[Federal Register Volume 61, Number 183 (Thursday, September 19, 1996)]
[Rules and Regulations]
[Pages 49271-49276]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-23958]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
42 CFR Part 421
[BPO-105-F]
RIN 0938-AF85
Medicare Program; Part B Advance Payments to Suppliers Furnishing
Items or Services Under Medicare Part B
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Final rule.
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SUMMARY: This rule establishes requirements and procedures for advance
payments to suppliers of Medicare Part B services. An advance payment
will be made only if the carrier is unable to process a claim timely;
the supplier requests advance payment; we determine that payment of
interest is insufficient to compensate the supplier for loss of the use
of the funds; and, we expressly approve the advance payment in writing.
These rules are necessary to address deficiencies noted by the
General Accounting Office in its report analyzing current procedures
for making advance payments. The intent of this rule is to ensure more
efficient and effective administration of this aspect of the Medicare
program.
EFFECTIVE DATE: This rule is effective October 21, 1996.
FOR FURTHER INFORMATION CONTACT: Robert Shaw, (410) 786-3312.
SUPPLEMENTARY INFORMATION:
I. Background
A. General
The Medicare Supplementary Medical Insurance (Part B) program is a
voluntary program that pays all or part of the costs for physicians'
services; outpatient hospital services; certain home health services;
services furnished by rural health clinics, ambulatory surgical centers
and comprehensive outpatient rehabilitation facilities; and certain
other items or medical and hospital health services not covered by the
Medicare Hospital Insurance program (Part A).
B. Use of Carriers
1. Statutory basis. Under section 1842(a) of the Social Security
Act (the Act), public and private organizations and agencies may
participate in the administration of the Medicare program under
contracts entered into with the Secretary. These Medicare contractors,
known as ``carriers,'' process and pay Part B claims.
Usually, these payments are made on a claim-by-claim basis.
Regulations at 42 CFR part 421, subpart C--Carriers, set forth the
functions performed by Medicare carriers, which include the following:
Determining the eligibility status of a beneficiary.
Determining whether the services for which payment is
claimed are covered under Medicare, and if so, the correct payment
amounts.
Making correct payment to the beneficiary or the supplier
of the items or services, as appropriate.
Carriers must also observe the ``prompt payment'' requirements set
forth in section 1842(c) of the Act. As amended by section 13568 of the
Omnibus Budget Reconciliation Act of 1993 (OBRA '93) (Public Law 103-
66), enacted on August 10, 1993, this provision currently requires
interest to be paid on all ``clean'' claims for which payment is not
issued within 30 calendar days.
[[Page 49272]]
2. Advance payments to suppliers. Under Part B, a carrier may make
an advance partial payment to a supplier if the carrier is not able to
process a claim. (For purposes of the Medicare program, Sec. 400.202
defines ``supplier'' as a physician or other practitioner, or an entity
other than a provider, that furnishes health care services under
Medicare. Section 400.202 defines ``services'' as medical care or
services and items, such as medical diagnosis and treatment, drugs and
biologicals, supplies, appliances, and equipment, medical social
services, and use of the facilities of a hospital, a rural primary care
hospital, or a skilled nursing facility.) An advance payment may be
made to a supplier eligible to receive Medicare payments.
At the present time, there are no regulations or guidelines for
making advance payments. In rare instances, such as when major
administrative changes are made in processing Part B claims, a backlog
of pending claims may occur. To avoid or reduce the payment of interest
on claims that are not processed timely, we sometimes authorize advance
payments for pending backlogged claims, subject to later recoupment
from amounts we owe, once the claims are processed.
II. General Accounting Office Report Finding--``HCFA Should Improve
Internal Controls Over Part B Advance Payments''
As a result of administrative changes made in processing Part B
claims at two carriers in two States during 1988, a large backlog of
pending claims occurred. In order to minimize the effects of these
claims payment disruptions on suppliers, in 1989 we authorized the two
carriers to make advance payments for pending backlogged claims,
subject to later recoupment, once the claims were actually processed.
The difficulties experienced by the suppliers resulted in the General
Accounting Office investigating these two carriers and their claims
processing systems. This investigation led the General Accounting
Office to question whether we had sufficient guidelines and safeguards
in place to ensure that advance payments were promptly recouped. A full
report of the General Accounting Office findings is included in the
proposed rule published in the Federal Register on July 18, 1994 (59 FR
36415).
As a result of its review of these cases, the General Accounting
Office recommended that we determine whether it is appropriate for
carriers to make advance payments to suppliers and that we be in
compliance with the Federal Managers' Financial Integrity Act (31
U.S.C. 3512) when making these determinations. A full discussion of the
requirements of the Federal Managers' Financial Integrity Act was
included in the proposed rule (59 FR 36416).
In applying this standard to Part B advance payments, the General
Accounting Office expressed the opinion that HCFA, rather than the
carriers, should authorize advance payments to be executed by the
carriers. In addition, the General Accounting Office asserted that we
should clearly communicate to carriers our approval to make advance
payments and include the terms under which these payments must be made.
Therefore, the General Accounting Office recommended that we develop
regulations and instructions for carriers regarding Part B advance
payments to suppliers. (General Accounting Office report, GAO/HRD-91-81
(April 1991), entitled ``Medicare: HCFA Should Improve Internal
Controls Over Part B Advance Payments.'')
III. Summary of the Proposed Regulations
We published a proposed rule in the Federal Register on July 18,
1994 (59 FR 36415) to announce our intention to establish requirements
and procedures for advance payments to suppliers of Medicare Part B
services. The proposed rule responded to the General Accounting Office
report and recommendation and proposed to add Sec. 421.214 (``Advance
payments to suppliers furnishing items or services under Part B'') to
42 CFR part 421, subpart C.
Proposed Sec. 421.214 would ensure the smooth and uniform issuance
and recoupment of Part B advance payments that may be authorized from
time to time to counter the negative consequences of disruptions in
Medicare Part B claims processing. The regulation, as proposed, would
be entirely self-contained. Advance payments would be made when a
carrier is unable to process a claim timely, not when delay is the
result of late or incomplete submittal of a claim by a supplier.
Processing delays would be highlighted to us to ensure that payment
disruptions and risks to the Medicare trust fund would be minimized.
There are some entities with provider agreements under section 1866
of the Act that are paid for certain Part B services from the Part B
Trust Fund through intermediaries (performing as a carrier when making
Part B payments). These providers generally have access to the existing
accelerated payment provisions under Sec. 413.64(g). The purpose of the
proposed regulation is to create a Part B advance payment procedure for
suppliers, not to supplant the existing Part A advance payment
procedure for some providers. Therefore, this section would not apply
to claims for Part B items or services that are furnished by entities
with provider agreements under section 1866 of the Act that receive
payments from intermediaries.
Proposed Sec. 421.214(b) defines the term ``advance payment'' to
mean a carrier's conditional partial payment to a supplier on a Part B
claim that the carrier is unable to process within the prescribed time
limits.
Proposed Sec. 421.214(c) specifies that an advance payment may be
made if the carrier is unable to process claims timely; if we determine
that the prompt payment interest provision in section 1842(c) of the
Act is insufficient to make claimants whole; and, if the advance
payment is expressly approved by us in writing. The prompt payment
interest provision currently requires us to pay interest on clean
claims when the carrier is unable to make payment within 30 calendar
days. The determination to issue advance payments must take into
consideration elements that are, or may be, subject to changes, such as
legislation related to prompt payment; system enhancements; severity of
system malfunctions; changes to regulations; change in contractors; and
any number of other factors that may necessitate the issuance of
advance payments. Therefore, we stated we would implement the threshold
criterion or criteria through manual instructions to the carriers. This
would give us the flexibility to respond promptly to providers without
going through the rulemaking process each time a unique situation
occurs. We specifically requested public comments on this approach. In
making changes, we would ensure that advance payments would be made in
a way that would ensure budget neutrality.
Section 421.214(d) specifies that no advance payment would be made
to any supplier who is delinquent in repaying a Medicare overpayment,
or one that has been advised that it is under active medical review or
program integrity investigation. Also, an advance payment would not be
made to a supplier that has not submitted any claims, or has not
accepted claims' assignments within the most recent 180-day period
preceding the system malfunction that created the need for the advance
payment.
Proposed Sec. 421.214(e)(1) specifies that a supplier must request,
in writing to the carrier, an advance payment for providing Part B
services. Paragraph
[[Page 49273]]
(e)(2) specifies that a supplier must accept an advance payment as a
conditional payment subject to adjustment, recoupment, or both based on
an eventual determination of the actual amount due on the claim and
subject to the other rules found in Sec. 421.214.
Proposed Sec. 421.214(f)(1) states that a carrier must calculate an
advance payment for a specific claim at no more than 80 percent of the
historical assigned claims payment data paid a supplier. ``Historical
data'' are defined as a representative 90-day assigned claims payment
trend within the most recent 180-day experience before the system
malfunction. Based on this amount, the carrier must determine and issue
an advance payment on a particular claim not to exceed 80 percent of
the average per claim amount paid during the 90-day trend period. If
historical data are not available or if backlogged claims cannot be
identified, the carrier would determine and issue advance payments
based on some other methodology approved by us. Advance payments would
be made no more frequently than once every 2 weeks to a supplier.
Proposed Sec. 421.214(f)(2) specifies that generally, a supplier
would not receive advance payments for more assigned claims than were
paid, on a daily average, for the 90 days before the system
malfunction. This would prevent and discourage suppliers from
submitting assigned claims that may lack merit in order to maximize the
receipt of advance payments. However, an example of a permissible
exception would be when a supplier does not receive payments from a
carrier for services during the early months of the year when
beneficiary deductibles are being met. In this case, the carrier would
use more representative payment months for the suppliers' daily
average.
Proposed Sec. 421.214(f)(3) specifies that a carrier must recover
an advance payment by applying it against the amount due on the claim
on which the advance payment was made. Under the proposal, if the
advance payment exceeds the Medicare payment amount, the carrier must
apply the unadjusted balance of the advance payment against further
Medicare payments due the supplier.
It is not our intent to permit repayment of an advance payment by
an option that could delay the recovery process or that would create a
duplicate payment or an overpayment. Thus, a supplier of Part B
services could not elect to receive the full payment amount for a claim
and repay the advance payment separately at some other time.
Proposed Sec. 421.214(f)(4) specifies that in accordance with our
instructions, a carrier must maintain financial records in accordance
with the Statement of Federal Financial Accounting Standards for
tracking each advance payment and its recoupment.
Proposed Sec. 421.214(g)(1) permits us to waive the requirements of
paragraph (e)(1) if we determine it is appropriate to make advance
payments to all affected suppliers. Paragraph (g)(2) specifies that if
adjusting Medicare payments fails to recover an advance payment, we may
authorize the use of any other recoupment method available (for
example, lump sum repayment or an extended repayment schedule).
Paragraph (g)(2) also allows an unpaid balance from a past advance
payment to be converted into an overpayment. In the unlikely event
that, after the adjustment process is completed, more money has been
advanced to the supplier than was due, we would consider that amount to
be an overpayment. We could then attempt to recover the overpayment
under the Medicare recovery procedures in part 401, subpart F and part
405, subpart C.
Proposed Sec. 421.214(h) clarifies that the advance payment would
be considered a payment that would satisfy the ``prompt payment''
requirements of section 1842(c)(2) of the Act for the amount of the
advance. Therefore, if an advance payment is made before the ``prompt
payment'' time limit and the actual amount of payment for the claim is
determined after the time limit, interest would be paid only on the
balance due the supplier after the carrier deducts the amount of the
advance. (Of course, no interest would accrue if the amount of the
advance exceeds the actual payment amount to be made on the claim.) If
the advance payment is issued after the time limit for making a prompt
payment, interest would accrue on the advance (or on the amount of the
claim, whichever is smaller) up to the date that the advance payment is
issued, and on the balance due the supplier, if any, up to the date of
payment.
Proposed Sec. 421.214(i) explains that the decision to advance
payments and the determination of the amount to be advanced on any
given claim are committed to agency discretion and are not subject to
review or appeal. However, the carrier would notify the supplier
receiving the advance payment about the amounts advanced and recouped,
and how any Medicare payment amounts have been adjusted. If the
supplier believes the carrier's reconciliation of the amounts advanced
and recouped is incorrectly computed, it may request an administrative
review from the carrier. If a review is requested, the carrier would
provide a written explanation of the adjustments. This review and
explanation would be separate from a supplier's right to appeal the
amount and computation of benefits paid on the claim, as provided at 42
CFR part 405, subpart H. The carrier's reconciliation of amounts
advanced and recouped would not be an initial determination as defined
at Sec. 405.803, and any written explanation of this reconciliation
would not be subject to further administrative review. We expect that
this review process would help to eliminate unnecessary appeals that
might result from errors in computation.
IV. Analysis of Public Comments
In response to the July 1994 proposed rule, we received three
timely items of correspondence. Comments were received from two
national trade associations--one is a nonprofit association comprised
of over 2,100 home medical equipment suppliers and one represents over
850 wholesale and retail distributors of health and medical products.
The third comment was sent by a 30,000-member professional association
representing pharmacists in various health settings. These comments and
our responses are discussed below.
Comment: One commenter stated that the term ``established time
limit'' that is referenced in the definition of advance payment
(Sec. 421.214(b)) should be specific for purposes of this rule. The
commenter suggested that after 30 to 60 days, interest should be paid
by the carrier on outstanding claims and after 60 days, advance
payments should be made automatically.
Response: Carriers must adhere to the ``prompt payment''
requirements set forth in section 1842(c) of the Act. As amended by
section 13568 of OBRA '93, this provision currently requires interest
to be paid on all ``clean'' claims for which payment is not made within
30 calendar days. We expect that the need for advance payment would be
determined in much less than 60 days. Additionally, as outlined in
Sec. 421.214(c) (``When advance payments may be made'') and
Sec. 421.214(d) (``When advance payments are not made''), advance
payments will be paid when the requirements of the rule are met.
However, it would be presumptuous for us or the carrier to assume that
all suppliers would want an advance payment.
Comment: Two commenters stated that it should be the obligation of
the carrier to notify suppliers as soon as the carrier discovers that
payment would not be made in a timely manner and
[[Page 49274]]
advance payments would be necessary. One of the commenters suggested
that, after an initial request, suppliers should not have to request an
advance payment in writing each time an advance payment is warranted.
Response: We agree that the carrier should notify a supplier when
there is a need to make advance payment. If the reason for not making
prompt payment is associated with the carriers' inability to process
Medicare claims in a timely manner, the carrier will notify the
supplier. The supplier will have the option of receiving an advance
payment, as long as the conditions as outlined in this final rule are
met. Additionally, it is not our intention to require suppliers to
request an advance payment each time a claim is submitted during a
period that advance payments are deemed to be necessary. Advance
payments will be automatic until the condition that caused the need for
advance payments is corrected.
Comment: One commenter disagreed with our position that the
decision to advance payments and the determination of the amount of any
advance payment are committed to agency discretion and are not subject
to review or appeal (Sec. 421.214(i)). The commenter believed that this
position does not ensure more efficient and effective administration of
this aspect of the Medicare program.
Response: Advance payments are discretionary because the Medicare
statute imposes no obligation to advance these monies before a final
payment determination is made. The final payment determination is not
affected by the advance payment process; suppliers can only be
advantaged by receiving these advances. Agency discretion for the
amount to be advanced is based on a valid and fair formula, as outlined
in Sec. 421.214(f)(1) and (f)(2). This is an efficient and effective
administration of the program that minimizes the risks to the Medicare
trust fund, without prejudice to the supplier.
Comment: One commenter objected to the provision in the proposed
rule instructing a carrier that the amount of an advance payment should
be no more than 80 percent of the historical assigned claims payment
data (Sec. 421.214(f)(1)). The commenter believed the supplier should
get an advance payment of 100 percent of its submitted charges, minus
the supplier's historical percentage differential between submitted and
approved charges.
Response: We have determined that the fairest method of calculating
advance payments to suppliers without risking an overpayment is to
calculate an advance payment for a particular claim at no more than 80
percent of the anticipated payment for that claim based upon the
historical assigned claims payment data for claims paid to the
supplier. This payment methodology balances the financial needs of the
supplier with our responsibility to protect the Medicare trust fund.
Comment: One commenter was concerned that a provision in the
proposed rule (Sec. 421.214(f)(3)) would allow the carrier to recover
payment from the supplier without requiring the carrier to resolve the
problem that actually caused the claims processing problem.
Response: The commenter's concern is unfounded. It is not our
intent to recover any part of the advance payment before the carrier
resolves the problem that made the advance payment necessary.
Comment: One commenter recommended that the supplier be given the
opportunity to repay the advance payment by check or wire transfer to
avoid the offsetting against claims because offsetting claims often
results in accounting problems.
Response: Permitting suppliers to refund advance payments (as
opposed to having the advanced payment offset against the actual
payment amount) would undoubtedly produce systemic overpayments and
duplicate payments to suppliers. This would be directly contrary to the
intent and purpose of this final rule. It is not our intent to permit
repayment of an advance payment by an option that could delay the
recovery process or that will create a duplicate payment or an
overpayment. A supplier of Part B services could not elect to receive
full payment for a claim and repay the advance payment separately at
some other time. Permitting suppliers to refund the advance payment by
check or wire transfer also conflicts with the definition of ``advance
payment'' in Sec. 421.214(b) and the concept of advancing a portion of
what is owed. The recommendation by the commenter would, in all
probability, increase the frequency of overpayments and duplicate
payments to providers, could be prone to abuse, and is inconsistent
with the intent of this rule.
Comment: One commenter had concerns about the provision prohibiting
an advance payment to a supplier if the supplier is under active
medical review or undergoing a program integrity investigation
(Sec. 421.214(d)(2)). The same commenter also believed that suppliers
that do not take assignment should not be excluded from receiving a
cash advance (Sec. 421.214(d)(4)).
Response: A supplier that is under an active medical review or
undergoing a program integrity investigation is in a status that we do
not treat lightly. These reviews and investigations could culminate in
actions that result in civil, criminal, and administrative remedies. To
authorize an advance payment without final resolution of the medical
review or program integrity investigation is not in the best interest
of the Medicare trust fund. A supplier that does not accept assignment
receives no monies from Medicare. Therefore, there is no basis for an
advance payment.
Comment: One commenter suggested that within 3 business days of a
carrier's receipt of an advance payment request, the carrier should
inform the supplier in writing of the amount of the advance payment
and, within the following 5 business days, the carrier should forward a
check for the advance payment to the supplier.
Response: The commenter proposes an administratively burdensome
time frame for carrier action that is far shorter than (and
inconsistent with) the ``prompt payment'' standard for ``clean'' claims
provided by Congress in section 1842(c)(2) of the Act. In accordance
with this provision, we pay interest when the carrier does not pay a
claim within 30 calendar days of receipt. Under 421.214(b), we will
issue advance payments only if the carrier is unable to process claims
timely, that is, within this 30 day period. Once we decide that the
carrier should issue advance payments, continuing advance payments will
be timed to be consistent with these prompt payment rules and the
carrier's usual operating procedures. This should minimize the
obligation to pay interest, as well as reduce the administrative burden
on the carrier during difficult circumstances. In addition, to adopt
the commenter's suggestion would likely aggravate the situation because
it would appear to create an incentive to seek advance payments.
Comment: One commenter stated that it opposed our proposed method
of calculating the amount of the advance payment (Sec. 421.214(f)) if
the payment is based on 80 percent of assigned claims submitted in the
past 90 days. The commenter further stated that if a carrier is unable
to process claims, the advance payment provision should allow that
carrier to pay at 100 percent of the supplier's submitted charges,
minus the supplier's historical percentage differential between
submitted and approved charges.
[[Page 49275]]
Response: We chose to base the advance payment on 80 percent of
assigned claims submitted in the past 90 days to meet the needs of a
supplier to continue to be a viable business and our responsibility to
protect the Medicare trust fund. If we chose to base the advance
payment on 100 percent of its submitted charges, minus the supplier's
historical percentage differential between submitted and approved
charges, we would likely create a situation in which a carrier overpays
a supplier and subsequently must recover the overpayment. This
situation creates an administrative burden on the carrier to develop
procedures to recover the overpayment successfully and results in
increased costs to the Medicare program.
V. Provisions of the Final Rule
We are making the following changes in this final rule as a result
of written comments received on the proposed rule. We are adding the
following paragraph (1) at the beginning of Sec. 421.214(f), which
concerns requirements for carriers:
``(1) A carrier must notify a supplier as soon as it is determined
that payment will not be made in a timely manner, and an advance
payment option is to be offered to the supplier.''
We are also clarifying Sec. 421.214(f)(1)(i) to eliminate possible
uncertainty regarding how advance payments will be calculated.
VI. Collection of Information
Under the Paperwork Reduction Act of 1995, we are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
requires that we solicit comment on the following issues:
Whether the information collection is necessary and useful
to carry out the proper functions of our agency;
The accuracy of our estimate of the information collection
burden;
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
We are soliciting public comment on each of these issues for
Sec. 421.214(f)(4) of this document that contains information
collection requirements. The information collection in that section
requires carriers to maintain a system of financial data in accordance
with the Statement of Federal Financial Accounting Standards for
tracking each advance payment and its recoupment. We estimate that it
will take a carrier 4 minutes for entry of an advance payment into the
tracking system and 2 minutes for any update (including recoupment).
For comments that relate to information collection requirements,
mail a copy of comments to: Health Care Financing Administration,
Office of Financial and Human Resources, Management Planning and
Analysis Staff, Room C2-26-17, 7500 Security Boulevard, Baltimore,
Maryland 21244-1850.
VII. Regulatory Impact Statement
Consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601
through 612), we prepare a regulatory flexibility analysis unless the
Secretary certifies that a rule will not have a significant economic
impact on a substantial number of small entities. For purposes of the
RFA, we consider all suppliers that provide services under Medicare
Part B to be small entities. We do not consider carriers to be small
entities.
Also, section 1102(b) of the Act requires the Secretary to prepare
a regulatory impact analysis for any rule that 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 that is located outside of a
Metropolitan Statistical Area and has fewer than 50 beds.
This final rule amends Medicare regulations to ensure that if
carriers make advance payments to suppliers and those payments are
greater than the amounts actually due after the claim is processed, the
excess payments are recovered promptly. We expect this rule will result
in marginal administrative savings to carriers and suppliers. In
addition, we do not believe this regulation will have a negative effect
on the economy. Therefore, the overall benefits are positive and indeed
provide stability for suppliers during potentially disruptive claims
processing delays.
We have determined, and we certify, that this final rule will not
have a significant economic impact on a substantial number of small
entities or a significant impact on the operations of a substantial
number of small rural hospitals. Therefore, we have not prepared
analyses for either the RFA or section 1102(b) of the Act.
In accordance with the provisions of Executive Order 12866, this
regulation was not reviewed by the Office of Management and Budget.
This rule is not a major rule as defined at 5 U.S.C. 804(2).
List of Subjects in 42 CFR Part 421
Administrative practice and procedure, Health facilities, Health
professions, Medicare, Reporting and recordkeeping requirements.
42 CFR part 421 is amended as follows:
PART 421--INTERMEDIARIES AND CARRIERS
1. The authority citation for part 421 continues to read as
follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
Subpart C--Carriers
2. A new Sec. 421.214 is added to subpart C to read as follows:
Sec. 421.214 Advance payments to suppliers furnishing items or
services under Part B.
(a) Scope and applicability. This section provides for the
following:
(1) Sets forth requirements and procedures for the issuance and
recovery of advance payments to suppliers of Part B services and the
rights and responsibilities of suppliers under the payment and recovery
process.
(2) Does not limit HCFA's right to recover unadjusted advance
payment balances.
(3) Does not affect suppliers' appeal rights under part 405,
subpart H of this chapter relating to substantive determinations on
suppliers' claims.
(4) Does not apply to claims for Part B services furnished by
suppliers that have in effect provider agreements under section 1866 of
the Act and part 489 of this chapter, and are paid by intermediaries.
(b) Definition. As used in this section, advance payment means a
conditional partial payment made by the carrier in response to a claim
that it is unable to process within established time limits.
(c) When advance payments may be made. An advance payment may be
made if all of the following conditions are met:
(1) The carrier is unable to process the claim timely.
(2) HCFA determines that the prompt payment interest provision
specified in section 1842(c) of the Act is insufficient to make a
claimant whole.
[[Page 49276]]
(3) HCFA approves, in writing to the carrier, the making of an
advance payment by the carrier.
(d) When advance payments are not made. Advance payments are not
made to any supplier that meets any of the following conditions:
(1) Is delinquent in repaying a Medicare overpayment.
(2) Has been advised of being under active medical review or
program integrity investigation.
(3) Has not submitted any claims.
(4) Has not accepted claims' assignments within the most recent
180-day period preceding the system malfunction.
(e) Requirements for suppliers. (1) Except as provided for in
paragraph (g)(1) of this section, a supplier must request, in writing
to the carrier, an advance payment for Part B services it furnished.
(2) A supplier must accept an advance payment as a conditional
payment subject to adjustment, recoupment, or both, based on an
eventual determination of the actual amount due on the claim and
subject to the provisions of this section.
(f) Requirements for carriers. (1) A carrier must notify a supplier
as soon as it is determined that payment will not be made in a timely
manner, and an advance payment option is to be offered to the supplier.
(i) A carrier must calculate an advance payment for a particular
claim at no more than 80 percent of the anticipated payment for that
claim based upon the historical assigned claims payment data for claims
paid the supplier.
(ii) ``Historical data'' are defined as a representative 90-day
assigned claims payment trend within the most recent 180-day experience
before the system malfunction.
(iii) Based on this amount and the number of claims pending for the
supplier, the carrier must determine and issue advance payments.
(iv) If historical data are not available or if backlogged claims
cannot be identified, the carrier must determine and issue advance
payments based on some other methodology approved by HCFA.
(v) Advance payments can be made no more frequently than once every
2 weeks to a supplier.
(2) Generally, a supplier will not receive advance payments for
more assigned claims than were paid, on a daily average, for the 90-day
period before the system malfunction.
(3) A carrier must recover an advance payment by applying it
against the amount due on the claim on which the advance was made. If
the advance payment exceeds the Medicare payment amount, the carrier
must apply the unadjusted balance of the advance payment against future
Medicare payments due the supplier.
(4) In accordance with HCFA instructions, a carrier must maintain a
financial system of data in accordance with the Statement of Federal
Financial Accounting Standards for tracking each advance payment and
its recoupment.
(g) Requirements for HCFA. (1) In accordance with the provisions of
this section, HCFA may determine that circumstances warrant the
issuance of advance payments to all affected suppliers furnishing Part
B services. HCFA may waive the requirement in paragraph (e)(1) of this
section as part of that determination.
(2) If adjusting Medicare payments fails to recover an advance
payment, HCFA may authorize the use of any other recoupment method
available (for example, lump sum repayment or an extended repayment
schedule) including, upon written notice from the carrier to the
supplier, converting any unpaid balances of advance payments to
overpayments. Overpayments are recovered in accordance with part 401,
subpart F of this chapter concerning claims collection and compromise
and part 405, subpart C of this chapter concerning recovery of
overpayments.
(h) Prompt payment interest. An advance payment is a ``payment''
under section 1842(c)(2)(C) of the Act for purposes of meeting the time
limit for the payment of clean claims, to the extent of the advance
payment.
(i) Notice, review, and appeal rights. (1) The decision to advance
payments and the determination of the amount of any advance payment are
committed to HCFA's discretion and are not subject to review or appeal.
(2) The carrier must notify the supplier receiving an advance
payment about the amounts advanced and recouped and how any Medicare
payment amounts have been adjusted.
(3) The supplier may request an administrative review from the
carrier if it believes the carrier's reconciliation of the amounts
advanced and recouped is incorrectly computed. If a review is
requested, the carrier must provide a written explanation of the
adjustments.
(4) The review and explanation described in paragraph (i)(3) of
this section is separate from a supplier's right to appeal the amount
and computation of benefits paid on the claim, as provided at part 405,
subpart H of this chapter. The carrier's reconciliation of amounts
advanced and recouped is not an initial determination as defined at
Sec. 405.803 of this chapter, and any written explanation of a
reconciliation is not subject to further administrative review.
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance and No. 93.774 Supplementary Medical
Insurance Program)
Dated: August 30, 1996.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
[FR Doc. 96-23958 Filed 9-18-96; 8:45 am]
BILLING CODE 4120-01-P