Wound management professionals and providers frequently call this author because they have received multiple denied claims and they do not know why the claims were denied. Most of the time they want to blame the denial on a product they used. In fact, they will often begin the call by saying, "I am never using [product] again because claims are always denied when I use it." When this author asks them if they checked the remittance advice (RA), they usually say, "I do not know what that is," or "I did not get one." Because the RA provides invaluable information about claims payment by Medicare, we will review the frequently asked questions from wound management stakeholders.
WHAT IS A REMITTANCE ADVICE?
The RA is a payment notice that accompanies claim payment or adjustments from the wound management stakeholder's Medicare Administrative Contractor (MAC). When wound management stakeholders submit claims to their MACs, they receive an RA that explains the payment and any adjustment(s) made to the payment. The RA itemizes the MAC's claims processing decision information regarding
* payments,
* deductibles and copayments,
* adjustments,
* denials,
* missing or incorrect data,
* refunds, and
* claims withholding because of Medicare Secondary Payer or penalty situations.
The codes in the RA help wound management stakeholders identify any additional action they need to take, for example, resubmitting the claim with corrected information or appealing a payment decision.
Wound management professionals who accept Medicare assignment receive payment and an RA from their MAC for claims they submit. Wound management professionals who do not accept Medicare assignment must submit claims to their MAC for services, procedures, or supplies they furnish to Medicare beneficiaries. The MAC sends payment for those claims to the beneficiaries and sends an informational RA to the wound management professional. The informational RA reports the amount of the payment and any adjustments the MAC made to the claims. Wound management professionals who do not accept assignment must bill the Medicare beneficiary to obtain payment.
WHAT IS THE FORMAT OF AN RA?
The RAs are sent in either electronic or paper format. Both formats provide similar information, but the electronic format offers some data and administrative efficiencies that are not available in the paper format:
* faster communication and payment notification
* faster account reconciliation through electronic posting
* automation of follow-up action
* generation of less paper
* lower operating costs
* ability to create various reports
* ability to search for information on claims
* ability to export data to other applications
* more detailed information
Therefore, this author recommends using RAs in electronic format.
DO I NEED SPECIAL SOFTWARE TO VIEW MY RAS?
If you work in a hospital outpatient wound management provider-based department, your MAC is required to make PC Print software available at no charge to your institution. The software includes self-explanatory loading and use instructions for viewing RAs.
If you are a wound management professional or supplier, the Centers for Medicare & Medicaid Services developed a software called Medicare Remit Easy Print that enables providers to view and print remittance information about a single claim or all claims, a summary page, and special reports that can be exported.
WHAT INFORMATION IS INCLUDED IN AN RA?
Wound management stakeholders will find detailed payment information about their claims, including a description of "why" Medicare may not have paid the total original charges in full. By reviewing this information, wound management stakeholders will better understand the actions their MAC took while processing each claim and any additional actions that may be required of the stakeholders.
Any time a MAC pays a claim differently than the original billing, that change is referred to as an adjustment. Following are seven general types of adjustments:
1. Denied claim
2. Zero payment
3. Partial payment
4. Reduced payment
5. Penalty applied
6. Additional payment
7. Supplemental payment
The RA uses medical and nonmedical code sets to represent a standardized reason or condition that relates to the claim or service. The medical code sets are the codes that identify the service, procedure, and/or products reported by the wound management stakeholder, such as the Healthcare Common Procedure Coding System Level I and Level II codes; International Classification of Diseases, 10th Revision, Clinical Modifications; and National Drug Codes.
The nonmedical code sets characterize general administrative situations.
* Group Codes assign financial responsibility for the unpaid portion of the claim/service line balance.1 Examples: CO (Contractual Obligation) assigns responsibility to the provider; PR (Patient Responsibility) assigns responsibility to the patient. A Group Code is always used in conjunction with a CARC (see below) to show liability for amounts not covered by Medicare for a claim or service.
* Claim Adjustment Reason Codes (CARCs) communicate adjustments made and offer an explanation when the MAC pays a claim or service line differently than what was on the original claim. A complete list of all CARCs and their descriptions can be viewed on the Washington Publishing Company website.2 A national healthcare code committee maintains and updates CARCs three times per year. Examples: CARC #4: The procedure code is inconsistent with the modifier used, or a required modifier is missing; CARC #5: The procedure code/type of bill is inconsistent with the place of service.
* Remittance Advice Remark Codes (RARCs) further explain an adjustment or relay informational messages that CARCs cannot express. In fact, some RARCs starting with the word "Alert" are general adjudication information from the MAC. The Washington Publishing Company website2 also displays a complete list of RARCs and their descriptions. The Centers for Medicare & Medicaid Services maintain and update the RARCs three times per year. Examples: M39: Alert: The patient is not liable for payment of this service as the advance notice of noncoverage you provided to the patient did not comply with program requirements; M51: Missing/incomplete/invalid procedure code(s).
* Provider-Level Balance (PLB) Reason Codes describe adjustments your MAC makes at the provider level, rather than to a specific claim or service line. The PLB code list is an internal codes list.3 Some examples of provider-level adjustments are: an increase in payment for interest due as a result of late payment of a claim by Medicare, a deduction from payment as a result of prior overpayment, or an increase in payment for any provider incentive plan.
SUMMARY
Wound management stakeholders should review the RAs for all processed Medicare claims to identify the reasons for adjustments (denials or payment reductions) and to avoid future errors by identifying potential problems with the way original claims were submitted. While reviewing their RAs, wound management stakeholders should
* list the common CARC and RARC code combinations that your business receives. The CARCs identify the claim submission problems and the RARCs tell you what you should correct.
* Look for reoccurring CARC and RARC code combinations and learn from them.
* Note whether you overturned any/all CARC and RARC code combinations in the past. If the answer is yes, note the material that you submitted to overturn the denials.
This overview of RAs should pique your curiosity to research why your claims received adjustments-and why you should make a habit of reviewing your RAs. Now would be a great time to ask your billers to show you your RAs. You will be pleasantly surprised at the amount of information you can glean from them. If you would like to learn more about this topic, this author recommends reading the portions of the Medicare Learning Network's Booklet Remittance Advice Resources and FAQs4 that which pertain to your wound management business.
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