[Federal Register: April 23, 2004 (Volume 69, Number 79)]
[Rules and Regulations]
[Page 21963-21966]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23ap04-12]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 424
[CMS-1185-F]
RIN 0938-AK79
Medicare Program; Elimination of Statement of Intent Procedures
for Filing Medicare Claims
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
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SUMMARY: This final rule removes the written statement of intent (SOI)
procedures, set forth in 42 CFR 424.45, used to extend the time for
filing Medicare claims. In the absence of an SOI, providers and
suppliers (and, where applicable, beneficiaries) have from 15 to 27
months (depending on the date of service) to file claims with Medicare
contractors.
Effective Date: This final rule is effective on May 24, 2004.
FOR FURTHER INFORMATION CONTACT: David Walczak, (410) 786-4475.
I. Background
The purpose of the statement of intent (SOI) procedures is to
extend the timely filing period for the submission of an initial
Medicare claim. An SOI, by itself, does not constitute a claim, but
rather is a means of extending the deadline for filing a timely and
valid claim. Our regulations at Sec. 424.32, ``Basic requirements for
all claims,'' and Sec. 424.44, ``Time limits for filing claims,''
require that Medicare claims be filed on Medicare-designated claims
forms by providers, suppliers, and beneficiaries according to Medicare
instructions. These claims must be filed by the end of the year
following the year in which the services were furnished. Services
furnished in the last 3 months of a calendar year are deemed to be
furnished in the subsequent calendar year; therefore, a provider,
supplier, or beneficiary has until December 31 of the second year
following the year in which the services were furnished to file claims.
Where an SOI has been filed with the appropriate Medicare contractor
and the contractor notifies the submitter of the SOI that the SOI is
valid (that is, the SOI sufficiently identifies the beneficiary and the
items or services rendered), the period in which to file a claim may be
extended an additional 6 months after the month of the contractor's
notice.
[[Page 21964]]
The original regulation on extending the time to file claims for
Medicare benefits at 20 CFR 405.1693, was based on 20 CFR 404.613,
which pertained to applications for Social Security benefits. Section
404.613 reflected the Social Security program's interest in allowing
virtually any type of writing to be a placeholder for filing a claim
for Social Security benefits, provided that a perfected claim was
submitted shortly thereafter. We instituted the SOI procedures because
we believed that Medicare beneficiaries might sometimes need extra time
to file a Part B claim due to extenuating circumstances such as poor
health or unfamiliarity with the claims filing process.
However, experience has shown that beneficiaries rarely submit SOIs
directly. Medicare contractors that we surveyed reported no SOIs were
directly submitted by beneficiaries for the claims filing period ending
December 31, 2001, the latest year for which we have complete data. One
reason for the lack of beneficiary-initiated SOIs is the fact that
beneficiaries rarely need to file claims. The percentage of Part B
claims taken on assignment is about 98 percent today, compared to about
52 percent in 1975. (``Assignment'' is the process by which the
physician or other supplier agrees to accept Medicare payment in full
for a Part B covered item or service and files the claim for the
payment.) Even for Part B claims not taken on assignment, the statute
now requires the physician or supplier to file the claim and provides
for sanctions for failure to do so. (See section 1848(g)(4) of the
Social Security Act (the Act)). The number of Part A claims filed by
beneficiaries has always been minimal because the statute requires that
payment for Part A services generally be made only to providers of
services, with very limited exceptions. (See section 1814(a) of the
Act). Therefore, we believe that the SOI procedures are no longer
necessary because they are not serving their intended purpose.
Further, we believe retention of the SOI procedures is
counterproductive because of the amount of resources needed to process
SOIs submitted by States and because the SOI procedures may encourage
or facilitate inappropriate behavior on the part of some States and
some providers.
Each year, our contractors receive an enormous number of SOIs that
are submitted by States that, having first made Medicaid payments to
dually-eligible (that is, Medicare and Medicaid) beneficiaries,
subsequently believe that Medicare should be the proper payor.
Subsequent to several court decisions in the early 1990s, we permitted
States to ``stand in the shoes'' of a dually-eligible beneficiary for
claims filing and appeals. For example, States are not required to
obtain a beneficiary's signature to request providers to file a Part A
claim or to file an appeal. We also have permitted States and their
contractors to file SOIs on the States' behalf or as appointed
representatives of the beneficiaries.
The great majority of SOIs are filed on paper and therefore, must
be manually processed to determine whether they are valid. According to
our requirements, SOIs must contain detailed and specific information
to ensure that a subsequently filed claim was in fact protected by an
SOI. (See Program Memorandum AB-03-61)). Also, these SOIs are typically
filed in large batches near the end of the timely filing period. All of
these factors contribute to the amount of resources and consequent cost
incurred in processing the SOIs.
We also believe that the SOI procedures may contribute to States
``paying and chasing'' instead of following the required cost-avoidance
procedures and to the incorrect submission of claims to Medicaid by
providers. Our regulations at Sec. 433.139(b) provide that, unless a
waiver is granted under Sec. 433.139(e), a State Medicaid agency that
has established the probable existence of third party liability
(including Medicare liability) at the time a claim for Medicaid payment
is presented to it, must reject the claim and return it to the provider
for a determination of liability. This process is known as cost
avoidance. Some States, however, have been paying thousands of Medicaid
claims, despite the knowledge that the beneficiaries involved are
entitled to Medicare. These States subsequently identify a significant
portion of the claims that they have paid as ones for which Medicare is
the proper payor, and use the SOI procedures to extend the time for
providers to file claims.
The fact that large numbers of claims are paid first by Medicaid
and then identified as payable by Medicare raises the inference that
providers are not as careful as they should be as to which payor they
initially submit claims, and that States, by initially paying these
claims, are not fully practicing cost avoidance. We are concerned that
the availability of the SOI procedures to extend the time for filing
claims is contributing to inappropriate behavior. We also note that
many of the claims filed with Medicare subsequent to the SOIs are
``demand bills,'' which require full medical review, thus increasing
the claims processing cost for our contractors. (Where a provider
believes that a service is not covered by Medicare but the beneficiary
(or the State as the beneficiary's representative) requests the
provider to bill Medicare regardless, the provider's Medicare provider
agreement requires it to bill Medicare. This bill is known as a
``demand bill.'' It requires full medical review because the fact that
the provider initially believed that the service was not covered by
Medicare raises the question of whether Medicare must pay it.)
Moreover, we are aware that providers and suppliers sometimes file
SOIs. However, we believe, that the filing periods in Sec. 424.44 (15
to 27 months, depending on the date the service was furnished) are more
than an adequate amount of time to submit claims.
The percentage of claims processed and paid compared to the total
number of SOI claim requests received was 4.4 percent, based on a
survey of SOI requests filed with Medicare contractors for the claims
filing period that ended December 31, 2001 (the latest year for which
data were available).
The entire SOI claims process is performed manually. The steps in
this process are the following:
Determining if an SOI request is valid or
invalid;
Examining a later-submitted claim to determine
whether the claim was protected by the SOI that was submitted earlier;
and
Adjudicating the claim (which, in many cases,
involves full medical review).
Based on the survey of SOI claim requests submitted to Medicare
contractors for 2001, we have estimated the manual processing of SOI
claim requests to cost approximately $12,000,000. (It is noted that
this cost estimate may vary from year to year because of the following:
(1) The number of SOI claim requests submitted by providers, suppliers
and States is not a constant number and varies from year to year; (2)
the manual processing costs may vary for each SOI claim request,
depending on the size and complexity of the SOI claim request; and, (3)
changes in State billing practices may result in fewer submissions of
SOI claim requests, if a State chooses to ``cost avoid'' rather than
``pay and chase.'')
It is also noted that the above cost estimate does not include
overtime costs and is not inclusive of all SOI claim requests submitted
to all Medicare contractors for the claims filing period that ended
December 31, 2001. In addition, this cost estimate does not include
hearing costs, for example, in the case of a provider or supplier who
disagrees with the final claim
[[Page 21965]]
determination and files an appeal. As stated, only 4.4 percent of SOI
claim requests submitted were actually processed and paid. Therefore,
based on the above information, we have concluded that the SOI process
is a resource burden on Medicare contractors, providers, and suppliers,
with little return or benefit to the States.
This final rule will have little financial impact on entities that
currently submit SOI requests. The requirements for submitting a claim
are similar to the requirements for submitting a valid SOI claim
request. Since an SOI must be filed within the timely filing period, we
anticipate no additional burden for these entities to submit claims
timely. Therefore, for the above reasons, we are removing Sec. 424.45
from the regulations.
II. Provisions of the Proposed Regulation
On July 25, 2003 we published a proposal in the Federal Register
(68 FR 44000) to remove Sec. 424.45. In the absence of Sec. 424.45,
providers, suppliers and beneficiaries will still have from 15 to 27
months to submit claims to Medicare.
III. Analysis of and Responses to Public Comments
We received two timely public comments on the July 25, 2003
proposed rule concerning the removal of the SOI procedures. A summary
of the comments and responses follow:
Comment: A commenter wrote that the SOI process benefits some
physician groups that experience physician turnover. The commenter
stated that the physician turnover results in extended delays in
obtaining needed documents to complete the CMS-855 enrollment forms.
The SOI process has enabled this entity to bill the Medicare program
after the timely filing period has expired, for services furnished by
physicians who had not completed these forms.
Response: We believe that the timely filing period of 15 to 27
months (depending on the date of service) is sufficient time for a
physician group to submit the necessary enrollment paperwork and have
it processed by Medicare prior to filing a claim. A physician group
must have all the necessary provider/supplier enrollment paperwork
completed for all of its physicians before the physicians furnish
services to Medicare beneficiaries. In any case where this is not
feasible, the paperwork must be completed and signed in a reasonable
time following the delivery of services. This will allow the physician
group to submit the enrollment forms and have them processed prior to
the expiration of the timely filing period.
Comment: One commenter believes that elimination of the SOI process
will simply shift a burden from Medicare contractors to dually-eligible
beneficiaries and their providers. The commenter believes that
providers will experience cash flow problems if States deny Medicaid
payment until after a Medicare demand bill is processed and provided
two suggestions to address the concerns. Finally, the commenter asserts
that changing the timeframe in which demand bills must be submitted
will not reduce the burden on Medicare contractors, because contractors
will still need to process demand bills.
The commenter suggested that if the current SOI process is
eliminated, then the Medicare regulation on the time limits for filing
claims be modified to extend the timely filing period in two instances.
First, the time limit for claims that are submitted within the timely
filing period but are rejected by Medicare's claims processing system
during the last three months of the filing period should automatically
be extended for at least an additional three months. Second, if we
experience systems problems that prevent claims processing, the timely
filing period should be extended for a period equal to the number of
days within the timely filing period that we are unable to process a
provider's claims (because of the systems problems).
Response: We disagree that eliminating the SOI procedures will
shift a burden to providers. Instead, we expect that there will be
improved efficiencies for States and providers, as well as Medicare
contractors, because there will be incentives to bill and pay correctly
the first time. One reason for our proposal to eliminate the SOI
process is our belief that it may contribute to the inappropriate
billing and payment practices of some providers and States concerning
claims for dually-eligible beneficiaries. By removing what amounts to
an automatic extension of time for States to decide whether a claim
that it has paid must be submitted to Medicare, we hope to focus
States' and providers' attention on whether a claim must be paid by
Medicaid or Medicare in the first instance. We believe that providers
will wish to avoid the possibility of having to file a claim with
Medicare on short notice because they submitted it to Medicaid
inappropriately, and that States will wish to avoid having to notify
their Medicaid providers on short notice that they have to submit
claims to Medicare. We note that processing written SOIs is a separate
process from processing demand bills. Therefore, eliminating the SOI
process will, in fact, reduce a resource burden on Medicare
contractors.
The timely filing period is 15 to 27 months, depending on the date
of service. We believe this already provides sufficient time for
providers to submit claims and to correct any problems that cause a
rejection of a claim. Providers and suppliers must file claims promptly
to allow enough time to correct any claims that may be rejected for
technical reasons.
Additionally, current rules already protect providers in potential
instances of our systems problems that prevent claims processing. If a
claim is submitted timely and there is a delay in our processing of a
claim, there is no need for an extension of the timely filing period.
If a claim cannot be accepted by us because of a CMS systems problem
(and not a systems problem of the provider), then the administrative
error provision specified at Sec. 424.44(b) may be applied to extend
the timely filing period.
IV. Provisions of this Final Rule
This final rule incorporates the provisions of the proposed rule by
removing the SOI procedures found at Sec. 424.45.
V. Collection of Information Requirements
This document does not impose new information collection and
recordkeeping requirements but does remove an old one.
Removing Sec. 424.45 will reduce costs and workload burdens on
providers and suppliers. Specifically, by removing the written SOI
procedures, we hope to: (1) Reduce provider, supplier and Medicare
contractor resource burdens; (2) reduce the burden placed on providers
and suppliers from having to resubmit claims, and also from having to
reimburse States for claims that were incorrectly paid for by the
States; (3) reduce Medicare contractor administrative costs; (4)
eliminate changes to existing intermediary/carrier claims payment
systems; (5) encourage States to pursue cost-avoidance procedures to
ensure that Medicaid is truly the payor of last resort, and thus reduce
the need to use ``pay and chase'' procedures; (6) reduce the necessity
for medical review at the contractor level; (7) strengthen Medicare and
Medicaid program integrity efforts to ensure correct payment the first
time; and (8) improve coordination efforts between the Medicare and
Medicaid programs.
[[Page 21966]]
VI. Regulatory Impact Statement
We have examined the impacts of this final rule as required by
Executive Order 12866 (September 1993, Regulatory Planning and Review),
the Regulatory Flexibility Act (RFA) (September 16, 1980, Pub. L. 96-
354), section 1102(b) of the Social Security Act, the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
Executive Order 12866 (as amended by Executive Order 13258, which
merely reassigns responsibility of duties) directs agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects; distributive impacts; and equity). A
regulatory impact analysis (RIA) must be prepared for major rules with
economically significant effects ($100 million or more annually). This
is not a major rule. This final rule will have no substantial economic
impact on either costs or savings to the Medicare or Medicaid programs.
The RFA requires agencies to analyze options for regulatory relief
of small businesses. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and government agencies.
Most hospitals and most other providers and suppliers are small
entities, either by nonprofit status or by having revenues of $6
million to $29 million annually (see 65 FR 69432). Individuals and
States are not included in the definition of small entities.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital located outside of a Metropolitan Statistical
Area with fewer than 100 beds.
We are not preparing analyses for either the RFA or section 1102(b)
of the Act because we have determined, and we certify, that this rule
will not have a significant impact on a substantial number of small
entities or rural hospitals because providers and suppliers will still
have 15 to 27 months to file claims. Although some providers and
suppliers may be small entities or rural hospitals, they are not filing
a significant number of SOIs and the information required to file a
valid SOI is essentially the same information that providers and
suppliers are required to provide when filing a valid claim. We are
aware that some States rely on the SOI process at the end of the period
for Medicare timely claims filing, to pay and recover expenditures for
some of their claims that could have been paid by Medicare. Elimination
of the SOI process will require that these States revert to the
standard recovery process in the Medicaid regulations to assure that
claims are filed within the Medicare timely filing requirements (15 to
27 months). While the elimination of the SOI process will not
completely eliminate the issue of ``pay and chase,'' we believe it will
encourage States to pursue cost-avoidance procedures to ensure that
Medicaid is truly the payer of last resort, reducing the need to use
``pay and chase'' procedures.
Section 202 of the Unfunded Mandates Reform Act of 1995 requires
that agencies assess anticipated costs and benefits before issuing any
rule that may result in an expenditure in any one year by State, local,
or tribal governments, in the aggregate, or by the private sector, of
$110 million. This rule would not have such an effect on State, local,
or tribal governments, or on the private sector.
Executive Order 13132 establishes certain requirements that an
agency must meet when it publishes a final rule that would impose
substantial direct requirement costs on State and local governments,
preempts State law, or otherwise has Federalism implications.
While this rule will not have a substantial effect on State and
local governments, States need to preserve their ability to
appropriately recover expenditures for Medicaid benefits that should
have been paid by Medicare. We are aware that some States rely on the
SOI process, at the end of the period for Medicare timely claims
filing, to recover expenditures for some of their claims that could
have been paid by Medicare. Elimination of the SOI process will require
that these States revert to the standard recovery process in the
Medicaid regulations to assure that claims are filed within the
Medicare timely filing requirements (15 to 27 months).
For the reasons discussed earlier in this regulation, we believe
this timeframe is adequate to address the States' need for recovering
claims from Medicare. We will continue to address the States' concerns
on these payment and recoupment issues, through the efforts of the
State Technical Advisory Group on Third Party Liability, and will
continue to consult with States about issues affecting their ability to
recover expenditures for some of their claims that should have been
covered by Medicare.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
List of Subjects in 42 CFR Part 424
Emergency medical services, Health facilities, Health professions,
Medicare, Reporting and recordkeeping requirements.
0
For reasons set forth in the Preamble, the Centers for Medicare and
Medicaid Services is amending 42 CFR chapter IV as set forth below.
PART 424--CONDITIONS FOR MEDICARE PAYMENT
0
1. The authority citation for part 424 continues to read as follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
Sec. 424.45 [Removed]
0
2. Section 424.45 is removed.
(Catalog of Federal Domestic Assistance Program No. 93.774,
Medicare--Supplementary Medical Insurance Program)
Dated: December 10, 2003.
Thomas A Scully,
Administrator, Centers for Medicare & Medicaid Services.
Approved: January 21, 2004.
Tommy G. Thompson,
Secretary.
[FR Doc. 04-9316 Filed 4-22-04; 8:45 am]
BILLING CODE 4120-01-P