On July 31, 2013, CMS updated its Frequently Asked Questions (FAQs) for all fee-for-service providers related to incarcerated beneficiary claim denials.  Medicare does not cover supplies or services for persons who are incarcerated at the time the services are rendered. 

Effective April 1, 2013, CMS created an Informational Unsolicited Response (IUR) process to identify and perform retroactive adjustments on any previously paid claims that may have been processed and paid erroneously during periods when the beneficiary data in the Medicare Enrollment Database did not reflect the fact that the beneficiary was incarcerated for the date of service.  Following the implementation of the IUR process, CMS identified a significant number of alleged overpayments, released demand letters, and automatically recovered the alleged overpayments.  Subsequently, however, CMS has determined that certain of the incarcerated beneficiary claims may have been denied in error, because the information related to the period of incarceration for certain beneficiaries was not completely accurate.  As a result, CMS is reviewing the data and will make changes to improve the process used to identify periods of incarceration.  CMS is working to identify claims that resulted in recent recovery actions and to correct any inappropriate overpayment recoveries.  Providers are encouraged to appeal any claims that have not been recouped in error to preserve their rights to payment even if CMS is expected to reprocess the claims.

CMS updated its FAQs related to the incarcerated beneficiary claim denial process.  The updated guidance provides:

• Providers and beneficiaries can appeal the denied claims, including those that are not adjusted by CMS as part of its reprocessing activities.
• Providers and suppliers should no longer encourage beneficiaries to contact their local Social Security offices in order to have their records updated as a result of this recent issue.
• Providers should no longer fax information to local CMS Regional Offices; CMS is working to develop processes to resolve the issue.
• CMS expects the improper claim denials associated with the June and July 2013 incarcerated beneficiaries data will not be resolved prior to October.
• All claims and accounts receivable will transfer to the incoming MAC if the corrections of recoupments occur after a new MAC has assumed responsibility for a jurisdiction.
• CMS plans to send a letter to all affected beneficiaries in August 2013 explaining the policy and stating the periods of time during which claims were affected.

Medicare will consider a person to be incarcerated when in prison or jail, but also in a supervised release program, and in certain other situations.  The Medicare Learning Network Matters article (effective April 1, 2013) discussing the IUR process is available here.  CMS’s recently updated FAQs regarding incarcerated beneficiaries are available here.  

Reporter, Juliet M. McBride, Houston, +1 713 276 7448, jmcbride@kslaw.com.