Clarification of Negative Reimbursement

Published 04/23/2020

Negative reimbursement happens when the beneficiary cost sharing, such as coinsurance and/or deductible, exceeds the reimbursement due to the provider. Medicare Administrative Contractors (MACs) are instructed to withhold payments if the Medicare deductible/coinsurance is more than the reimbursement rate. For example, if the set deductible for an inpatient stay is $100 and the reimbursement for the stay is $95, Medicare will show a negative $5 for the reimbursement amount.

Further examples are listed below; this is not an all-inclusive list.

Inpatient Prospective Payment System (PPS) Services (only full days utilized)

A negative payment amount may occur in two situations:

  1. When a beneficiary is charged the full Medicare deductible during a short inpatient stay and the deductible exceeds the amount Medicare pays; or,
  2. When a beneficiary is charged a coinsurance amount during a long stay and the coinsurance amount plus deductible exceeds the amount Medicare pays

For a relatively low weight diagnosis-related group (DRG), the deductible plus coinsurance can exceed the Medicare DRG payment amount. Medicare records the payment as a negative number on the claim and deducts the amount from the provider payment at the time it is sent. The beneficiary does not receive the excess.

The hospital may charge the beneficiary or other person for applicable deductible and coinsurance amounts. The deductible is satisfied only by charges for covered services. The Part A MAC deducts the deductible and coinsurance first from the PPS payment. Where the deductible exceeds the PPS amount, the excess will be applied to a subsequent payment to the hospital.

Calculation Example

Description
Amount
DRG reimbursement
$851.58
Part A hospital stay deductible (2018) applied
-$1340.00
Medicare reimbursement
-$488.42

Reminder: The inpatient deductible for Part A is met per benefit period. The patient begins a new benefit period when he or she has not been in an inpatient facility for 60 consecutive days. If the patient is readmitted to a facility within 60 days of a discharge, he or she is considered to be under the same benefit period or spell of illness and a new deductible does not apply.

Skilled Nursing Facility (SNF)
In the SNF inpatient setting, negative reimbursements are encountered any time the cost of the stay is greater than the Patient Driven Payment Model (PDPM) or Resource Utilization Group (RUG) rate and the billed amount is applied to the patient’s Medicare coinsurance. The negative reimbursement rule also applies to partial Denial of Payment for New Admission (DPNA) claims.

Example

 RUG/PDPM
$384.00
 Total coinsurance amount (4 days) 2018 – $167.50 x 4 =
$670.00
 Medicare reimbursement
-$286.00

Rural Health Clinics (RHC)
For Rural Health Clinics (RHCs), negative reimbursement is encountered when the cost of the visit is greater than the provider encounter rate and the billed amount is applied to the patient's Medicare deductible.

Example

 Total billed amount
$115.00
 Provider all-inclusive reimbursement rate
$75.00
 Amount applied to deductible
$115.00
 Beneficiary's responsibility
$115.00
 Medicare reimbursement
-$40.00

Outpatient Services
Under Outpatient PPS, a negative reimbursement is encountered when the Ambulatory Payment Classification (APC) amount is applied to the patient’s Medicare deductible and/or coinsurance.

Example

 Total Charges (subject to deductible/coinsurance)
$180.00
 OPPS (Outpatient Prospective Payment System) amount
$180.00
 Part B Deductible (2018) (not met)
$183.00
 Part B Coinsurance amount
$36.00
 Medicare reimbursement
-$39.00

The patient’s responsibility is limited to the amounts shown on the remittance advice under the deductible, coinsurance and noncovered charge fields. The negative amount shown in the reimbursement field must never be billed to the patient in addition to the amounts in the deductible, coinsurance and noncovered charge fields.