CMS Provides MACs, RACs, and ZPICs With Automatic Denial Authority for “Related” Claims

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Effective March 6, 2014, Medicare contractors may automatically deny claims that are “related” to other claims that have been denied as a result of pre- or postpayment review.  Contractors need not issue Additional Documentation Requests (ADRs) for the “related” claims prior to issuing the denial. 

In Change Request (CR) 8425, CMS modifies Section 3.2.3 of the Program Integrity Manual, which governs ADRs during prepayment and postpayment review.  The CR expressly provides that Medicare Administrative Contractors (MACs), Recovery Auditors (RACs) and Zone Program Integrity Contractors (ZPICs) “have the discretion to deny other related claims submitted before or after the claim in question.”  Claims will be deemed “related” if documentation associated with one claim can be used to validate another claim.  CMS provided the following illustrative examples of how claims may be viewed as related:

  • An inpatient claim and associated documentation is reviewed and determined not to be reasonable and necessary and, therefore, the physician claim can be determined not to be reasonable and necessary;
  • A diagnostic test claim and associated documentation is reviewed and determined not to be reasonable and necessary and, therefore, the professional component can be determined not to be reasonable and necessary. 

CMS’s examples suggest a focus on physician services, but CMS is clear that its examples are “not exhaustive” and “claims may be ‘related’ in other scenarios.”  Accordingly, the change could impact coverage of and payment for numerous types of services and products including, for instance, episodic care (e.g., SNFs, home health, and hospice) and rented DME.  The change also could result in significant increases in the number of appeals, claims, and appellants that will be added to the already overburdened claims appeals system. 

Reporter, Tracy Weir, Washington, D.C., +1 202 626 2923, tweir@kslaw.com.

Topics:  CMS, Contractors, Healthcare, MACs, Medicare, RACs, ZPIC

Published In: Health Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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