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Medicare Claims Processing Topics

Denied vs. Unprocessable Claims
Advanced Beneficiary Notification (Waiver of Liability) Forms
Modifier to Indicate Teaching Physician Services

Denied vs. Unprocessable Claims

I noticed that some of my claims are denied by my Medicare carrier, while others are returned as "unprocessable." What is the difference?

As of July 1, 1996, Medicare carriers began returning incomplete or invalid Medicare claims as unprocessable. Previously, many carriers denied claims that lacked either necessary information or contained invalid information; these claims were then subject to the normal Medicare appeals process. Properly identifying the reason for your returned claims will assist you in determining how to best rectify the situation.

If a claim is denied by your carrier, you may seek reconciliation through the normal Medicare appeal process. A claim that is returned by your carrier as unprocessable requires a different course of action. A claim that is returned as incomplete or invalid should include specific information. The returned claim should include the patient's name and health insurance claim number, date(s) of services, patient account or control number, and an explanation of errors. When you get the claim back, you have three options: (1) submit the necessary corrections; (2) submit a corrected claim; or (3) submit an entirely new claim. Select the option that corresponds with the billing system of your practice.

When pursuing payment for returned claims, be careful to avoid submitting duplicate claims. If you think that you may have made an error on a claim, wait for your carrier to return the claim as unprocessable. Submitting a corrected or an entirely new claim before the original is returned could result in a duplicate payment-an overpayment that is sure to get your carrier's attention. There are other guidelines to follow to help you avoid duplicate claim situations. These guidelines are: (1) submit a claim in only one format, do not submit both an electronic and paper claim; (2) call your carrier before you resubmit a claim even if you have reason to believe that the carrier did not receive your initial claim; (3) closely monitor the claims you have submitted and processed, alerting you to the status of all your claims.

Efficient billing ensures efficient use of your practice's resources. Making a distinction between claims that are denied and claims that are returned as unprocessable will help your practice obtain reimbursement for its claims in a more timely manner and help you to avoid submitting duplicate claims.

Advanced Beneficiary Notification (Waiver of Liability) Forms

When is it necessary to have a patient sign a "waiver of liability" form?

A waiver of liability form should be used when a physician is aware that the treatment provided to a beneficiary may be denied by Medicare as "not medically necessary." Medicare will only pay for "medically necessary" services. If you have reason to believe that Medicare may not cover a particular service, then you must have the patient sign a waiver of liability before the service is performed in order to be paid. If the patient signs the waiver and Medicare denies payment, the patient is liable for the cost of the service.

Medicare's decision on medical necessity, whether or not it will pay a claim, is usually diagnosis code or frequency driven. Services that Medicare covers are not payable under all circumstances. Medicare may only pay for a certain service to be performed a certain number of times during a specified time period or may limit coverage of a service to specific diagnosis codes. These criteria and policies are developed and maintained by your Medicare carrier. (Your carrier should publish a payment policy manual that lists frequency parameters and acceptable diagnoses. If a service you are looking for is not listed, you can request it from your carrier).

If you recommend a services for a patient that is payable under certain circumstances (such as the ones described above), a waiver must be signed to prove that the beneficiary was informed in advance of a potential denial of payment. The claim should then be submitted to your carrier with Centers for Medicare and Medicaid Services's Common Procedural Coding System (HCPCS) modifier "-GA" attached. The -GA modifier signifies that the beneficiary has been informed that the service may not be covered and that the physician has a signed statement on file. If the claim is denied and you have the waiver form on file, the patient is responsible for payment of the service.

Services that Medicare determines to be "not medically necessary" differ from services that are not covered by Medicare. Medicare non-covered services are services that Medicare will not pay for regardless of the patient's condition or diagnosis. Medicare beneficiaries are informed of the services that are not covered by Medicare when they become eligible for Medicare Part B benefits. Accordingly, you are not required to inform the patient in advance when a service is not covered and a waiver does need to be signed. The patient is liable for the full charge of the service. Although you are not required to "re-inform" the patient, it may be in your best interest to do so.

When you are unsure whether a waiver of liability is necessary, err on the side of caution and have the patient sign one. Of course, you should also consider your relationship with your patients when making a decision on the frequency in which you approach them with a waiver of liability. Overuse of such a form has the potential to unnecessarily aggravate your patients.

What information should a "waiver of liability" include?

A well-designed waiver of liability form is essential to ensure payment for the services you perform. The following information should be included on the form:

  • Beneficiary's name and signature
  • date of service
  • name of service provided
  • reason you believe it may or may not be covered by Medicare
  • section of Medicare law which explains to the patient the need for the waiver

It is unnecessary to write out every item each time you ask a beneficiary to sign a form. For example, you can develop a standard form that displays a comprehensive checklist of reasons that the service may not be covered so that you can check the appropriate box depending on the circumstances. Descriptive phrases, such as "Medicare usually does not pay for this number of services within this period of time" and "Medicare usually does not pay for this lab test," are sufficient notification as to why a service may not be covered. Also, tailoring a form to meet your needs and the needs of your patients can help to minimize your paper volume. If a patient comes into your office routinely to receive a service that meets the limited coverage criteria-such as a Vitamin B12 injection-you can develop a form for that service and simply have the patient sign and date it each time the service is rendered.

Most Medicare carriers provide a prototype waiver of liability form. Please refer to the provider manual that is supplied by your carrier for assistance in developing a waiver of liability form that is right for you. Medicare is working with physician organizations to develop a standard ABN form that can be used uniformly by physicians and will be accepted by all carriers.

How does Medicare determine who must pay for a claim when it is determined to be "not medically necessary?"

When a claim is denied because Medicare determines that the service furnished was not medically necessary, Medicare assumes that the beneficiary did not know that Medicare would not pay for the service. At this point, Medicare will also presumes that the physician did know that the service would be denied. Under these circumstances, the physician can appeal both the denial of the service and/or the assumption that he or she knew or could have been expected to know that the service would be denied. If the denial is reversed, or if it is determined that the physician could not have known that the service would be denied, the physician's responsibility to incur the cost of the service is waived and Medicare will pay the physician. Payment made under the premise that the physician could not have know that a service would not be covered serves as notice of non-coverage under those circumstances and renders the physician accountable for future services of the same nature.

The original finding that the beneficiary did not know that the services would not be covered and physician did can be rebutted if there is evidence on file to show that the beneficiary did know. It can be demonstrated that the beneficiary knew if he or she had received prior receipt of a Medicare denial notice involving the same or similar circumstances or if the physician informed the beneficiary in writing before the service was furnished through having the patient sign a waiver. The waiver does not need to be submitted with the original claim, however HCPCS modifier "-GA" should be attached. Modifier -GA shows Medicare that the patient has been informed and that a statement is on file to support it.

The following chart illustrates all possible scenarios of payment responsibility:

Who is Responsible? Services Denied as not Medically Necessary
Physician If the beneficiary did not have such knowledge, but the physician could have been expected to know that the services were not eligible, payment responsibility is waived for the beneficiary. No payment is due from Medicare, and the physician may not bill the beneficiary.
Beneficiary If the physician did not have the knowledge, but the beneficiary could have been expected to know that the services were not necessary, responsibility is waived for the physician. Medicare will not make payment, but the physician can bill the beneficiary.
Both Physician and Beneficiary Prior to furnishing the service, the physician properly notified the beneficiary in writing that Medicare would not pay for the service, and after being so informed, the beneficiary agreed to sign an agreement to pay for the service. The agreement should be dated.
Neither Physician nor Beneficiary The Medicare program makes payment to the physician if neither the beneficiary nor the physician knew or could have known that the service was not medically necessary.

Modifier to Indicate Teaching Physician Services

As a teaching physician, when should I use the -GC modifier?

The -GC modifier--one of two modifiers created by the Centers for Medicare and Medicaid Services (CMS) for billing services of teaching physicians--indicates that the a service or procedure was performed in part by a resident under the direction of a teaching physician. You should use the -GC modifier when a resident is involved in furnishing the care described by the service or procedure code that you submit for the treatment of your patient. For evaluation and management (E/M) services, CMS's definition of resident involvement is not limited to direct interaction between the teaching physician and the resident. Often, the teaching physician's service will follow the resident's service. For example, if a resident admits a patient to the hospital during the middle of the night, it is unlikely that the teaching physician will see the patient until the next day. When examining and questioning the patient, the teaching physician does not have to repeat the work performed by the resident at the time of admission. The teaching physician should, however, refer to the resident's note and provide summary comments that establish, revise, or confirm the resident's findings.

You do not have to use the modifier if you ignore the information gathered by the resident and perform the entire service yourself. CMS has indicated that it would view a pattern of services furnished in a teaching hospital that exclude the involvement of a resident as unusual, however.

I heard that the use of the -GC modifier makes a claim more susceptible to post-payment utilization review by my Medicare carrier. Is that true?

No. All Medicare payments are potential subjects for post-payment utilization review. Use of the -GC modifier does not increase the likelihood that the claim will be subject to post-payment review; nor does its absence preclude it from review after the payment is issued. In fact, omitting the modifier when its use is appropriate in an attempt to avoid closer scrutiny of a claim is liable to backfire. Using the example of an overnight hospital admission listed above, CMS has stated that an initial E/M billing for an overnight admission that indicates the patient was only seen the following day by the teaching physician rather than by the resident is likely to raise a red flag for a reviewer.

If the purpose of the -GC modifier is not to identify claims for review, why does Medicare require its use?

CMS developed the modifier and requires its use in order to identify teaching physician claims from claims in which a physician furnishes all aspects of the service. Although the modifier will assist post-payment reviewers in recognizing teaching physician claims, its primary function is for research. The modifier will permit CMS and others to analyze claims data in a variety of ways.

Last updated: 12/17/2015