Take Steps Now to Avoid Claims Denials That Will Occur After January 6, 2014

Clinical laboratories could face denial of claims under Medicare beginning in January as a result of missing or incorrect information about referring providers. The Affordable Care Act, Section 6405, “Physicians who order items or services are required to be Medicare enrolled physicians or eligible professionals,” requires physicians or other eligible professionals to be enrolled in the Medicare program to order or refer items or services for Medicare beneficiaries and must be of a provider type that is eligible to do so. Labs already have the information they need to determine their risk of claims denials due to missing or incorrect information in the ordering or referring provider’s Provider Enrollment, Chain and Ownership System (PECOS) enrollment records. This also allows labs to determine if the ordering/referring provider is eligible. This requirement was rolled out in two distinct phases. The first phase, initiated Oct. 5, 2009, was to include edits in the claims adjudication process to detect, but not deny, problematic claims and include specific remittance advice remark codes (RARCs or remark codes) and claims adjustment reason codes (CARCs or reason codes), in the billing laboratory’s remittance advice (RA). CARC codes inform the submitter of the reason the claim is denied or adjusted, while the RARC provides additional remarks that further identify what is wrong with the claim or expands on the CARC. The messages are intended to alert the billing laboratory that the identification information for the ordering/referring provider is missing, incomplete, or invalid or that the ordering/referring provider is not eligible to order or refer. The second phase will begin Jan. 6, 2014, and will turn the edits on, at which time claims will be denied. It is through these codes currently included in their RAs for denied claims that labs can detect problematic claims and take steps to avoid those denials or communicate the problem to an ordering or referring provider in the future. The Centers for Medicare and Medicaid Services (CMS) has also provided labs with information they can use to correct their billing files before claims are submitted. This is important because once the claim is submitted and denied, the only recourse for the lab is to appeal the claim, a costly and inefficient process. Required Information and Informational Messages Any laboratory suppliers having the ability to query their billing computer for RARCs and CARCs and sort them according to the identification alphanumeric code designations will be able to estimate their risk, correct their files, and communicate with the offending ordering/referring provider about the problem. The edits will verify that the provider is enrolled in Medicare and will ensure the ordering/referring provider has a valid National Provider Identifier (NPI) and that the NPI matches the NPI listed in the PECOS record. The edits will compare the first four letters of the last name on the claim to ensure they match the first four letters of the last name as they appear in the PECOS record. It is important that the claim does not include any extraneous information in the last name field such as a middle initial, title, or other designation. The name fields on the claims should only include the requested first name and last name information. During phase one, ending Jan. 5, 2014, if the claim does not pass the edits, it will not be denied but it will include the reason code CO-16, meaning the claim lacks information that is needed for adjudication and will include one or both of the following remark codes on the RA:

• N264: Missing/incomplete/invalid ordering provider name

• N265: Missing/incomplete/invalid ordering provider primary identifier

During phase one, RAs may also include the code N544: Alert: Although this was paid, you have billed with a referring/ordering provider that does not match our system record. Unless corrected, this will not be paid in the future. Also look for remark codes N574 and N575, which indicate that the ordering/referring provider is not eligible to order/refer lab services. Correcting Your Computer Files CMS has published a list of NPIs and the correct spelling of all physician last and first names, last updated Nov. 6. With this information at hand, the laboratory can identify physicians and providers with records that do not match their billing files and correct their records, in many cases without contacting the physician office. It may be possible for the laboratory’s information technology (IT) department to automate the comparison of the files which are provided in Adobe Acrobat (PDF) format and as a comma-separated values or CSV file that can be converted to an Excel or other format that is easier to use for IT purposes. These files can be found at www.cms.gov/Medicare/Medicare.html in the Provider Enrollment and Certification section under the Medicare provider-supplier enrollment link. The one case where the laboratory cannot correct the problem itself is when the provider is not eligible to order laboratory services. Only physicians and certain types of nonphysician practitioners are eligible to order or refer items or services for Medicare beneficiaries. For Medicare purposes, the following list identifies who can order/refer:

• Physicians (doctor of medicine or osteopathy, doctor of dental medicine, doctor of dental surgery, doctor of podiatric medicine, doctor of optometry—optometrists may only order and refer DMEPOS products and services and laboratory and X-ray services payable under Medicare Part B);
• Physician assistants;
• Clinical nurse specialists;
• Nurse practitioners;
• Clinical psychologists;
• Interns, residents, and fellows;
• Certified nurse midwives; and
• Clinical social workers.

Chiropractors are not eligible to order/refer items or laboratory services and there may be limits on the types of services that may be ordered by physicians like dentists, podiatrists, and optometrists. Lab tests ordered/referred by physicians in these categories may be denied also. If the laboratory gets denials for ordering/referring ineligible providers, the laboratory can contact the ordering provider and inform them of the problem and take steps to avoid submitting the incorrect claims. The laboratory may choose to not perform the tests ordered/referred by a noneligible provider and thereby avoid the cost of performing the testing for which they will not get paid. The beneficiary cannot be held liable and the use of advance beneficiary notices is not allowed in this case because the denial is not due to medical necessity. All of the above information is contained in the MLN Matters article SE1305, which can also be found on the CMS Web site. Takeaway: Laboratories can obtain the information they need from CMS to estimate their risk of denials based on the upcoming ordering/referring denial edits and can take steps to avoid denials and costly appeals of claims by correcting their billing computer NPI and physician identification files.