Medical Billing & Coding For Dummies
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At the top of the government heap is the biggest government payer of them all: good old Medicare. Medicare is funded by payroll taxes deducted from every employed American. (You’ve probably seen the acronym FICA, which stands for Federal Insurance Contributions Act, on your pay stub. This FICA deduction is what helps fund Medicare.)

Everyone who gets a paycheck gets FICA withheld, but you don’t see the dividends of that investment until you actually qualify for Medicare. Here’s how you can tell whether you (or any patients in your office) fall into that category. Generally, those eligible for Medicare are

  • Legal U.S. residents who are 65 or older who paid FICA for at least ten years
  • Individuals who are suffering end-stage renal disease who are receiving dialysis treatments or are on a kidney transplant list
  • Individuals who are eligible for Social Security Disability Insurance and are suffering from a permanent disability
Medicare has different levels of coverage, referred to as Parts. The coverage a patient gets is determined by how that patient paid (or continues to pay) into the plan. Here’s a brief overview:
  • Part A has already been paid for through the patient’s payroll taxes.
  • Part B is paid for through deductions, usually from the patient’s Social Security dividends.
  • Part C, added to the program in 1997, allows individuals who are eligible for Medicare to enroll in Medicare replacement plans offered by private health insurance plans.
  • Part D, adopted in 2006, is the drug plan. Part D covers prescription drug coverage.

Working with Medicare Claims

Think of Medicare like a nice, distant relative who sends you a check for $7 each year for your birthday. It’s not flashy, but it’s reliable. In other words, Medicare should be your most predictable payer. How so? Well, the fine folks at Medicare provide you with as much information as possible so that you can do your job effectively (and they can do theirs).

Medicare policies and procedures are available on both the Centers for Medicare & Medicaid Services (CMS) website, as well as on all the local contractor websites. Medicare also reliably follows the National Correct Coding Initiative (NCCI) edits, and it recognizes modifiers and the payments that link to them. Medicare, for the most part, lets providers know upfront what to expect.

Here’s how your provider gets paid with Medicare: Medicare Parts A and B (what’s considered “original” Medicare) is administered through regional contractors that accept and process Medicare claims in accordance with Medicare policy. Professional providers, including most physician practices, are paid under Part B per fee schedules, which are available on your local contractor’s website. Fee allowances are based on relative value unit (RVU) equations.

Getting Medicare-approved

Before a provider can receive payment for treating a Medicare patient, the provider must apply for Medicare’s approval. The registration process to become a Medicare provider takes several weeks to complete. The enrollment forms are available on the CMS website, and you can complete most of the enrollment online. To enroll with Medicare, providers must be licensed professionals and have both a National Provider Identifier (NPI) number and a tax identification number (TIN). After completing registration, Medicare assigns a Provider Transaction Access Number (PTAN), which allows providers to submit claims and have access to check the status of claims that are in process.

Providers who are not registered with Medicare cannot submit claims to Medicare, period. Large organizations often have employees that specialize in payer enrollment, but if you work for a small physician practice, you may be responsible for leading the effort to fill out all the necessary paperwork to get your provider Medicare-ready.

Registering with Medicare does not automatically mean that a provider is a participating provider. A provider can be registered with Medicare and be what the pros call non-par (non-participating). If a patient visits a non-par registered provider, the provider is not obligated to accept fee schedule allowance as payment in full. Instead the provider can charge up to a higher level called a limiting charge, and the provider would then need to bill and collect payment from the patient. Medicare reimburses the patient for 80 percent of the fee schedule allowance, but the patient must pay the remaining 20 percent out of his own pocket. Sometimes collecting from patients is difficult, to say the least, so a provider must decide whether to participate with Medicare and receive a lower fee directly from the carrier or risk collecting his fee from the patient at a slightly higher rate.

Processing Medicare claims

After your provider is good to go as a Medicare provider, you can start processing claims. You submit all claims to the local Medicare contractor, which processes them according to Medicare processing guidelines and policies.

When no national policy applies to a particular service, the decision whether to cover the service may fall to the local Medicare contractor or something called a fiscal intermediary, a private insurance company that serves as an agent for the federal government in the administration of Medicare.

The lack of a national policy sometimes happens when a modification has been made with regard to a procedure. Procedural modifications are often the result of advancements in medicine. The development of new tools or equipment that may be used by physicians can result in new procedural codes, for example. Initially, these items are represented by unspecified codes, which are not reimbursable by Medicare. Subsequently, new codes are added to represent these services or items.

Similarly, when a claim is processed incorrectly, the initial appeal process goes through the local contractor, although the process is uniform for all regions.

Working with Medicare Contractors

When you think of Medicare, you probably (or will soon) immediately think of the umbrella organization, the Centers for Medicare & Medicaid Services (CMS). Who you should be thinking about are the local Medicare contractors or fiscal intermediaries, because these are the people providers deal directly with.

Submitting your claims

You submit your claims to the local carrier, who processes them. Each carrier is required to follow Medicare processing guidelines, which help contractors provide the same Medicare level of service to all providers. Each Medicare contractor must do the following:
  • Accept electronic claim submissions
  • Maintain an interactive voice response (IVR) provider phone line
  • Follow the same timely filing requirements set by Medicare
  • Make payment according to Medicare fee schedules and timely payment rules
  • Operate the same way when it comes to the Health Insurance Portability and Accountability Act (HIPAA) communications and observe all HIPAA regulations
Regardless of which contractor you call, you can always expect the process to follow these steps:
  1. At the contract’s request, you supply the provider’s PTAN (Provider Transaction Access Number), the provider’s NPI (National Provider Identifier), and the last five digits of the TIN (tax identification number).
  2. You will be asked for the patient’s Medicare number, name, and date of birth before any privileged information will be shared.
  3. You may then make claim or member-specific inquiries.
By following the same protocols for every single phone call, the contractors allow Medicare to operate with more expedience and efficiency for the large number of claims that are submitted daily.

Regardless of which government program you’re dealing with, you work with a regional, or possibly a local, company. Each of these administrators has its own contact information (phone number, electronic payer identification number, and physical address).

Getting along with your Medicare rep

Each Medicare contractor has provider representatives available for assistance when you’re not sure what is wrong with a submitted claim, but these representatives can’t advise you how to code or how to bill. They can only direct you to the correct resources that will assist in getting your claim paid.

When calling Medicare, make sure you have the following info handy:

  • The PTAN, the number assigned by Medicare to the individual provider
  • The provider’s NPI, the 10-digit provider number issued by CMS
  • The last five digits of the provider’s TIN, which is similar to an individual’s Social Security number
  • The patient’s Medicare number
  • The patient’s name and date of birth
  • The date of service and billed amount of the claim in question

About This Article

This article is from the book:

About the book author:

Karen Smiley, CPC, is a certified, multi-specialty coding expert in physician and outpatient reimbursement. With an extensive background as a coder, auditor, accounts receivable manager, and practice administrator, she has also served as an independent consultant to physician practices and as an assistant coding instructor.

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