MINNEAPOLIS, July 16, 2008—Now that Congress has passed a law reversing the cuts retroactive to July 1st, Medicare carriers are switching their systems back to the June 2008 rates (and increasing rates for certain mental health services).

Some carriers may already have posted the new, correct rates, but others could take a week or more. CMS has stated that it will automatically reprocess any claims paid at the reduced rates and provide the balances due to physician practices that are shortchanged, most likely as a single batched check.

The midyear 2008 Medicare Physician Fee Schedule (MPFS) rate of -10.6 percent has been replaced with a 0.5 percent update, retroactive to July 1.

Physicians, non-physician practitioners and other providers of services paid under the MPFS should begin to receive payment at the 0.5  percent update rates in approximately 10 business days or less. Medicare contractors are currently working to update their payment system with the new rates.

In the meantime, to avoid a disruption to the payment of claims for physicians, non-physician practitioners and other providers of services paid under the MPFS, Medicare contractors will continue to process the claims that have been on hold on a rolling basis (first in/first out) for payment at the -10.6 percent update level.

After local contractors begin to pay claims at the new 0.5 percent rate, to the extent possible, the contractor will begin to automatically reprocess any claims paid at the lower rates.

Under the Medicare statute, Medicare pays the lower of submitted charges or the Medicare fee schedule amount. Claims with dates of service July 1 and later billed with a submitted charge at least at the level of the January 1 – June 30, 2008, fee schedule amount will be automatically reprocessed. Any lesser amount will require providers to contact their local contractor for direction on obtaining adjustments. Non-participating physicians who submitted unassigned claims at the reduced nonparticipation amount also will need to request an adjustment.

Contractor websites are being updated with the new rates and these should be available shortly.

Finally, be on the alert for more information about other legislative provisions which may affect you.