Medicare makes an "Oops!" on denial of incarcerated claims

If you recently had a Medicare claim denied because the patient was supposedly "incarcerated," the Centers for Medicare & Medicaid Services (CMS) wants you to know it may have made a mistake.

The CMS earlier this summer began denying claims and initiating recoveries on previously paid claims from physicians and others based on Social Security Administration data that indicated that the Medicare beneficiaries cared for had been incarcerated on the date of service. Medicare will generally not pay for medical items and services furnished to a beneficiary who is incarcerated, which the CMS defines as being confined within a penal facility, on a supervised release, on medical furlough, residing in a halfway house, or other similar situations.

CMS has since learned that the information related to these periods of incarcerations was, in some cases, wrong – or “incomplete for CMS purposes," as the government puts it. That has led CMS to review the data and begin changing how it determines whether a recipient is incarcerated. In the meantime, however, CMS is also working to quickly identify and correct any inappropriate overpayment recovery proceedings against providers.

According to a related set of frequently asked questions on the CMS web site, fixing these mistakes will take a lot of work, including restoring the original Medicare Enrollment Data Base, identifying overpayments that need to be abated or refunded, and creating a claims processing system. CMS does not yet have a firm target date and anticipates that it won't complete the process before October.

Physicians will not have to resubmit claims that may have been denied or considered an overpayment. If you have received a related overpayment demand letter, you will either need to repay the debt or appeal while CMS is working out the corrections. Considering that many of these overpayments will likely be overturned, it's a good idea to preserve your rights by filing an appeal.

CMS will continue to issue messages about this topic, including timeframes for resolution, to keep the physician community informed. Information will also be posted on the All-Fee-For-Service-Providers page on the CMS website.

– Kent Moore, Senior Strategist for Physician Payment for the American Academy of Family Physicians