Electronic Exemptions

     The final word on electronic claims submissions to Medicare, recently published in the Federal Register, adds a pair of exceptions to the general rule that all initial Medicare claims must now be filed electronically.

     The general rule stems from the Administrative Simplification Compliance Act (ASCA), which is intended to improve the administrative efficiency of the Medicare claims process by limiting the number of paper claims that must be processed (currently about 139 million a year). Medicare carriers are instructed to deny payment under Parts A and B for any service for which a claim is submitted in nonelectronic form. The focus of the Final Rule is on the few exceptions to the mandatory electronic claims filing process.

     First, note that electronic filing is mandated only for initial claims. Therefore, the Rule does not apply to appeals, for which paper may still be submitted. Also, the Rule only applies to Parts A and B; therefore, paper claims may still be submitted to "M+C" organizations.

     There are two categories of exceptions ("mandatory exceptions"). The first applies when there is no method available for submission of the electronic claim. Two examples of this are: 1) where beneficiaries submit their own claims (which is rare), and 2) where the electronic standard does not support all the information necessary for payment of the claims (e.g., for roster billing of vaccinations, claims under Medicare demonstration projects or claims where more than one health plan is responsible for payment before Medicare). This first exception is not likely to apply to ambulance services, except perhaps in the last example of having two other insurance companies responsible for payment before Medicare. CMS, however, is working on a solution to this multiple-insurer problem, so once that is published, this example will no longer be valid.

     The second category of exceptions is where the supplier or provider is "small." Small, for a provider (an ambulance service based in a hospital and billing under Part A), would be fewer than 25 full-time equivalent employees (FTEs), while a small supplier (an independent service billing under Part B) would have fewer than 10 FTEs. FTEs are not necessarily employees who work 40 hours a week. If you consider employees to be full-time if they work, for example, 35 hours a week, then your full-time employees are based on 35-hour workweeks. Also, if you have 20 employees who each work 20 hours a week, then you must add their hours together to get an FTE equivalent of 10 employees working 40-hour weeks (or 11.42 working 35-hour weeks). FTEs include office and support staff who are directly involved with ambulance services (as opposed to, say, city employees who may divide their time between various departments, although the portion of their time working for the ambulance service would be treated as a part-time employee working that number of hours). Independent contractors and volunteers are not considered FTEs. This category of exception is one that may apply to some small and volunteer ambulance services.

     There is a third category of possible exceptions: The electronic claims requirement may be waived in "unusual cases" ("permissive exceptions"). There are five possible unusual cases outlined:

• Dental claims. Under rare circumstances, dentists might bill Medicare. Since this would be a rare case, dentists are exempt from the Rule and may bill using paper claims.
  
• When phone or power services have been interrupted through no fault of the provider (e.g., by a storm or flood).
  
• When a provider or supplier submits fewer than 10 claims a month.
  
• When services are furnished only outside of U.S. territory.
  
• When you can demonstrate "other extraordinary circumstances precluding submission of electronic claims." In this event, the provider/supplier should make a written request to the Secretary of Health and Human Services asking for a determination as to whether the exception is granted. For the mandatory exceptions (the first two categories listed above) and other permissive exceptions in this third category (the four specifically mentioned), no special request is required. Each provider/supplier must determine for themselves if the exception applies to them.

     A few additional comments: A claim sent to Medicare for secondary payment is considered an initial claim. Submission of some electronic claims to some insurance companies does not revoke any exception that might apply to you (i.e., just because you can bill electronically doesn't mean you have to). The cost of complying is not an excuse to continue to bill paper claims if none of the exceptions apply to you. And the exception for loss of power or telephone communications applies only to claims submitted during that time frame--once the phone or power comes back on, you must revert to billing electronically.

     Unless one of the above exceptions applies to your service or you get approval under the "other unusual cases" category, you must bill Medicare Parts A and B electronically. Not doing so may result in the denial of your claims--or, worse, in recoupment of claims considered overpaid.

G. Christopher Kelly is an attorney practicing in Atlanta, GA. This article is not intended to be legal advice. Contact Chris at chris@emscltd.com, or 800/342-5460.