DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, Maryland   21244-1850   
 
 
CMCS  MMCO  CM Informational Bulletin 
 
Date:  June 7, 2013 
 
From: Cindy Mann, Director 
  Center for Medicaid & CHIP Services (CMCS) 
 
  Melanie Bella, Director 
  Medicare-Medicaid Coordination Office (MMCO) 
 
  Jonathan Blum, Director 
  Center for Medicare (CM) 
 
Subject:  Payment of Medicare Cost Sharing for Qualified Medicare Beneficiaries 
(QMBs) 
 
This  Informational Bulletin provides information for state Medicaid agencies and other interested 
parties regarding the treatment of claims for Medicare cost sharing for Qualified Medicare 
Beneficiaries (QMBs).  The Bulletin also reminds states of the statutory requirement to process 
Medicare cost-sharing claims for QMBs from Medicare-certified providers, and to be able to 
document proper processing of such claims.  This Informational Bulletin is provided as a companion 
to communications on this topic to Medicare providers in the form of a Medicare Learning Network 
Matters article, and a CMCS Informational Bulletin published in 2012, which are available 
at:  http://www.cms.gov/MLNMattersArticles/Downloads/SE1128.pdf;  
and http://www.medicaid.gov/Federal-Policy-Guidance/downloads/CIB-01-06-12.pdf.   
 
State Medicaid agencies have a legal obligation to reimburse providers for any Medicare cost 
sharing that is due for QMBs according to the states CMS-approved Medicare cost-sharing 
payment methodology.  State Medicaid Management Information Systems (MMIS) must process 
all Medicare crossover claims (claims that include primary payment from Medicare) for 
QMBs, including Medicare-adjusted claims that are submitted by Medicaid-enrolled providers, 
even if a service or provider category is not currently recognized in the Medicaid State Plan.  
States must furnish all Medicare-enrolled providers, including out-of-state providers, with a 
means by which they can enroll in the Medicaid program for purposes of having such claims 
processed.   
Statutory Authority for Payment of QMB Cost-Sharing Amounts 
Section 1902(a)(10)(E) of the Social Security Act (hereinafter the Act) directs state Medicaid 
agencies to reimburse providers for QMB cost-sharing amounts [as defined in 1905(p)(3)], 
without regard to whether the costs incurred were for items and services for which medical  assistance is otherwise available under the plan. (emphasis added).  Section 1902(n)(2) of the 
Act does permit the state to limit payment for QMB cost sharing to the amount necessary to 
provide a total payment to the provider (including Medicare, Medicaid, required nominal 
Medicaid copayments, and third party payments) equal to the amount a state would have paid for 
the service under the State Plan.  When the crossover claim is for Medicare-covered services that 
are not included in the Medicaid State Plan, the state is still liable to pay the crossover claim, but 
may establish reasonable payment limits, approved by CMS, for the service. 
The actual crossover payment made to a provider by Medicaid (plus the QMBs personal liability 
for any nominal copayments under Medicaid, if applicable) is considered payment-in-full for 
Medicare deductibles and coinsurance.  
 
Impermissible Balance Billing of QMBs 
 
Providers are strictly prohibited under 1902(n)(3) of the Act from seeking to collect any 
additional amount from a QMB for Medicare deductibles or coinsurance (other than nominal 
Medicaid copayments, as mentioned above), even if the Medicaid programs payment is less 
than the total amount of the Medicare deductibles and coinsurance. 
Possible Causes of Impermissible Balance Billing of QMBs 
CMS believes that some instances of impermissible balance billing of beneficiaries occur when 
Medicare-certified providers are unable to obtain reimbursement or an 835 Health Care Payment 
and Remittance Advice (RA) for QMB cost-sharing claims from the state Medicaid program. 
Repeated reports of QMB crossover claims not being processed in state MMIS systems prompt 
us to remind states of their claim processing obligations under federal law.  We are aware of 
situations typically occurring when: 
 
  the Medicare-certified provider submitting the claim is not enrolled with the state 
Medicaid agency; or 
 
  the MMIS does not recognize the provider identifier; or 
 
  the service is covered by Medicare, but not included in the Medicaid State Plan; or 
 
  the provider type is recognized by Medicare, but not by the state Medicaid program; or   
 
  the service is provided by an out-of-state provider. 
 
For each of the situations listed above, CMS has received reports that Medicare-certified 
providers may not be  receiving adjudication of their claim for Medicaid liability, or may not be 
receiving subsequent notification through the standard RA, as required under the Health 
Insurance Portability and Accountability Act of 1996 (HIPAA). There may be isolated instances 
of a state MMIS rejecting a QMB crossover claim because the individual provider has been 
suspended from participation in the Medicaid program, but continues as a Medicare-certified 
provider.  Even in this circumstance, the state is required to permit the provider to enroll for the  limited purpose of obtaining adjudication of the QMB cost-sharing amount.  
 
State Medicaid Programs Claims Processing Obligations 
 
All states maintaining a federally-certified MMIS funded under 1903(a)(3) of the Act are 
requiredas an express condition of receiving enhanced federal matching funds for the design, 
development, installation and administration of their MMIS systemsto process Medicare 
crossover claims, including QMB cost sharing, for adjudication of Medicaid cost-sharing 
amounts, including deductibles and coinsurance for Medicare services, and to furnish the 
provider with an RA that explains the states liability or lack thereof.  
 
Specifically, 1903(a)(3)(A)(i) of the Act requires MMIS systems to demonstrate full 
compatibility with the claims processing and information retrieval systems utilized in 
administration of the Medicare program. Instructions contained in CMSs  State Medicaid 
Manual (SMM), Part 11, 11325 reinforce the requirement of the MMIS system to (1) record 
Medicare deductibles and coinsurance paid by the Medicaid program on crossover claims, (2) 
provide a prompt response to all inquiries regarding the status of the crossover claim, and (3) 
issue remittance statements to providers detailing claims and services covered by a given 
payment at the same time as payment, including remittance statements for zero payment 
amounts.  The state must be able to document that it has properly processed all claims for cost-
sharing liability from Medicare-certified providers to demonstrate compliance with 
1902(a)(10)(E) and 1902(n)(1) & (2) of the Act. 
 
Services Not Covered by the Medicaid State Plan 
 
As noted earlier in this Informational Bulletin, a Medicaid agencys obligation to adjudicate and 
reimburse providers for QMB cost sharing exists even if the service or item is not covered by 
Medicaid, irrespective of whether the provider type is recognized in the State Plan and whether 
or not the QMB is eligible for coverage of Medicaid state plan services.  For Full Benefit Dual 
Eligibles who are not eligible as QMBs, a state may elect to limit coverage of Medicare cost 
sharing to only those services also covered in the Medicaid State Plan.  
 
Provider Enrollment 
 
The state may require Medicare-certified providers to execute a Medicaid provider agreement 
and enroll in the states Medicaid program in order to submit claims for reimbursement of QMB 
cost sharing, but the state should have a mechanism to ensure that providers who enroll only for 
that purpose are not included in lists of providers available to other beneficiaries.  Alternately, a 
state may utilize a simplified, limited-purpose enrollment process for Medicare providers seeking 
to enroll in Medicaid for the sole purpose of claiming Medicare cost-sharing reimbursement 
while in compliance with the provider screening and enrollment requirements included in the 
CMCS Informational Bulletin issued December 23, 2011 (http://www.medicaid.gov/Federal-
Policy-Guidance/downloads/CIB-12-23-11.pdf).  As noted above, however, regardless of the 
specific enrollment mechanism chosen, states must enable all Medicare-enrolled providers, 
including those who are out-of-state, some mechanism by which they can get the state to process 
their Medicare crossover claims, including claims for QMB cost sharing.   
Summary   
 
Therefore, in circumstances where a provider has submitted a claim to Medicaid for processing 
in accordance with the timely filing provisions of 42 CFR 424.44; and the provider has 
executed the necessary provider agreement according to a states procedures for provider 
enrollment, the state must process the claim in accordance with the timely claims processing 
provisions of 42 CFR 447.45 and must issue the provider an RA for those claims as required by 
the SMM.  
 
CMS Technical Assistance Is Available 
 
CMS will provide technical assistance to states in: 
 
  understanding state Medicaid agency liability for Medicare cost sharing; 
 
  modifying or enhancing the MMIS to permit proper processing of QMB crossover 
claims; and  
 
  enrolling providers for the limited purpose of processing Medicare cost-sharing 
crossover information, or developing alternative methods to identify these Medicare 
providers in the MMIS.   
 
States should contact the CMS Regional Office to request technical assistance.    
 
For further information concerning state Medicaid agency liability for Medicare cost sharing, 
please contact Nancy Dieter, Technical Director for Coordination of Benefits and Third Party 
Liability, Division of Integrated Health Systems, at 410-786-7219 or Nancy.Dieter@cms.hhs.gov.  
For further information concerning MMIS requirements, please contact your CMS Regional Office 
or George Patterson, Health Insurance Specialist, Division of State Systems, at 410-786-4609 
or George.Patterson@cms.hhs.gov.