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CMS Announces New Claims Denial Code; Issues Proposed Rules on ICD-10 Code Sets


Email Alert

August 20, 2008
By Enjoliqué Aytch and Eli Poliakoff*

Claims Denial Code for Stark Violations

On August 15, 2008, the Centers for Medicare and Medicaid Services (CMS) announced that effective January 1, 2009, it will utilize a new Claim Adjustment Reason Code (CARC No. 213) to notify designated health services (DHS) providers when claims are being denied due to non-compliance with the physician self-referral prohibition, commonly known as the Stark law. Previously, CMS did not have a specific CARC to identify a claim that was being denied based on a Stark violation. This code will only be used when a claim is being denied because the physician or immediate family member has a financial interest in a DHS provider and fails to meet one of the exceptions permitted by Stark.

The new CARC will be implemented on January 5, 2009.

More information is available on the CMS website under the Medicare Learning Network.

*We would like to thank Enjoliqué Aytch (Nelson Mullins Riley & Scarborough LLP, Atlanta, GA) for providing this summary.

ICD-10 Code Sets Rules

On August 15, 2008, CMS placed on display with the Office of the Federal Register two proposed rules to replace longstanding ICD-9 code sets and update related electronic transaction standards. These proposed rules will be published in the Federal Register on August 22, 2008, with comments due by October 21, 2008.

Among other provisions, the proposed rules:

  • Replace existing ICD-9 code sets with ICD-10 code sets, effective October 1, 2011. CMS notes ICD-9 contains only 17,000 codes and is expected to run out of available codes next year. ICD-10 includes over 155,000 codes to accommodate new diagnoses and procedures. CMS Acting Administrator Weems acknowledges the "upfront costs" of the transition to ICD-10.
  • Update the HIPAA electronic transaction standards to accommodate larger code sets and provide technical, structural, and descriptive improvements. The proposed rules modify the current Version 4010/4010A standards to adopt Version 5010 for healthcare transactions, and Version D.0 for pharmacy claims, effective April 1, 2010.
  • Provide a standard for Medicaid pharmacy subrogation transactions, by which state Medicaid agencies can recoup certain funds from third-party payors. Compliance with these standards will be required two years after the effective date of the final rule, except for small health plans which will have an additional year.

Access the display version of the proposed code set rule.

Access the display version of the proposed rule updating the electronic transaction standards and addressing Medicaid pharmacy subrogation transactions.

In addition, read the HHS press release accompanying these proposed rules. CMS' fact sheets describing both proposed rules will be forthcoming.

Access the CMS Transactions and Code Sets Standards webpage that summarizes the proposed rules.

*We would like to thank Eli Poliakoff (Nelson Mullins Riley & Scarborough LLP, Charleston, SC) for providing this summary.

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