Denial of Medicare Coverage Continues

On August 5, 2011, we discussed that with the transparency of claims being reported to Medicare via MMSEA Section 111, we have seen an increase in the instances of improper denial of coverage to Medicare beneficiaries.

This appears to be a widespread problem which is affecting not only the Medicare beneficiary, but the entire insurance industry. For our August 5th blog posting, please click here.


On November 16, 2011, CMS held a teleconference for liability insurance (including self-insurance), no-fault, and workers’ compensation, collectively recognized as Non-Group Health Plans (NGHP), to address MMSEA Section 111 technical issues. Several callers, including industry associations as well as insurance carriers, took the opportunity during the question and answer session to express their frustration to CMS regarding the issue of beneficiaries being inappropriately denied coverage due to the improper handling of information supplied during Section 111 reporting. The amount of discussion surrounding this issue confirms that it is a widespread issue and it was made very clear to CMS through these discussions that this is a very important issue requiring CMS’ immediate attention.

During the call, it was also noted that there is a perception by beneficiaries that the insurance industry is responsible for this issue because they do not fully understand the Medicare coordination of benefits process. One insurance industry association informed CMS they were recommending that Medicare beneficiaries contact their congressional leadership about specific instances where Medicare has improperly denied coverage.

The following instances of improper Medicare coverage denial were noted during the call:

  • Denial of coverage occurring when there is an open payment obligation and ongoing responsibility for medical (ORM) reported via Section 111
  • Denial of coverage when the proper ICD-9 codes are reported for the accepted injuries

CMS confirmed that they are aware of these issues, have received specific examples of inappropriate denial of benefits, and are looking into them. Over the last several months, CMS stated that they have been focused on outreach and education of contractors and providers to put a stop to this issue. Additionally, CMS indicated that they have not advised their contractors to deny claims solely because there is an open NGHP record of ORM without examining whether the payment sought was due to a specific illness/injury related to the ORM report.

CMS offered the following helpful hints to assist in reducing these issues:

  • For ORM reports, only submit ICD-9 codes related to the accepted injuries. For example, if ORM has been accepted for a broken arm, only ICD-9 codes related to the arm injury should be reported. ICD-9 codes pertaining to unrelated diagnoses such as hypertension and diabetes should not be included even if they appear on billing forms.
  • Assure proper ICD-9 codes are reported. Reporting vague or inaccurate ICD-9 codes can lead to improper denial of coverage.
  • Supply as many ICD-9 codes as needed to adequately document the injuries and diagnoses accepted (ORM) for that claim.
  • Responsible Reporting Entities (RREs) have the option to make an immediate report of ORM termination prior to their next assigned quarterly report submission by contacting the COBC Call Center at 1-800-999-1118 (specific instructions are in User Guide 3.2- need to provide link).
  • The Medicare Secondary Payer Recovery Contractor (MSPRC) is not the proper entity to contact regarding denial of Medicare coverage.

If all else fails, the beneficiary is not without recourse. CMS confirmed that there is an appeals process that the beneficiary can follow if they disagree with the denial. For further information on the Medicare appeals process please see our blog dated August 5, 2011.

While Section 111 reporting was created to assist in the recovery process, it has not been smooth sailing for all parties involved. The industry appears hopeful that CMS will take heed to the seriousness of this issue and take steps to correct problems on their end. However, in order to fully overcome these issues it will take the effort of not only CMS, but also everyone involved in this cumbersome and complex process.

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