Denial Types

3.6.2.5 - Denial Types (Rev. 10365; Issued: 10-02-20; Effective: 08-27-20; Implementation: 08- 27-20) The term Medicare beneficiary identifier (Mbi) is a general term describing a beneficiary's Medicare identification number. For purposes of this manual, Medicare beneficiary identifier references both the Health Insurance Claim Number (HICN) and the Medicare Beneficiary Identifier (MBI) during the new Medicare card transition period and after for certain business areas that will continue to use the HICN as part of their processes. This section applies to MACs, CERT, RACs, and UPICs, as indicated. A. Distinguishing Between Benefit Category, Statutory Exclusion and Reasonable and Necessary Denials The MACs, CERT, RACs, and UPICs shall be cognizant that the denial type may affect the financial liability of beneficiaries. They shall ensure that benefit category denials take precedence over statutory exclusion and reasonable and necessary denials. They shall ensure that statutory exclusion denials take precedence over reasonable and necessary denials. MACs, CERT, and UPICs shall use the guidelines listed below in selecting the appropriate denial reason. RACs shall follow denial reason guidance outlined in their SOW. • If additional documentation was requested from the provider or other entity for any MR reason (benefit category, statutory exclusion, reasonable/necessary, or coding), and the information is not received within 45 calendar days or a reasonable time thereafter, the MACS, CERT, and UPICs shall issue a reasonable and necessary denial, in full or in part. • If additional documentation was requested because compliance with a benefit category requirement is questioned and the documentation received fails to support compliance with the benefit category, the MACs, CERT, and UPICs shall issue a benefit category denial. • If additional documentation was requested because compliance with a benefit category requirement is questioned and the received documentation shows evidence that the benefit category requirement is present but is defective, the MACs, and UPICs shall issue a reasonable and necessary denial. EXAMPLE 1: A MAC is conducting a review of partial hospitalization (PH) claims from a provider who has a pattern of failing to comply with the benefit category requirement that there be a signed certification in the medical record. In the first medical record, the MAC finds that there is no signed certification present in the medical record. The MAC shall deny all PH services for this beneficiary under §1835(a) (2) (F) of the Act (a benefit category denial). However, in the second medical record, the MAC determines that a signed certification is present in the medical record, but the documentation does not support the physician's certification, the services shall be denied under §1862(a) (1) (A) of the Act (a reasonable and necessary denial) because the certification is present but defective. Example 2: The MAC performs a medical record review on a surgical procedure claim and determines that the procedure was cosmetic in nature and was not reasonable and necessary; the denial reason would be that the service is statutorily excluded since statutory exclusion denials take precedence over reasonable and necessary denials. The MACs, CERT, RACs, and UPICs shall deny payment on claims either partially (e.g., by down coding or denying one line item on a multi-line claim) or in full, and provide the specific reason for the denial whenever there is evidence that a service: • Does not meet the Benefit Category requirements described in Title XVIII of the Act, NCD, or coverage provision in an interpretive manual; • Is statutorily excluded by other than §1862(a)(1) of the Act; • Is not reasonable and necessary as defined under §1862(a) (1) of the Act. MACs, CERT, RACs, and UPICs shall use this denial reason for all non-responses to documentation requests; • Was not billed in compliance with the national and local coding, payment or billing requirements; and/or • Was not delivered or provided to the beneficiary, or not provided as billed. The denial explanation needs to be more specific than merely repeating one of the above bullets. The general exception to the need for a full denial explanation is in the event of a clerical error, for example, the billing entity transposes two digits in the Medicare beneficiary identifier on a claim. The claim is quickly returned, usually electronically, to the provider for correction. In the case of dual-eligible beneficiaries where there is a State-specific policy, see CMS IOM Pub. 100-04, chapter 30, §60.5 A for a detailed explanation of handling administrative denials.