CMS explains new Medicare claims payment process. Source: Wall Street Journal

The Centers for Medicare & Medicaid Services (CMS) has released information to explain how Medicare payment rates will be processed due to the enactment of the Medicare Improvements for Patients and Providers Act of 2008 on July 15. 

As a result of the new law, the mid-year 2008 Medicare Physician Fee Schedule (MPFS) rate of -10.6 percent has been replaced with a 0.5 percent update, retroactive to July 1, according to CMS.

Physicians, non-physician practitioners and other providers of services who are paid under the MPFS should begin to receive payment at the 0.5 percent update rates in approximately 10 business days, or less.  Medicare contractors are currently working to update their payment system with the new rates, the agency said.

To avoid a disruption in claims payments under the MPFS, the agency said that Medicare contractors will continue to process the claims that have been on hold on a rolling basis (first in/first out) for payment at the 10.6 percent update level. After local contractors begin to pay claims at the new 0.5 percent rate, to the extent possible, the contractor will begin to automatically reprocess any claims paid at the lower rates.

Under the statute, Medicare will pay the lower of submitted charges or the Medicare fee schedule amount.  Claims with dates of service July 1 and later billed with a submitted charge at least at the level of the January 1 to June 30 fee schedule amount will be automatically reprocessed. 

Any lesser amount will require providers to contact their local contractor for direction on obtaining adjustments.  Non-participating physicians who submitted unassigned claims at the reduced nonparticipation amount also will need to request an adjustment, according to CMS.