10.6% Pay Cut Effective July 1 – CMS to Hold Claims for 10 Business Days

Medicare’s current fee schedule calls for a 10.6% cut in physician reimbursement effective July 1, 2008. The Heart Rhythm Society and other medical societies participated in a call on Monday, July 2 with Jeffrey Rich, MD, Director of the Center for Medicare Management,Centers for Medicare & Medicaid Services (CMS). Dr. Rich is working, to the fullest extent possible, with Congress, health care providers, and the beneficiary community to avoid disruption in the delivery of health care services and payment of claims paid under the Medicare physician fee schedule, beginning July 1.

Because Congress failed to pass legislation to avert the 10.6% pay cut before it recessed for the Independence Day holiday, CMS has instructed Medicare Administrative Contractors (MACs) and local carriers to halt processing of claims for the first 10 business days of July, for services rendered on or after July 1. After 10 business days, contractors will begin releasing claims into processing under the fee schedule that implements current law.

Of course, this could result in claims being processed with the negative 10.6% update. If a new law is enacted which changes the negative update, retroactive to July 1, CMS is prepared to automatically reprocess most of those claims which have already been processed.

During the interim, Medicare participants have several options:

Providers can hold claims until Congress takes action, which could occur by mid-July. This will enable providers to submit the correct amount to Medicare and charge the correct co-pay amounts to patients. Or,
Providers can submit claims to Medicare using the previous fee schedule amount (prior to July 1). If Congress retroactively adjusts the fee schedule, then providers would not have to resubmit claims. Medicare will automatically reprocess the claims at the rate that was in effect for that time period. However, under this option, providers are not permitted to charge patients 20% of the previous fee schedule amount. Therefore, providers will have to wait and charge the co-pay after the claim is processed, or they can charge the co-pay based on the lower fee schedule amount. Or,
Providers can file claims with the lower fee schedule amount (rates effective after July 1) and charge patients the corresponding co-pay at the time of service. If Congress acts to retroactively fix the fee schedule, providers will have to resubmit those claims to Medicare and re-bill for the difference in co-pay.

CMS anticipates that the hold should have minimum impact on provider cash flow because under current law electronic claims are not paid any sooner than 14 days (29 days for paper claims) after the date of receipt. Meanwhile, all claims for services delivered on or before June 30 will be processed and paid under normal procedures.

For further information on claims processing and coinsurance, contact your local MAC or carrier directly.