CMS 838 Credit Balance Report: A Provider’s Guide to Medicare Reimbursement Compliance

Understanding the Medicare Credit Balance Report (CMS-838)

For healthcare providers participating in the Medicare program, accurate financial reporting and compliance are paramount. One critical aspect of this is managing and reporting Medicare credit balances through the CMS-838 form. This comprehensive guide details the essential requirements, processes, and best practices for completing the Medicare Credit Balance Report, ensuring your facility maintains compliance with Medicare reimbursement rules.

Table of Contents

• What is a Medicare Credit Balance?
• Why is the CMS-838 Required?
• Medicare Credit Balance Reporting Requirements
  • When to Submit CMS-838
  • Completing the CMS-838 Certification Page
  • Step-by-Step Guide to Completing the CMS-838 Detail Page
• Examples of Medicare Credit Balances
• Payment of Amounts Owed Medicare
• Records Supporting CMS-838 Data
• Exception for Low Utilization Providers
• Compliance with MSP Regulations
• Key Takeaways & Compliance Checklist

What is a Medicare Credit Balance?

A Medicare credit balance represents an improper or excess payment made to a provider due to patient billing or claims processing errors. Essentially, it’s an amount determined to be refundable to Medicare. While these are typically reflected as a “credit” in a provider’s accounting records (patient accounts receivable), Medicare credit balances encompass any monies due to the program, regardless of their classification in a provider’s internal systems.

Even if a provider maintains credit balance accounts for a stipulated period (e.g., 90 days) and then transfers or writes them off to a holding account, this action does not absolve the provider of their liability to Medicare. In such cases, providers are still responsible for identifying and repaying all monies due to the Medicare program.

Why is the CMS-838 Required?

The legal framework for Medicare credit balance reporting is established by the Social Security Act. Specifically, sections 1815(a) and 1833(e) authorize the Secretary to request information from participating providers necessary for proper Medicare program administration.

Furthermore, section 1866(a)(1)(C) of the Act mandates that participating providers furnish information about payments received and refund any incorrectly paid monies. In adherence to these provisions, all providers in the Medicare program must complete a Medicare Credit Balance Report (CMS-838) to ensure timely repayment of funds owed to Medicare. The CMS-838 is a vital tool for monitoring the identification and recovery of these credit balances.

Medicare Credit Balance Reporting Requirements

When to Submit CMS-838

• Providers must submit a completed CMS-838 to their fiscal intermediary (FI) within 30 days after the close of each calendar quarter.
• The report should include all Medicare credit balances identified in your accounting records (including transfer, holding, or other general accounts used to accumulate credit balance funds) as of the last day of the reporting quarter.
• You are responsible for reporting and repaying all improper or excess payments received since your participation in the Medicare program began.
• Once a credit balance is identified and reported on the CMS-838, it should not be reported on subsequent CMS-838 reports.

Completing the CMS-838 Certification Page

The CMS-838 form comprises a certification page and a detail page. The certification page must be signed and dated by an officer (such as the Chief Financial Officer or Chief Executive Officer) or the Administrator of your facility. Even if your records show no Medicare credit balances for the reporting quarter, a signed certification page must still be submitted to your FI as an attestation of this fact. An electronic or hard copy of the certification page is available from your FI.

Completing the CMS-838 Detail Page: Overview

The detail page requires specific, claim-by-claim information for each credit balance. While the standard form provides space for 17 claims, you may add additional lines or reproduce the form as many times as necessary. An electronic or hard copy of the detail page is also available from your FI. It is important to segregate Part A credit balances from Part B credit balances by reporting them on separate detail pages.

• Note: Part B reporting pertains only to services you provide that are billed to your FI, not to physician and supplier services billed to carriers.

Begin by providing the following header information on each detail page:

• The full name of the facility.
• The facility’s provider number. If dedicated units within the facility have multiple provider numbers (e.g., psychiatric, physical medicine and rehabilitation), a separate report must be completed for each.
• The month, day, and year of the reporting quarter (e.g., 12/31/02).
• An “A” if the page(s) reflect Medicare Part A credit balances, or a “B” for Part B credit balances.
• The current detail page number and the total number of pages forwarded, excluding the certification page (e.g., “Page 1 of 3”).
• The name and telephone number of the individual who can be contacted regarding the credit balance data.

Step-by-Step Guide to Completing the CMS-838 Detail Page

When a credit balance results from a duplicate Medicare primary payment, report data pertaining to the most recently paid claim. Complete the data fields for each Medicare credit balance as follows:

1. Column 1 – Beneficiary Name: Enter the Medicare Beneficiary’s last name and first initial (e.g., Doe, J.).
2. Column 2 – Medicare HICN: Provide the Medicare Health Insurance Claim Number (HICN) of the Beneficiary.
3. Column 3 – Medicare ICN: Input the multiple-digit Internal Control Number (ICN) assigned by Medicare when the claim was processed.
4. Column 4 – Type of Bill: Enter the 3-digit number explaining the type of bill (e.g., 111 – inpatient, 131 – outpatient, 831 – same day surgery). Refer to the **Uniform Billing instructions** for specific codes.
5. Columns 5/6 – Admission/Service Dates: Numerically indicate the admission (From) and discharge (Through) date (e.g., 01/01/02) for inpatient claims, or the “From” and “Through” dates (date services were rendered) for outpatient services.
6. Column 7 – Claim Paid Date: Enter the month, day, and year the claim was paid (e.g., 01/01/02). If the credit balance is due to a duplicate Medicare payment, ensure the paid date and ICN correspond to the most recent payment.
7. Column 8 – Cost Reporting Period: Enter “O” if the claim is for an open Medicare cost reporting period (NPR not yet issued). Enter “C” if the claim pertains to a closed cost reporting period (do not consider a cost report open if reopened for a specific issue).
8. Column 9 – Credit Balance Amount: State the amount of the Medicare credit balance determined from your patient/accounting records.
9. Column 10 – Repayment Amount: Enter the amount of the Medicare credit balance (from column 9) being repaid with the submission of this report.
10. Column 11 – Repayment Method:
    • “C” when submitting a check with the CMS-838.
    • “A” if a hard copy claim adjustment (e.g., adjustment bill in **UB-04 format**) is submitted with the CMS-838.
    • “Z” if payment is a combination of check and adjustment bill.
    • “X” if an adjustment bill has already been submitted electronically or by hard copy.
11. Column 12 – Outstanding Balance: Show the remaining Medicare credit balance (Column 9 minus Column 10). Enter “0” if full payment was made or an adjustment bill was previously submitted.
12. Column 13 – Reason for Credit Balance:
    • “1” for duplicate Medicare payments.
    • “2” for a primary payment by another insurer.
    • “3” for “other reasons.” Provide an explanation on the detail page for each credit balance marked with a “3.”
13. Column 14 – Value Code (Primary Payer): (Complete only if the credit balance was caused by a payment when Medicare was not the primary payer.) Enter the appropriate two-digit code. If multiple codes apply, use the code applicable to the payer with the largest liability. Refer to **Value Code descriptions** for details.
    • 12 – Working Aged
    • 13 – End Stage Renal Disease
    • 14 – Auto/No Fault
    • 15 – Workers’ Compensation
    • 16 – Other Government Program
    • 41 – Black Lung
    • 42 – Department of Veterans Affairs (VA)
    • 43 – Disability
    • 44 – Conditional Payment
    • 47 – Liability
14. Column 15 – Primary Insurer Details: Provide the name and billing address of the primary insurer identified in column 14.

Note: Once a credit balance is reported on the CMS-838, it should not be reported on a subsequent period report.

Examples of Medicare Credit Balances

Medicare credit balances can arise from various scenarios. Here are common examples to help providers identify them in their records:

• Duplicate Payments: A provider is paid twice for the same service, either by Medicare directly (e.g., system error) or by Medicare and another insurer (e.g., coordination of benefits issue where Medicare paid as primary when it shouldn’t have).
• Services Not Performed or Not Covered: Payment was received for services that were planned but ultimately not rendered (e.g., patient cancelled a procedure after the claim was submitted and processed) or for services that are explicitly not covered by Medicare policies.
• Deductible/Coinsurance Errors: Overpayments occur due to incorrect calculation of the beneficiary’s deductible and/or coinsurance amounts, leading to Medicare paying more than its due share.
• Outpatient Services in Inpatient Claims: A hospital bills and receives payment for outpatient services that were subsequently included as part of a beneficiary’s inpatient claim, resulting in duplicate payment for the same care components.

It’s important to distinguish that proper payments made by Medicare in excess of a provider’s charges, such as DRG payments to hospitals under the Medicare prospective payment system, are generally not considered credit balances for the purpose of the CMS-838.

Payment of Amounts Owed Medicare

Providers are required to pay all amounts owed to Medicare (as identified in column 9 of the report) at the time the credit balance report is submitted. Payment can be made via check or by submitting an adjustment bill.

• If paying by check, it must be accompanied by a separate adjustment bill (electronic or hard copy) for all individual credit balances that pertain to open cost reporting periods. Your FI will ensure that monies are not collected twice.
• The detail information on the CMS-838 will not be accepted by the FI as a substitute for an adjustment bill.
• Claim adjustments, whether for payment or in connection with a check, must be submitted as adjustment bills. If an adjustment was submitted electronically, this must be indicated on the CMS-838 (refer to instructions for column 11).
• Exception for MSP Credit Balances: Federal regulations at 42 CFR 489.20(h) allow providers 60 days from the date of receiving payment from another primary payer to repay Medicare. If an MSP credit balance occurs late in a reporting quarter and the CMS-838 is due before the 60-day period expires, you must include it in the report. However, payment does not have to be made at the time of CMS-838 submission, only within the 60 days allowed. If you are not submitting payment for an MSP credit balance with the CMS-838 due to the 60-day rule, you must furnish the date the credit balance was received to avoid recovery demand letters and accruing interest.
• If the amount owed to Medicare is substantial and immediate repayment would cause financial hardship, providers may contact their FI to discuss an extended repayment schedule.

Records Supporting CMS-838 Data

Providers must develop and maintain thorough documentation demonstrating that each patient record with a credit balance (including those in transfer or holding accounts) was reviewed to determine amounts attributable and refundable to Medicare for the CMS-838 preparation. At a minimum, your procedures should:

• Accurately identify whether the patient is an eligible Medicare beneficiary.
• Clearly identify other liable insurers and the primary payer.
• Strictly adhere to applicable Medicare payment rules and guidelines.
• Ensure that the credit balance is definitively due and refundable to Medicare.

Note: Failure to submit the CMS-838 or maintain adequate supporting documentation can lead to consequences such as a suspension of Medicare payments or an impact on your eligibility to participate in the Medicare program. Your FI will review your documentation during audits and reviews for cost report settlement purposes.

Provider-Based Home Health Agencies (HHAs): Provider-based HHAs must submit their CMS-838 to their Regional Home Health Intermediary, even if it differs from the FI servicing the parent facility.

Exception for Low Utilization Providers

Not all providers are required to submit a CMS-838. An exception exists for facilities with extremely low Medicare utilization. A low utilization provider is specifically defined as a facility that:

• Files a low utilization Medicare cost report as specified in PRM-I, section 2414.4.B, or
• Files less than 25 Medicare claims per year.

If your facility meets these criteria, you may be exempt from the CMS-838 submission requirement.

Compliance with MSP Regulations

Medicare Secondary Payer (MSP) regulations, found at 42 CFR 489.20(h), mandate that providers repay Medicare within 60 days from the date they receive payment from another payer that is primary to Medicare for the same service. Adherence to CMS-838 instructions does not interfere with this 60-day repayment rule.

• You must repay credit balances resulting from MSP payments within the 60-day period.
• If you identify and repay an MSP credit balance within a reporting quarter, according to the 60-day rule, you should not include it on the CMS-838, as it would no longer be reflected in your records as a credit balance.
• However, if an MSP credit balance occurs late in a reporting quarter and the CMS-838 is due prior to the 60-day requirement’s expiration, you must include it in the credit balance report. Payment of this credit balance, however, is still due within the allowed 60 days, not necessarily at the time of CMS-838 submission.

Key Takeaways & Compliance Checklist

Navigating the CMS-838 Credit Balance Report is crucial for maintaining Medicare reimbursement compliance. Use this checklist to ensure your facility meets all obligations:

• Quarterly Submission: Submit the CMS-838 to your FI within 30 days of each calendar quarter-end.
• Comprehensive Reporting: Include all identified Medicare credit balances, regardless of how they are classified in your accounting records or when they occurred.
• Certification Requirement: Always submit a signed certification page, even if you have no credit balances for the quarter.
• Detail Page Accuracy: Complete the detail page accurately, providing claim-by-claim information for each credit balance. Segregate Part A and Part B balances.
• Timely Repayment: Make payments for credit balances at the time of report submission, either by check with an adjustment bill or solely by adjustment bill.
• MSP Exception: Understand the 60-day rule for MSP credit balances regarding repayment timing, even if reported earlier.
• Maintain Documentation: Keep robust records supporting all reported credit balance data for audit purposes.
• Know Your Status: Verify if your facility qualifies as a low utilization provider for exemption.

By diligently following these instructions and proactively managing credit balances, healthcare providers can ensure accurate reporting, timely repayment, and continued compliance with Medicare regulations.

Suggestion for Visual Aid: For enhanced clarity, consider including a sample filled-out CMS-838 form (certification and detail page) with annotations for each field in this section.