ACP: Career Counseling - Medicare Claims Processing

Residents & Fellows

Overview of Medicare Claims Processing

by Patrick C. Alguire, MD, FACP
Director, Education and Career Development

Medicare claims are processed by non-government organizations or agencies that contract to serve as the fiscal agent between providers (hospitals, doctors, and other health care providers) and the Federal Government. These claims processors are known as "intermediaries" and "carriers." They apply Medicare coverage rules to determine the appropriateness of claims.

Medicare "intermediaries" process Part A claims (Hospital Insurance) for institutional services, including inpatient hospital claims, skilled nursing facilities, home health care agencies, and hospice services. They also process hospital outpatient claims for Part B. Examples of intermediaries include Blue Cross and Blue Shield Association, and other commercial insurance companies.

Intermediaries are responsible for:

Determining costs and reimbursement amounts
Maintaining records
Establishing controls
Safeguarding against fraud and abuse or excess use
Conducting reviews and audits
Making the payments to providers for services
Assisting both providers and beneficiaries as needed

Medicare carriers also handle Part B claims for services by physicians and medical suppliers. Their responsibilities include:

Determining charges allowed by Medicare
Maintaining quality of performance records
Assisting in fraud and abuse investigation
Assisting both suppliers and beneficiaries as needed
Making payments to physicians and suppliers for services that are covered under Part B

In order to bill Medicare for services, a physician provider number is required. If you have previously moonlighted, you may already have your Medicare provider number; this federal identification number never changes once it is assigned to you. Once you have secured your provider number, this automatically initiates the Unique Physician Identification Number (UPIN) process. Each provider receives only one UPIN. The State Survey Agency most often supplies the Medicare and Medicaid provider numbers to new physicians. For information about other paperwork that needs to be completed before beginning your practice, see "Completing the Important Practice Paperwork".

Peer Review Organizations (PROs) are groups of practicing health care professionals who are paid by the Federal government to do the general overview of the care provided to Medicare beneficiaries in each state, and to improve the quality of services. PROs act to educate and assist in the promotion of effective, efficient, and economical health care delivery of health services to the Medicare population they serve.

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