpayments

Beginning January 1, 2012, all Part B withholdings and overpayments shown on the remittance advice with PLB adjustment reason code ‘WO’ and forwarding balances with provider level adjustment (PLB) reason code FB will no longer have the beneficiary’s Health Insurance Claim number (HICN) on the remittance advice alongside the financial control number (FCN). If your office submits claims with the Patient Account Number field completed, this field of the remittance advice will now contain the patient account number instead.


It has been brought to the attention of CMS that providing the Patient Account Number as received on the original claims rather than the HICN would:

  • Enhance the provider’s ability to automate payment posting
  • Reduce the need for additional communication (via telephone calls, etc.) that would subsequently reduce the costs for providers as well as Medicare

Important: If you do not submit claims with the patient account number field completed, this change will not affect you, and you will continue to see the HICN on your remittance advice. This change will only impact remittance advice and claims submitted in Version 5010A1 and does not apply to standard paper remittance or Version 4010A1 transactions.


Related CMS Site Resource Links: MLN Matters articles MM7499, MM6870, and Change Request (CR) 7068.

Advanced Diagnostic Imaging Accreditation Potential for Denials

Providers performing the technical component of advanced diagnostic imaging (ADI) services (i.e., MRI, CT scans, nuclear medicine imaging, PET scans, etc.) who bill Medicare under the physician fee schedule and who have not yet been accredited will receive denials for ADI services submitted with dates of service on or after January 1, 2012.


Please visit the following Web site for more information on the ADI accreditation requirements and procedures: http://www.cms.gov/MedicareProviderSupEnroll/03_AdvancedDiagnosticImagingAccreditation.asp


To obtain additional information about the accreditation process, please contact the accreditation organizations shown below.


American College of Radiology (ACR)
1891 Preston White Drive
Reston, VA 20191-4326


Intersocietal Accreditation Commission (IAC)
6021 University Boulevard, Suite 500
Ellicott City, MD 21043


The Joint Commission (TJC)
Ambulatory Care Accreditation Program

One Renaissance Boulevard
Oakbrook Terrace, IL 60181


Note: Providers experiencing denials for non-ADI accreditation will see remark code N290 on their remittance advice for claims submitted for or including the technical component of an ADI procedure.

Related CMS Site Resource Link: MLN Matters Article SE1122

Recovery Audit Contractor Initiated Demand Letter Changes

As of January 3, 2012, all Recovery Audit Contractor (RAC) overpayment demand letters will be issued on National Government Services letterhead. The letter will contain the Recovery Auditor’s contact information.


National Government Services will be responsible for fielding any administrative concerns regarding your overpayment, such as timeframes for payment recovery and appeal processes.


The RAC will remain your contact for any audit specific questions, such as their rationale for identifying the potential improper payment.

Related CMS Site Resource Link: MLN Matters Article MM7436

Additional Development/Documentation Request Letter Changes

Starting January 3, 2012, all additional development request (ADR) letters will contain information on how your office may be able to submit medical records electronically via the Electronic Submission of Medical Documentation (esMD) process. More information about submitting medical documentation electronically is available on the CMS Web site at www.cms.gov/esmd.


5010 Claim Submission Changes

When transitioning to 5010A1 transactions, please make note of the following claim submission changes that may affect your Part B claims:

Ambulance Changes

  • Ambulance claims will require a diagnosis code in order to be processed. Please see MLN Matters Special Edition article SE1029 for more information.
  • Ambulance providers submitting medical transportation claims are required to report pickup and drop off locations for ambulance transports. This information should be reported in 2310E for the pickup and 2310F for the drop off location.
  • Ambulance 5010 claims contain a new segment named “Patient Ambulance Count.” This new segment will be reported in the 2400 QTY segment and is required to report the number of patients transported in the same vehicle for ambulance or non-emergency transports.
  • When submitting “unclassified” or “not otherwise classified” procedure codes, the description should no longer be placed in the line item note NTE segment. It should instead be placed in the 2400.SV101-7 segment. This change affects all Healthcare Common Procedure Coding System (HCPCS) codes that contain verbiage below and require a description be submitted:
    • NOC – not otherwise classified
    • NEC – not elsewhere classified
    • NOS – not otherwise specified
    • NES – not elsewhere specified
    • NOR – not otherwise reported
    • The Billing Provider Address (2010AA Loop) submitted on claims in the 5010 format will now require a physical location address to be reported. P.O. Boxes and lockbox addresses cannot be reported as a billing provider address. P.O. Boxes and lockbox address can be reported as a pay-to-address in loop 2010AB.
    • In the 5010 format, a change has also been made to require the full nine-digit ZIP code for the Billing Provider address (2010AA Loop) and the Service Facility address (2310C Loop). Placing all zeros or all nines in the four-digit extension field will cause front-end rejections.

Unclassified Procedure Codes

Address Submission Changes

Changes to the Psychiatric Reduction in 2012

The psychiatric payment reduction will be altered as follows.

In 2011, Medicare payments for psychiatric services were paid based on the following formula:

  1. Fee schedule amount – $100.00
  2. Psychiatric reduction – 0.6875
  3. Reduced fee schedule allowed amount – $68.75
  4. Medicare pays 80 percent of reduced allowed amount  $55.00
  5. Patient’s 20 percent coinsurance for reduced allowed amount – $13.75
  6. Difference between fee schedule and reduced allowed amount – $31.25
  7. Patient responsibility (Item 5+6) – $45.00

The beneficiary responsibility in 2011 would generally be 45 percent of the Medicare physician fee schedule (MPFS) allowed amount.

In 2012, Medicare payments for psychiatric services will be paid based on the following formula:

  1. Fee schedule amount – $100.00
  2. Psychiatric reduction – 0.75
  3. Reduced fee schedule allowed amount – $75.00
  4. Medicare pays 80 percent of reduced allowed amount – $60.00
  5. Patient’s 20 percent coinsurance for reduced allowed amount – $15.00
  6. Difference between fee schedule and reduced allowed amount – $25.00
  7. Patient responsibility (Item 5+6) – $40.00

The beneficiary responsibility in 2012 will generally be 40 percent of the MPFS allowed amount. The psychiatric reduction calculator located under the Self Service Tools section of the National Government Services Web site will be updated with this information.

This change is a result of CR 6686, whereas the following changes were set into action:

Effective January 1, 2010, the previous 62.5 percent limitation increased as follows:

  1. 2010-2011 = 68.75 percent
  2. 2012 = 75 percent
  3. 2013 = 81.25 percent, and
  4. 2014 and onward = 100 percent

Effective January 1, 2014, Medicare will pay outpatient mental health services at the same level as other Part B services. That is, at 80 percent of the MPFS.

Related CMS Site Resource Link: MLN Matters Article MM6686

Multiple Procedure Payment Reduction on the Professional Component of Multiple Diagnostic Imaging Services Performed Same Day/Same Session

On January 1st, 2011, CMS implemented a 50 percent payment reduction on the technical component when multiple diagnostic imaging procedures were performed on the same patient/same day/same session by the same provider. Starting January 3, 2012, this multiple procedure payment reduction (MPPR) will be expanded to the professional component in addition to the existing reduction on the technical component.


When multiple diagnostic imaging services are performed on the same day during the same session by the same provider on the same beneficiary, the professional component with the highest valued fee schedule amount will be paid at 100 percent. All subsequent and lower valued professional components on the MPFS will be paid at 75 percent of the MPFS amount (i.e., a 25 percent reduction).


This new reduction will apply on services submitted as global procedures or broken down into each component and billed separately (professional and technical).


Claims impacted by this payment reduction will have claim adjustment reason code CO-59 appended to any line items whose payment amounts were reduced. All items that were reduced will also have the modifier 51 appended.


More information will be shared as soon as it is available.

Related CMS Site Resource Link: CR 7442