CMS Pub. 100-04, ch. 3, § 50

Adjustment bills are the most common mechanism for changing a previously accepted bill.

They are required to reflect the results of A/B MAC (A)’s medical review. Adjustments may

also be requested by CMS via CWF if it discovers that bills have been accepted and posted in

error other than the omission of a charge. Adjustments may be initiated as a result of OIG

and MSP requests. The A/B MAC (A) will ask the provider to submit an adjustment request

for certain situations.

For hard copy Form CMS-1450 adjustment requests, the provider places the ICN/DCN of the

original bill for Payer A, B, or C.

Where payment is handled through the cost reporting and settlement processes, the provider

accumulates a log for those items not requiring an adjustment bill. For cost settlement, the

A/B MAC (A) pays on the basis of the log. This log must include:

• Patient name;

• HICN;

• Dates of admission and discharge, or from and thru dates;

• Adjustment in charges (broken out by ancillary or routine service); and

• Any unique numbering or filing code necessary for the hospital to associate the

adjustment charge with the original billing.

Providers in Maryland, which are not paid under PPS or cost reports, submit an adjustment

bill for inpatient care of $500 or more, and keep a log as described above for lesser amounts.

Because there are no adjustment bills, the A/B MAC (A) enters the payment amounts from

the summary log into the PPS waiver simulation and annually pays the items on the log after

the cost report is filed.

NOTE: Information regarding the claim form locators that correspond with these fields on

the Form CMS-1450 is found in chapter 25.

An original bill does not have to be accepted by CMS prior to making related adjustments to

the provider. However, for all adjustments other than QIO adjustments (e.g., provider

submitted and/or those the A/B MAC (A) initiates), the A/B MAC (A) submits an adjustment

bill to CWF following its acceptance of the initial bill. To verify CMS' acceptance, it takes

one or both of the following actions:

A. - General Rules for Submitting Adjustment Requests

Adjustment requests that only recoup or cancel a prior payment are "credits" and must match

the original in the following fields:

• A/B MAC (A) control number (ICN/DCN);

• Surname;

• HICN;

When a definite match cannot be made on the 3 fields above, the provider's A/B MAC (A)

will use the fields below as needed. Note that for older claims, ICN/DCN probably will not

match.

• Date of birth;

• Admission date (Start of Care Date for Home Health), unless changed by this

adjustment requests; and

• From/thru dates (Date of First Visit/Date of Last Visit for Home Health), unless

changed by this adjustment request.

Cancel-only adjustment requests must be submitted only in cases of incorrect provider

identification numbers and incorrect HICNs. After the cancel-only request for the incorrect

bill is resolved, the provider must submit correct information as a new bill.

The provider must submit all other adjustment requests as debits only. It shows the

ICN/DCN of the bill to be adjusted as described above, with the bill type shown as XX7. It

submits adjustment requests to its A/B MAC (A) either electronically or on hard copy.

Electronic submission is preferred.

The A/B MAC (A) must enter the following bill types that relate to the entity generating the

adjustment request:

Bill

Type

Description

XX7 Provider (debit)

Bill

Type

Description

XX8 Provider (cancel)

XXF Beneficiary

XXG CWF

XXH CMS

XXI A/B MAC (A)

XXM MSP

XXP QIO/QIO

XXJ Other

XXK OIG

The provider submits adjustment requests as bill type XX7 or XX8. Since several different

sources can initiate an adjustment for MSP purposes, the A/B MAC (A) will change the bill

type to XXM, which takes priority over any other source of an adjustment except OIG.

These priorities refer only to the designation of the source of the adjustment. The difference

between CWF generating the adjustment request and CMS generating the request is:

An adjustment is CWF-generated if the A/B MAC (A) receives a CWF alert or a CMS-

L1002.

The A/B MAC (A) prepares an adjustment if instructed by CO or RO to make a change.

Typically, the A/B MAC (A) receives such direction from CMS when it decides to

retroactively change payment for a class or other group of bills. Occasionally, CMS will

discover an error in the processing of a single bill and direct the A/B MAC (A) to correct it.

If the A/B MAC (A) furnished the A/B MAC (B) a copy of the original bill which is being

adjusted, it must furnish them a copy of the adjusted bill.

If adjustment bills are rejected by CWF for additional corrections, they need to be corrected

and resubmitted. Even if the adjustment action is requested by letter from CMS, the A/B

MAC (A) must submit the adjustment bill in its CWF record. If a rejected adjustment bill is

determined to be unnecessary, the A/B MAC (A) stops the adjustment action upon receipt of

correction.

Where an adjustment bill changes subsequent utilization, the A/B MAC (A) notes this and

processes adjustments to subsequent bills if it services the provider.

If the A/B MAC (A) does not service the provider, CMS will contact the A/B MACs (A),

which submitted bills with subsequent billing dates that are affected by the adjustments via

an SSA-L389 or SSA-L1001 upon receipt of the adjusted bills in CWF. (An indicator is set

by CMS on its records upon advising an A/B MAC (A) of the appropriate adjustment

actions.)

B. - Adjustment Bills Involving Time Limitation for Filing Claims

If a provider fails to include a particular item or service on its initial bill, an adjustment

bill(s) to include such an item(s) or service(s) is not permitted after the expiration of the time

limitation for filing a claim. However, to the extent that an adjustment bill otherwise

corrects or supplements information previously submitted on a timely claim about specified

services or items furnished to a specified individual, it is subject to the rules governing

administrative finality, rather than the time limitation for filing.

Under prospective payment, adjustment requests are required from the hospital where errors

occur in diagnoses and procedure coding that change the DRG, or where the deductible or

utilization is affected. A hospital is allowed 60 days from the date of the A/B MAC (A)

payment notice for adjustment bills where diagnostic or procedure coding was in error.

Adjustments reported by the QIO have no corresponding time limit and are adjusted

automatically by the A/B MAC (A) without requiring the hospital to submit an adjustment

bill. However, if diagnostic and procedure coding errors have no effect on the DRG,

adjustment bills are not required.

Under PPS, for long-stay cases, hospitals may bill 60 days after an admission and every 60

days thereafter if they choose. The A/B MAC (A) processes the initial bill through Grouper

and Pricer. The provider must submit an adjustment to cancel the original interim bill(s) and

rebill the stay from the admission date through the discharge date. When the adjustment bill

is received, it processes it as an adjustment. In this case, the 60-day requirement for

correction does not apply.

Where payment is handled through cost reporting and settlement processes, the provider

accumulates a log for those items not requiring an adjustment bill. Maryland inpatient

hospital providers also keep a log of late charges when the amount is under $500. They

submit the log with their cost reports. After cost reports are filed, the A/B MAC (A) makes a

lump sum payment to cover these charges as shown on the summary log. The provider uses

the summary log for late charges only under cost settlement (outpatient hospital), except in

Maryland.

Maryland and cost providers are required to meet the 27-month timeframe for timely filing

of claims, including late charges.

NOTE: Providers in Maryland which are not paid under PPS or cost reports, submit an

adjustment bill for inpatient care of $500 or more, and submit a log for the lesser amounts.