Medicaid Secondary Claims Where Cost Share Does Not Apply, and Contractual Obligations Reporting on Medicaid Secondary Claims

On October 29, 2017, the NC Department of Health and Human Services (DHHS) will implement in NCTracks new business rules for processing Medicaid secondary claims and claim adjustments where a Third-Party payer made a payment on the claim and Cost Share (Patient Responsibility) was not applicable. For claims meeting this condition, the “lesser of logic” pricing method is not appropriate and will not be performed. Additional changes will include the creation of an “Other Payer Adjustment” segment for 835 reporting of all Medicaid secondary claims where a prior payment exists. Medicare claims are not affected by these changes.

As is standard practice for coordination of benefit (COB) segments, when entering Third Party prior payer information, the provider must select the appropriate “payer filing indicator”.  It is recommended the provider attach the Remittance Advice/Explanation of Benefits (EOB) of the prior payer with the Medicaid claim to confirm that cost share is not applicable when they have selected one of these filing indicators. The following specific COB payer filing indicators will identify Third Party claims that will price without Cost Share:

• AM – Automobile Medical
• LM – Liability Medical
• WC – Workers’ Compensation Health Claim
• TV – Title V (All other policies that do not have Cost Share information)

The paid amount associated with these payer filing indicators will be used only as a reduction to any Medicaid payment amount.

This new method will apply to all X12 837 Institutional, Professional, and Dental claim transaction types (837I/P/D) as well as claims keyed into the secure provider portal. Pharmacy claims are excluded. Paper claims are also excluded as the claim filing indicator cannot be submitted. The new method will be applicable for any claim that meets the criteria adjudicated after October 29, regardless of the date of service.

Note that if a provider submits a claim with a payer filing indicator of AM, LM, WC or TV, and a Cost Share amount greater than $0, the claim will be denied due to billing error with EOB code 02470 - COST SHARE IS NOT APPLICABLE FOR THE CLAIM FILING INDICATOR SELECTED. PLEASE SUBMIT A CLAIM FILING INDICATOR APPLICABLE TO INSURANCE POLICIES WITH COST SHARE INFORMATION OR REMOVE THE INVALID COST SHARE AMOUNTS. If the claim also contains claim indicators other than AM, LM, WC or TV, and/or Medicare, the claim will perform the “lesser of logic” pricing method.

The “lesser of logic” pricing method refers to payment for services at the lesser of the Cost Share (Patient Responsibility) or the difference (if any) between the amount paid by the Third Party/Medicare and the Medicaid state plan rate.

The “Other Payer Adjustment” is to be calculated and reported on the 835 prior to determining and reporting the Contractual Obligation. The other payer adjustment will be calculated as the difference between all prior patient responsibility amounts and the billed charge amount. Any remaining difference (if any) between the submitted billed charge amount and the Medicaid allowable amount (after the other payer adjustment has been determined) will be reported as contractual obligation.