Change Request SUBJECT: Claim Adjustment Reason Code (CARC), Remittance Advice Remark Code (RARC), and Medicare Remit Easy Print (MREP) Update

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1 anual ystem Pub edicare laims Processing Department of ealth & uman ervices (D) enters for edicare & edicaid ervices () Transmittal 2194 Date: pril 22, 2011 hange equest 7369 UBJET: laim djustment eason ode (), emittance dvice emark ode (), and edicare emit Easy Print (EP) Update. UY O NGE: This hange equest () instructs the contractors to update laim djustment eason ode () and emittance dvice emark ode () reported on the emittance dvice (). t also instructs V to update edicare emit Easy Print (EP) software. This ecurring Update applies to chapter 22, sections 60.1 and 60.2 of the edicare laims Processing anual. EETVE DTE: July 1, 2011 PLEENTTON DTE: July 5, 2011 Disclaimer for manual changes only: The revision date and transmittal number apply only to red italicized material. ny other material was previously published and remains unchanged. owever, if this revision contains a table of contents, you will receive the new/revised information only, and not the entire table of contents.. NGE N NUL NTUTON: (N/ if manual is not updated) =EVED, N=NEW, D=DELETED /N/D PTE / ETON / UBETON / TTLE 22/60/60.1/laim djustment eason odes 22/60/60.2/emittance dvice emark odes. UNDNG: or iscal ntermediaries (s), egional ome ealth ntermediaries (s) and/or arriers: No additional funding will be provided by ; contractor activities are to be carried out within their operating budgets. or edicare dministrative ontractors (s): The edicare dministrative ontractor is hereby advised that this constitutes technical direction as defined in your contract. does not construe this as a change to the tatement of Work. The contractor is not

2 obligated to incur costs in excess of the amounts allotted in your contract unless and until specifically authorized by the contracting officer. f the contractor considers anything provided, as described above, to be outside the current scope of work, the contractor shall withhold performance on the part(s) in question and immediately notify the contracting officer, in writing or by , and request formal directions regarding continued performance requirements. V. TTENT: anual nstruction ecurring Update Notification *Unless otherwise specified, the effective date is the date of service.

3 ttachment ecurring Update Notification Pub Transmittal: 2194 Date: pril 22, 2011 hange equest: 7369 UBJET: laim djustment eason ode (), emittance dvice emark ode (), and edicare emit Easy Print (EP) Update Effective Date: July 1, 2011 mplementation Date: July 5, GENEL NOTON. Background: The ealth nsurance Portability and ccountability ct (P) of 1996, instructs health plans to be able to conduct standard electronic transactions adopted under P using valid standard codes. edicare policy states that laim djustment eason odes (s) are required in the remittance advice and coordination of benefits transactions. edicare policy further states that appropriate emittance dvice emark odes (s) that provide either supplemental explanation for a monetary adjustment or policy information that generally applies to the monetary adjustment are required in the remittance advice transaction. The and changes that impact edicare are usually requested by staff in conjunction with a policy change. ontractors and hared ystem aintainers (s) are notified about these changes in the corresponding instructions from the specific component that implements the policy change, in addition to the regular code update notification. f a modification has been initiated by an entity other than for a code currently used by edicare, contractors must either use the modified code or another code if the modification makes the modified code inappropriate to explain the specific reason for adjustment. s have the responsibility to implement code deactivation making sure that any deactivated code is not used in original business messages, but the deactivated code in derivative messages is allowed. s must make sure that edicare does not report any deactivated code on or before the effective date for deactivation as posted on the WP Web site. ontractors shall stop using codes that have been deactivated on or before the effective date specified in the comment section (as posted on the WP Web site) if they are currently being used. n order to comply with any deactivation, edicare may have to stop using the deactivated code in original business messages before the actual top Date posted on the WP Web site because the code list is updated three times a year and may not align with the edicare release schedule. Note that a deactivated code used in derivative messages must be accepted even after the code is deactivated if the deactivated code was used before the deactivation date by a payer who adjudicated the claim before edicare. edicare contractors must stop using any deactivated reason and/or remark code past the deactivation date whether the deactivation is requested by edicare or any other entity. The regular code update hange equest () will establish the implementation date for all modifications, deactivations, and any new code for edicare contractors and the s. f another specific has been issued by another component with a different implementation date, the earlier of the two dates will apply for edicare implementation. This recurring lists only the changes that have been approved since the last code update ( 7250 Transmittal 2131), and does not provide a complete list of codes in these two code sets. You must get the complete list for both and from the WP Web site that is updated three times a year around arch 1,

4 July 1, and November 1 to get the comprehensive lists for both code sets, but the implementation date for any new or modified or deactivated code for edicare contractors is established by this recurring code update published three or four times a year according to the edicare release schedule (see above for exception). WP Web site address: The WP Web site has four listings available for both and : ll: ll codes including deactivated and to be deactivated codes are included in this listing. To Be Deactivated: Only codes to be deactivated at a future date are included in this listing. Deactivated: Only codes with prior deactivation effective date are included in this listing. urrent: Only currently valid codes are included in this listing. NOTE : n case of any discrepancy in the code text as posted on WP Web site and as reported in any, the WP version should be implemented. NOTE : This recurring ode Update lists only the changes approved since the last recurring ode Update once. f any modification becomes effective at a future date, contractors must make sure that they update on the quarterly release date that matches the effective date as posted on the WP Web site. laim djustment eason ode (): national code maintenance committee maintains the health care laim djustment eason odes (s). The ommittee meets at the beginning of each X12 trimester meeting (January/ebruary, June and eptember/october) and makes decisions about additions, modifications, and retirement of existing reason codes. The updated list is posted three times a year around early arch, July, and November. To access the list go to: wpc-edi.com/odes The new codes usually become effective when approved unless mentioned otherwise. ny modification or deactivation becomes effective on the next quarterly release date (pril 1 or July 1 or October 1 or January 1) or later to provide lead time for implementing necessary programming changes. Exception: The effective date for a modification may be as early as the approval or publication date if the requester can provide enough justification to have the modification become effective earlier than the next quarterly release date. health plan may decide to implement a code deactivation before the actual effective date posted on WP Web site as long as the deactivated code is allowed to come in on oordination of Benefits (OB) claims if the previous payer(s) has (have) used that code prior to the deactivation date. n most cases edicare will stop using a deactivated code before the deactivation becomes effective per the WP Web site to accommodate the edicare release schedule. The following new laim djustment eason odes were approved by the ode ommittee in January, and must be implemented, if appropriate, by July 5, New odes : ode urrent Narrative Effective Date per WP Posting

5 236 This procedure or procedure/modifier combination is not compatible with another procedure or procedure/modifier combination provided on the same day according to the National orrect oding nitiative. 1/30/2011 odified odes : None Deactivated odes : None emittance dvice emark odes (): is the national maintainer of the remittance advice remark code list. This code list is used by reference in the X12 N transaction 835 (ealth are laim Payment/dvice) version and mplementation Guide (G)/Technical eport (T) 3. Under P, all payers, including edicare, have to use reason and remark codes approved by X12 recognized code set maintainers instead of proprietary codes to explain any adjustment in the claim payment. as the X12 recognized maintainer of s receives requests from edicare and non- edicare entities for new codes and modification/deactivation of existing codes. dditions, deletions, and modifications to the code list resulting from non-edicare requests may or may not impact edicare. emark and reason code changes that impact edicare are usually requested by staff in conjunction with a policy change. ontractors are notified about these changes in the corresponding instructions from the specific component which implements the policy change, in addition to the regular code update notification. f a modification has been initiated by an entity other than for a code currently used by edicare, contractors must use the modified code even though the modification was not initiated by edicare. hared ystem aintainers have the responsibility to implement code (both and ) deactivation making sure that any deactivated code is not used in original business messages, but the deactivated code in derivative messages is allowed. ontractors must stop using codes that have been deactivated on or before the effective date specified in the comment section (as posted on the WP Web site) if they are currently being used. edicare contractors are not to use any deactivated reason and/or remark code past the deactivation date whether the deactivation is requested by edicare or any other entity. The complete list of remark codes is available at: list is updated three times a year in early arch, July and November although the ommittee meets every month. The ommittee has established the following schedule: equest received in October January: Published in early arch. Deactivation becomes effective in October ny new code or modification become effective when published equest received in ebruary ay: Published in early July Deactivation becomes effective in January ny new code or modification become effective when published

6 equest received in June eptember: Published in early November Deactivation becomes effective in July ny new code or any modification becomes effective when published NOTE: Exception to the above schedule may be approved by the ommittee if enough justification is provided by the requester. This recurring is published four times a year. odes are updated three times a year, pril, July and October as part of this recurring. The fourth publication in January is usually used to address EP enhancement requests. s mentioned earlier, specific components may publish s in addition to the recurring code update s instructing contractors to use specific s/ s and establishing an implementation date that may differ from the implementation date mentioned in the recurring code update. f there is any difference in the implementation dates, the contractors are to implement on the earlier of the two dates. By July 5, 2011, contractors must complete entry of all applicable code text changes and new codes, and the s shall implement all code deactivations. ontractors must use the latest approved and valid emittance dvice emark codes in the 835 and corresponding tandard Paper emittance (P) advice. NOTE: ome remark codes may only provide general information that may not necessarily supplement the specific explanation provided through a reason code and in some cases another/other remark code(s) for a monetary adjustment. odes that are nformational will have the word lert in the text to identify them as informational rather than explanatory codes. These nformational codes may be used without any specific monetary adjustment and an associated explaining the monetary adjustment. These informational codes should be used only if specific information about adjudication (like appeal rights) needs to be communicated but not as default codes when a is required with a e.g., 16, 96, 125, 129, 148, 226, 227, 234, 1, and D23. New odes : ode urrent Narrative edicare nitiated N542 issing income variation No N543 ncomplete/invalid income verification No odified odes : ode odified Narrative edicare nitiated 37 Not covered when the patient is under age 35. No 116 Processed under a demonstration project or No program. Project or program is ending and additional services may not be paid under this project or program. N62 Dates of service span multiple rate periods. esubmit separate claims. No

7 N129 Prior processing information appears incorrect. No t least one emark ode must be provided (may be comprised of either the NPDP eject eason ode, or emittance dvice emark ode that is not an LET.) N356 Not covered when performed with, or No subsequent to, a non-covered service. N383 Not covered when deemed cosmetic. No N410 Not covered unless the prescription changes. No N428 Not covered when performed in this place of No service. N429 Not covered when considered routine. No N431 Not covered with this procedure. No Deactivated odes : None B. Policy: or transaction 835 (ealth are laim Payment/dvice) and standard paper remittance advice, there are two code sets laim djustment eason ode () and emittance dvice emark ode () that must be used to report payment adjustments, appeal rights, and related information. dditionally, for transaction 837 OB, must be used. These code sets are updated three times a year on a regular basis. edicare contractors must report only currently valid codes in both the remittance advice and OB laim transaction, and must allow deactivated and in derivative messages when certain conditions are met (see Business equirements segment for explanation of conditions). hared ystem aintainers and contractors must make the necessary changes on a regular basis as per this recurring code update and/or the specific that describes the change in policy that resulted in the code change requested by edicare. ny modification and/or deactivation will be implemented by edicare even when the modification and/or the deactivation has not been initiated by edicare.. BUNE EQUEENT TBLE Number equirement esponsibility (place an X in each applicable column) / D hared- ystem OT E B E aintainers ontractors shall update reason and remark codes that have been modified and apply to edicare by July 5, Note: ome modifications may become effective at a future date. ontractors shall make sure that E X X X X X V W

8 Number equirement esponsibility (place an X in each applicable column) / D hared- ystem OT E B E aintainers modifications are implemented on the effective date as posted on the WP Web site (which may be later than the implementation date mentioned in this ) for those code modifications that are being used by edicare ontractors shall update reason and remark codes to include new codes that apply to edicare by July 5, 2011 or after July 5, 2011 if instructed by ,, and V shall make necessary programming changes so that no deactivated reason and remark code is reported in the remittance advice and no deactivated reason code is reported in the OB claim by July 5, ,, V shall update any crosswalk between the standard reason and remark codes and the shared system internal codes provided to the contractors and make any deactivated standard code unavailable for use by the contractor by July 5, ,, ED shall make necessary programming changes so that deactivated reason and remark codes are allowed in derivative messages after the deactivation implementation date per this or as posted on the WP Web site when: E X X X X X V X X X X X X X X W ED edicare is not primary; The OB claims is received after the deactivation effective date; and The date in DTP03 in Loop 2430 or 2330B in OB 837 transaction is less than the deactivation effective date as posted on the WP Web site ,, and V shall make necessary programming changes so that deactivated reason and remark codes are allowed even after the deactivation implementation date in a eversal and orrection situation when a value of 22 in LP02 identifies the claim to be a corrected claim V shall update the edicare emit Easy Print (EP) software by July 5, This update shall be based on the and lists as posted on WP Web site on arch 8, Note: This update is provided in a separate file since pril, X X X X

9 Number equirement esponsibility (place an X in each applicable column) / D hared- ystem OT E B E aintainers /B s, carriers, and ED for DE s shall notify the users that the code update file must be downloaded to be used in conjunction with the updated EP software. E V W X X ED. POVDE EDUTON TBLE Number equirement esponsibility (place an X in each applicable column) / D hared- ystem OT E B E aintainers provider education article related to this instruction will be available at shortly after the is released. You will receive notification of the article release via the established "LN atters" listserv. ontractors shall post this article, or a direct link to this article, on their Web site and include information about it in a listserv message within one week of the availability of the provider education article. n addition, the provider education article shall be included in your next regularly scheduled bulletin. ontractors are free to supplement LN atters articles with localized information that would benefit their provider community in billing and administering the edicare program correctly. E V W X X X ED

10 V. UPPOTNG NOTON ection : or any recommendations and supporting information associated with listed requirements, use the box below: X-ef equirement Number ecommendations or other supporting information: N/ ection B: or all other recommendations and supporting information, use this space: N/ V. ONTT Pre-mplementation ontact(s): umita en at sumita.sen@cms.hhs.gov or Pre-mplementation ontact(s): ngie Bartlett at angie.bartlett@cms.hhs.gov or Post-mplementation ontact(s): ontact your ontracting Officer s Technical epresentative (OT) or ontractor anager, as applicable. V. UNDNG ection : or iscal ntermediaries (s), egional ome ealth ntermediaries (s), and/or arriers: No additional funding will be provided by ; contractor activities are to be carried out within their operating budgets. ection B: or edicare dministrative ontractors (s): The edicare dministrative ontractor is hereby advised that this constitutes technical direction as defined in your contract. does not construe this as a change to the tatement of Work. The contractor is not obligated to incur costs in excess of the amounts allotted in your contract unless and until specifically authorized by the contracting officer. f the contractor considers anything provided, as described above, to be outside the current scope of work, the contractor shall withhold performance on the part(s) in question and immediately notify the contracting officer, in writing or by , and request formal directions regarding continued performance requirements.

11 laim djustment eason odes (ev.2194, ssued: , Effective: , mplementation: ) laim djustment eason odes (s) are used on the edicare electronic and paper remittance advice, and oordination of Benefit (OB) claim transaction. The laim djustment tatus ode aintenance ommittee maintains this code set. new code may not be added and the indicated wording may not be modified without the approval of this committee. These codes were developed for use by all U.. health payers. s a result, they are generic, and there are a number of codes that do not apply to edicare. This code set is updated three times a year. edicare contractors shall use only the most current valid codes in E, P, and OB claim transactions. ny reference to procedures or services mentioned in the reason codes apply equally to products, drugs, supplies or equipment. eferences to prescriptions also include certificates of medical necessity (Ns). These reason codes explain the reasons for any financial adjustments, such as denials, reductions or increases in payment. These codes may be used at the service or claim level, as appropriate. urrent 835 structure only allows one reason code to explain any one specific adjustment amount. There are basic criteria that the laim djustment tatus ode aintenance ommittee considers when evaluating requests for new codes: an the information be conveyed by the use or modification of an existing reason code? s the information available elsewhere in the 835? Will the addition of the new reason code make any significant difference in the action taken by the provider who receives the message? The list of laim djustment eason odes can be found at: The updated list is published three times a year after the committee meets before the N X12 trimester meeting in the months of January/ebruary, June, and eptember/october. edicare contractors must make sure that they are using the latest approved claim adjustment reason codes in E, P and OB transaction by implementing necessary code changes as instructed in ecurring Update Notifications or any other instruction or downloading the list after each update. The hared ystem aintainers shall make sure that a deactivated code (either reason or remark) is not allowed to be used in any original business message, but is allowed and processed when reported in derivative business messages. ode deactivation may be implemented prior to the stop date posted at the WP Web site to follow edicare release schedule. s shall implement deactivation on the earlier date if the implementation date in the recurring code update is different than the stop date posted at the WP Web site.

12 ontractors are responsible for entering claim adjustment reason code updates to their shared system and entry of parameters for shared system use to determine how and when particular codes are to be reported in remittance advice and coordination of benefits transactions. n most cases, reason and remark codes reported in remittance advice transactions are mapped to alternate codes used by a shared system. These shared system codes may exceed the number of the reason and remark codes approved for reporting in a remittance advice transaction. particular 835 reason or remark code might be mapped to one or more shared system codes, or vice versa, making it difficult for a contractor to determine each of the internal codes that may be impacted by remark or reason code modification, retirement or addition. hared systems must provide a crosswalk between the reason and remark codes to the shared system internal codes so that a contractor can easily locate and update each internal code that may be impacted by a remittance advice reason/remark code change to eliminate the need for lengthy and error prone manual contractor searches to identify each affected internal code. hared systems must also make sure that 5-position remark codes can be accommodated at both the claim and service level for 835 version onwards. The effective date of programming for use of new or modified reason/remark codes applicable to edicare is the earlier of the date specified in the contractor manual transmittal or recurring code update change request or the edicare laims Processing anual transmittal that implemented a policy change that led to the issuance of the new or modified code. ontractors must notify providers of the new and/or modified codes and their meanings in a provider bulletin or other instructional release prior to issuance of remittance advice transactions that include these changes emittance dvice emark odes (ev. 2194, ssued: , Effective: , mplementation: ) emittance dvice emark odes () are used in a remittance advice to further explain an adjustment or relay informational messages that cannot be expressed with a claim adjustment reason code. emark codes are maintained by, but may be used by any health plan when they apply. edicare contractors must report any remark code(s) that apply, subject to capacity limits in the standard. ost remark codes were initially separated into service level (line level) and claim level categories. ome of the same messages were included in both categories. To simplify remark code use, these categories have been eliminated. ny remark code may now be reported at the service or the claim level, as applicable, in any electronic or paper remittance advice version. emark codes that apply at the service line level must be reported in the X12N 835 LQ segment. emark codes that apply to an entire claim must be reported in either an X12N 835 (inpatient) or O (non-inpatient) segment, as applicable. lthough the G allows up to 5 remark codes to be reported in the O/ segment and up to 99 remark codes in the LQ segment, system limitation may restrict how many codes edicare contractors can actually report.

13 The remark code list is updated three times a year, in the months following X12N trimester meetings. edicare contractors must use the latest approved remark codes as included in the regular code ecurring Update Notifications or in any other instructions or downloading the list after each update in their 835 version and subsequent versions, the corresponding standard paper remittance advice, and the X12N oordination of Benefit transaction (outbound 837). ontractor and shared system changes must be made, as necessary, as part of a routine release to reflect changes such as retirement of previously used codes or newly created codes that may impact edicare.