Update on Medicare claims processing

With the newly enacted Medicare Improvements for Patients and Providers Act of 2008, psychologists who participate in Medicare want to know how contractors are handling claims processing

by Government Relations Staff

July 17, 2008 — In December 2007, Congress delayed implementation of a steep cut in 2008 Medicare payments from taking effect for six months, until July 1. The delay was accompanied by a "positive update" of 0.5 percent in payment levels for the first six months of 2008.

Though Congress failed to enact further Medicare payment legislation by July 1, the Medicare Improvements for Patients and Providers Act of 2008 (H.R. 6331) became law on July 15. The new law, retroactive to July 1, postpones for an additional 18 months the 10.6 percent Medicare payment cut that took effect at the beginning of this month. The 0.5 payment update will continue for the remaining six months of 2008; an update of 1.1 percent will apply throughout 2009.

Since Congress was considering the Medicare bill in June, the Centers for Medicare and Medicaid Services (CMS) had instructed its contractors to hold claims for Medicare services provided July 1, 2008 or later that were received for processing during the first 10 business days of the month.

On July 16, one day after H.R. 6331 was enacted, CMS announced that local contractors will need approximately 10 business days to incorporate the new payment rates into their systems. As a result, psychologists may wish to delay filing Medicare claims until August 1.

If any claims for services provided on or after July 1 are processed before the new rates are set, the payment to Medicare providers will reflect the 10.6 percent cut that went into effect on July 1. Local contractors will then reprocess any claims paid at the lower rate once their systems have been updated.