(LANSING) - The Office of Financial and Insurance Services (OFIS) today released the instructions and forms for the timely payment of Medicaid claims process.

"This information outlines the OFIS process that must be used in filing a clean Medicaid claim to effect timely payment," commented OFIS Commissioner Frank M. Fitzgerald. "The purpose of this timely Medicaid claims process is to establish time frames and definitions that will allow the Michigan Office of Financial and Insurance Services to determine if providers and plans have met timely payment obligations."

Part of the HMO reform legislation (Senate Bill 938/2000 PA187) that was passed in June of this year required OFIS to establish a timely Medicaid claims process to be used by all health professionals, facilities, and qualified health plans (QHPs). The timely Medicaid claims process went into effect October 1, 2000 and may only be used for Medicaid services rendered on or after that date. The OFIS timely Medicaid claims process is not applicable for Medicaid fee-for-service benefits.

The OFIS timely Medicaid claims process is made up of 4 elements: a definition of clean claims, timelines, provider & plan responsibilities, and penalties.

Clean Claim Definition - The legislation requires that certain conditions be met for a Medicaid claim to be a "clean claim." A clean claim must:

• Use the HCFA 1500 (providers) or the UB92 (facilities) format.
• Contain the patient's QHP member number, name, address, and date of birth.
• Contain the day, month, and year the service was provided and be billed to the QHP within 1 year after the date of service or date of discharge from the health facility
• Contain the name, appropriate tax identification number, and QHP provider identification number of the provider rendering the service, and location of service.
• Contain the description of the covered service rendered using the universal identifying procedure code, as designated by the Commissioner.
• Include substantiation of medical necessity, appropriateness of service and an applicable authorization number, if required by the QHP.
• Be submitted for services that are covered under the Michigan Department of Community Health (MDCH) Medicaid contract.
• Be electronic, unless the provider does not currently have the capability. For claims incurred after June 1, 2001, only claims filed electronically by the provider will have access to the OFIS timely Medicaid claims process. All QHPs must have current capability to accept Medicaid claims electronically as outlined by the MDCH Medicaid contract.

Timelines - A Medicaid clean claim must be paid within 45 days after receipt of the claim by the QHP. A pharmaceutical clean claim must be paid within the industry standard time frame or within 45 days after receipt of the claim by the QHP, whichever is sooner. After 45 days, claims are considered late and are eligible for the OFIS timely Medicaid claims process. Upon receipt of any claim, if the QHP determines that 1 or more covered services listed on a Medicaid claim are payable, it must pay for those services and not deny the entire claim because 1 or more services listed are in dispute or are not covered.

A QHP has 30 days to notify a provider or facility of any defects in the claim. If the defect is an established clean claim requirement within the OFIS timely Medicaid claims process, the 45-day payment timeline no longer applies. After notification of a defect, the provider has 30 days to correct the defect and resubmit the corrected claim to the QHP. The QHP then has another 30 days to pay it if the returned corrected claim meets the definition of a clean claim. If a corrected claim that is returned to a QHP is still defective, the QHP has 30 days from the date they receive the corrected claim to notify the provider of the remaining defect. The QHP will also notify OFIS of the defect on a required form (form # FIS0279).

The provider must allow the QHP at least 30 days to provide notice of any reason for not paying the claim. If a nonpayment notice has not been sent within 30 days, the provider may assume payment will be made 45 days from date of receipt. If a provider resubmits a claim before the 45 days elapsed, it will not be considered clean.

Medicaid claims are submitted for OFIS timely Medicaid claims process review with a form (form #FIS0278) available on the OFIS Web site (www.cis.state.mi.us/ofis). A form must accompany each claim and claims may not be batched. If the claim or a service becomes the subject of a denial, the provider may take the claim through the OFIS health insurance and HMO grievance procedure.

Provider and Plan Responsibilities - The OFIS timely Medicaid claims process established procedures for plans and providers to follow even before a claim is filed. Providers are responsible for knowing what services are covered Medicaid benefits, verifying Medicaid eligibility and plan membership verification. Both contracted and non-contracted providers are responsible for determining QHP requirements concerning the authorization of services and information required for submitting a claim. In addition, providers must be enrolled with Medicaid and meet all timelines, definitions and procedures in order to be eligible. Failure of a provider to meet the conditions does not relieve the QHP from paying claims for covered services.

In addition to the OFIS timely Medicaid claims process, QHP's have a Medicaid contract with MDCH that permits an arbitration process for disputed claims. This process is separate from the OFIS timely Medicaid claims process and a provider must choose only one process to pursue payment of a claim. Grievances submitted to the Medicaid contract arbitration system will not be reviewed by OFIS.

A QHP shall notify providers of any authorization procedures and guidelines before a claim is filed in order to get the most correct and complete information. This information includes elements needed to substantiate medical necessity. QHPs shall make this information available electronically and by other means for providers. If changes are made without proper notification, the QHP will not be able to avoid the 45-day requirement for payment of the clean claim without penalty.

Penalties - Under the authority to establish the OFIS timely Medicaid claims process, the Commissioner may assess penalties to health professionals, health facilities and QHPs for their failure to comply. If, after review, it is found that the QHP has violated the OFIS timely Medicaid claims payment process, costs incurred may be assessed to the QHP. A health professional or health facility may be assessed a similar penalty if it is found the QHP has rejected a claim for cause. Other penalties may be assessed as appropriate for persistent violations under Chapter 20 of the Michigan Insurance Code as an unfair trade practice. If the party disputing the claim is also found to have violated the OFIS timely Medicaid claims process, penalties will be assessed at the discretion of the Commissioner.

Reference Materials: Bulletin 2000-09, form # FIS0278 - the Medicaid Clean Claim Report, form # FIS0279 - the Quarterly Notice of Medicaid Claims Defects. These materials, as well as information on the OFIS health insurance and HMO grievance procedure, may be found at www.cis.state.mi.us/ofis.