CMS Pub. 100-08, ch. 3, § 3.6.2.5

The term Medicare beneficiary identifier (Mbi) is a general term describing a

beneficiary's Medicare identification number. For purposes of this manual, Medicare

beneficiary identifier references both the Health Insurance Claim Number (HICN) and

the Medicare Beneficiary Identifier (MBI) during the new Medicare card transition

period and after for certain business areas that will continue to use the HICN as part of

their processes.

This section applies to MACs, CERT, RACs, and UPICs, as indicated.

A. Distinguishing Between Benefit Category, Statutory Exclusion and

Reasonable and Necessary Denials

The MACs, CERT, RACs, and UPICs shall be cognizant that the denial type may

affect the financial liability of beneficiaries. They shall ensure that benefit category

denials take precedence over statutory exclusion and reasonable and necessary

denials. They shall ensure that statutory exclusion denials take precedence over

reasonable and necessary denials. MACs, CERT, and UPICs shall use the guidelines

listed below in selecting the appropriate denial reason. RACs shall follow denial

reason guidance outlined in their SOW.

• If additional documentation was requested from the provider or

other entity for any MR reason (benefit category, statutory

exclusion, reasonable/necessary, or coding), and the information is

not received within 45 calendar days or a reasonable time

thereafter, the MACS, CERT, and UPICs shall issue a reasonable

and necessary denial, in full or in part.

• If additional documentation was requested because compliance

with a benefit category requirement is questioned and the

documentation received fails to support compliance with the

benefit category, the MACs, CERT, and UPICs shall issue a

benefit category denial.

• If additional documentation was requested because compliance

with a benefit category requirement is questioned and the received

documentation shows evidence that the benefit category

requirement is present but is defective, the MACs, and UPICs shall

issue a reasonable and necessary denial.

EXAMPLE 1: A MAC is conducting a review of partial

hospitalization (PH) claims from a provider who has a pattern of

failing to comply with the benefit category requirement that there be a

signed certification in the medical record. In the first medical record,

the MAC finds that there is no signed certification present in the

medical record. The MAC shall deny all PH services for this

beneficiary under §1835(a) (2) (F) of the Act (a benefit category

denial). However, in the second medical record, the MAC determines

that a signed certification is present in the medical record, but the

documentation does not support the physician's certification, the

services shall be denied under §1862(a) (1) (A) of the Act (a

reasonable and necessary denial) because the certification is present

but defective.

Example 2: The MAC performs a medical record review on a surgical

procedure claim and determines that the procedure was cosmetic in

nature and was not reasonable and necessary; the denial reason would

be that the service is statutorily excluded since statutory exclusion

denials take precedence over reasonable and necessary denials.

The MACs, CERT, RACs, and UPICs shall deny payment on claims either partially (e.g.,

by down coding or denying one line item on a multi-line claim) or in full, and provide the

specific reason for the denial whenever there is evidence that a service:

• Does not meet the Benefit Category requirements described in Title

XVIII of the Act, NCD, or coverage provision in an interpretive

manual;

• Is statutorily excluded by other than §1862(a)(1) of the Act;

• Is not reasonable and necessary as defined under §1862(a) (1) of

the Act. MACs, CERT, RACs, and UPICs shall use this denial

reason for all non-responses to documentation requests;

• Was not billed in compliance with the national and local coding,

payment or billing requirements; and/or

• Was not delivered or provided to the beneficiary, or not provided

as billed.

The denial explanation needs to be more specific than merely repeating one of the above

bullets. The general exception to the need for a full denial explanation is in the event of a

clerical error, for example, the billing entity transposes two digits in the Medicare

beneficiary identifier on a claim. The claim is quickly returned, usually electronically, to

the provider for correction. In the case of dual-eligible beneficiaries where there is a

State-specific policy, see CMS IOM Pub. 100-04, chapter 30, §60.5 A for a detailed

explanation of handling administrative denials.