Revised Beneficiary Liability and Messages Associated with Denials for Claims for Services Furnished to Incarcerated Beneficiaries

Medicare does not pay for services furnished to a beneficiary who has no legal obligation to pay for the service, and no other person or organization has a legal obligation to provide or pay for the service. As such, when claims for services furnished to beneficiaries who are incarcerated are submitted to Medicare, the claims are rejected by the Common Working File (CWF) and denied by the claims processing contractors. CR8488 revises the remittance advice messages and group code used for denials of claims for services furnished to incarcerated beneficiaries. Effective February 24, 2014 MACs will begin using the following new CARC code when denying claims for services furnished to beneficiaries while they are in Federal, State, or local custody:

• CARC: 258 – Claim/service is not covered when patient is in custody or incarcerated. Appropriate Federal, State or Local authority may cover this claim/service.

• RARC: N103 – “Medicare records indicate this patient was a prisoner or in custody of a Federal, State, or local authority when the service was rendered. This payer does not cover items and services furnished to an individual while he or she is in custody under a penal statute or rule, unless under State or local law, the individual is personally liable for the cost of his or her health care while in custody and the State or local government pursues the collection of such debt in the same way and with the same vigor as the collection of its other debts.”

• Group Code: OA – Other Adjustment