CMS Suspends Payment on Certain ICD-10 Claims

CMS Systems Not Ready for All NCDs and LCDs

We may be seeing one of the first latent indicators of the financial impact of ICD-10 with today’s announcement. CMS stated in a November 20th 2015 email that its systems are being updated to accommodate ICD-10 NCDs and LCDs.  This also resulted in “temporary” suspensions of payments for LCDs.  CMS states, “Claims affected by these edits were temporarily suspended.”

Despite promises from CMS that payments would be processed even if there were deficiencies in how the claims are submitted for Medicare Part B providers, this may be the first significant area where CMS is unable to fulfill that commitment.  CMS stated that a permanent fix won’t be ready for about 40 days.

According to an FAQ from CMS published July 6, 2015 and updated September 22, 2015:

“Question 7:
National Coverage Determinations (NCD) and Local Coverage Determinations (LCD) often indicate specific diagnosis codes are required. Does the recent Guidance mean the published NCDs and LCDs will be changed to include families of codes rather than specific
Answer 7:
No. As stated in the CMS’ Guidance, for 12 months after ICD-10 implementation, Medicare review contractors will not deny physician or other practitioner claims billed under the Part B physician fee schedule through either automated medical review or complex medical record review based solely on the specificity of the ICD-10 diagnosis code as long as the physician/practitioner used a valid code from the right family of codes. The Medicare review contractors include the Medicare Administrative Contractors, the Recovery Auditors, the Zone Program Integrity Contractors, and the Supplemental Medical Review Contractor.”

CMS Systems Impacted

The U.S. Centers for Medicare and Medicaid (CMS) published clarifications regarding National Coverage Determination (NCD) and Local Coverage Determination (LCD) policies. Medicare national and local coverage policies are translated for the new medical coding standard, International Classification of Diseases, version 10 (ICD-10), and to receive payment, providers must bill using ICD-10 codes for services rendered on or after October 1, 2015.

This impacts  Medicare Coverage Database (MCD) which contains all NCDs and LCDs, local articles, and proposed NCD decisions. The database also includes several other types of National Coverage policy related documents, including National Coverage Analyses (NCAs), Coding Analyses for Labs (CALs), Medicare Evidence Development & Coverage Advisory Committee (MEDCAC) proceedings, and Medicare coverage guidance documents.  The deficiency was reported by Medicare Administrative Contractors.

National Coverage Determinations Require Interim Fix to CMS Systems

CMS stated, “Interim solutions are currently in place to permit appropriate claims payment. In most cases, claims were automatically reprocessed, and no action is required. A permanent systems update will be in place by January 4, 2016.”  Information about specific claim types and the reprocessing of claims is available on your Medicare Administrative Contractor (MAC) website.

Local Coverage Determinations and Claim Suspensions

CMS explained in the email that, “… after implementation, some Medicare Administrative Contractors (MACs) identified LCDs that needed further refinements for ICD-10 diagnosis codes. Claims affected by these edits were temporarily suspended and automatically reprocessed. Curiously, CMS stated, “No action is required. Questions about specific LCDs should be directed to the appropriate MAC.”

Expected Legal and Fiscal Impacts to Health Care Providers

This potentially impacts hundreds of $millions of health care claims.  Health care providers should have heeded early industry advice to take out a line of credit as a hedge against revenue disruption.  Quasi government entities such as MACs who are fiscal intermediaries as well as Medicare Advantage plans that have a fiduciary duty to manage funds on behalf of the U.S. Government’s HHS and CMS departments will have to evaluate their payment policies.  State workers compensation funds, third party liability claims, and State Medicaids may also be impacted.

Michael F. Arrigo

Michael is Managing Partner & CEO of No World Borders, a leading healthcare management and IT consulting firm. He serves as an expert witness in Federal and State Court and was recently ruled as an expert by a 9th Circuit Federal Judge. He serves as a patent expert witness on intellectual property disputes, both as a Technical Expert and a Damages expert. His vision for the firm is to continue acquisition of skills and technology that support the intersection of clinical data and administrative health data where the eligibility for medically necessary care is determined. He leads a team that provides litigation consulting as well as advisory regarding medical coding, medical billing, medical bill review and HIPAA Privacy and Security best practices for healthcare clients, Meaningful Use of Electronic Health Records. He advises legal teams as an expert witness in HIPAA Privacy and Security, medical coding and billing and usual and customary cost of care, the Affordable Care Act and benefits enrollment, white collar crime, False Claims Act, Anti-Kickback, Stark Law, physician compensation, Insurance bad faith, payor-provider disputes, ERISA plan-third-party administrator disputes, third-party liability, and the Medicare Secondary Payer Act (MSPA) MMSEA Section 111 reporting. He uses these skills in disputes regarding the valuation of pharmaceuticals and drug costs and in the review and audit of pain management and opioid prescribers under state Standards and the Controlled Substances Act. He consults to venture capital and private equity firms on mHealth, Cloud Computing in Healthcare, and Software as a Service. He advises ERISA self-insured employers on cost of care and regulations. Arrigo was recently retained by the U.S. Department of Justice (DOJ) regarding a significant false claims act investigation. He has provided opinions on over $1 billion in health care claims and due diligence on over $8 billion in healthcare mergers and acquisitions. Education: UC Irvine - Economics and Computer Science, University of Southern California - Business, studies at Stanford Medical School - Biomedical Informatics, studies at Harvard Medical School - Bioethics. Trained in over 10 medical specialties in medical billing and coding. Trained by U.S. Patent and Trademark Office (USPTO) and PTAB Judges on patent statutes, rules and case law (as a non-attorney to better advise clients on Technical and Damages aspects of patent construction and claims). Mr. Arrigo has been interviewed quoted in the Wall Street Journal, New York Times, and National Public Radio, Fortune, KNX 1070 Radio, Kaiser Health News, NBC Television News, The Capitol Forum and other media outlets. See and for more about the company.

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