July 1, 2008

MEMBER ADVISORY

TO:          AAA Membership

FROM:    David M. Werfel, Esq.

                AAA Medicare Consultant

RE:         Hold on Payment of Physician Claims

On June 27, the Centers for Medicare and Medicaid Services (CMS) notified Medicare carriers and fiscal intermediaries to place, effective July 1, a 10-day "hold" on the payment of physician claims.  The AAA, however, has learned that several carriers misunderstood the instructions from CMS or thought ambulance services were on the physician fee schedule and, therefore, have extended the "hold" to ambulance claims.  The AAA has contacted CMS which confirmed that the "hold" applies only to physicians.  The AAA requested that CMS issue immediately a clarification to carriers restating that the "hold" does not apply to ambulance services and other suppliers and providers.

Even with the request from the AAA, it is unlikely that CMS will be able to issue a clarification in time for all carriers to remove the "hold" on ambulance claims before the expiration of the 10-day "hold" on physician claims.  For those ambulance service providers and suppliers affected by the "hold", the impact should be minimal.  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.

CMS intended this "hold" to apply only to claims from physicians, physician practitioners and those paid under the physician fee schedule.  I have included below the relevant portions of the communication from CMS.  The reason for the hold is that, before Congress took its July 4th recess, it failed to pass legislation to correct the 10.6% decrease that would have gone into effect for physicians and those tied to the physician fee schedule, effective July 1, 2008.

As a result, rather than process claims with a decrease and then have to reprocess physician claims, CMS has advised their contractors to hold claims for 10 days.  

CMS will then wait to see what Congress does when it comes back after July 4th.  Interestingly, the legislation noted above does affect ambulance rates as there is a provision for an increase of 2% for urban and 3% for rural ambulance services.

We will get back to you with any additional information.

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Here is an extract from the communication from CMS:

To the extent possible, the Centers for Medicare & Medicaid Services (CMS) is working with Congress, health care providers, and the beneficiary community to avoid disruption in the delivery of health care services and payment of claims for physicians, non-physician practitioners, and other Fee-For-Service (FFS) providers of services paid under the Medicare physician fee schedule, beginning July 1.  In this regard, CMS has instructed its contractors to hold these claims for the first 10 business days of July, for dates of service in July.  This 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.

After 10 business days, contractors will begin releasing claims into processing under the fee schedule which implements current law.  This, of course, could result in claims being processed with the negative 10.6 percent update.  If a new law is enacted which changes the negative 10.6 percent update, retroactive to July 1, CMS is prepared to automatically reprocess most of those claims which have already been processed.