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Note: Hospitals must submit Medicare Advantage claims as far back as October 2005

Medicare Weekly Update, March 10, 2009

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Last week, CMS published Transmittal 1695 to the Claims Processing Manual, reaching back to FY 2006 to include Medicare Advantage (MA) Plan members in the Disproportionate Share Hospital (DSH) calculation. CMS calculates a DSH adjustment to DRG payments for hospitals serving a disproportionate share of low income patients. 

By regulation, low-income patients include certain Medicaid patients (Medicaid portion) and certain Medicare patients (Medicare portion). The Medicare portion is a ratio of Medicare Part A patients receiving Social Security Income (SSI) (disabled) divided by the total Medicare Part A patients. The Medicare portion includes MA members because they are eligible for Medicare Part A, even though the payment is being made through a MA plan. The effect of including MA members may be positive or negative for hospitals, depending on how the addition of the MA members affects the overall Medicare portion ratio. 

This issue may sound familiar because in July of 2007 CMS published Transmittal 1311 that gave instructions for hospital to include MA members in their Disproportionate Share calculation for FY 2007. Transmittal 1695 requires hospital who received DSH to go back as far as FY 2006 and submit MA plan member data. The affected providers have a limited time frame to submit the claims data for FY 2006: from the implementation date, July 6, 2009, through November 30, 2009.

The process for submitting MA member data entails submitting a separate claim to the MAC/FI with condition code 04 (Information Only) and the Medicare Beneficiary’s HICN. CMS has instructed contractors to override timely filing edits for these claims. They have also turned off the Medicare Summary Notice to the patient.

NOTE: Teaching hospitals are not affected by this requirement because they would have already submitted a claim for Indirect Medical Education payment with condition code 04 and 69, which would allow CMS to account for the MA plan members in their DSH calculations.

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