Brief Issue Description
This guidance document outlines the challenges states have faced with adjustment indicators reported on financial transactions in Transformed Medicaid Statistical Information System (T-MSIS) records and provides clarification for properly reporting adjustments. The guidance in this document addresses the reporting of ADJUSTMENT-IND and LINE-ADJUSTMENT-IND on financial transactions such as beneficiary/enrollee-specific capitation payments, premium payments, or supplemental payments administered by a financial system that does not adjust transactions in sequence like a typical fee-for-service (FFS) claim would be adjusted.
In June 2017, CMS released the guidance document, “CMS Guidance: Clarification on Reporting Adjustment Indicator (ADJUSTMENT-IND)”. The guidance clarified which valid values should be used in the ADJUSTMENT-IND1 and LINE-ADJUSTMENT-IND2 fields as well as the methodology for reporting adjustment indicators on service tracking claims (payments that cannot be directly attributable to a single beneficiary).
Adjustment indicators are critical to the analysis of T-MSIS utilization and payment data, and all states are expected to report adjustment information accurately. Proper reporting of adjustment indicators will help ensure that utilization and payment data captured in T-MSIS are accurately interpreted. Adjustment indicator and line adjustment indicator are now part of the primary key – the combination of values that make a record segment unique in T-MSIS - for claim headers and claim lines. A valid adjustment indicator and line adjustment indicator are required on all T-MSIS claims and claim lines, even for financial transactions. Using invalid ADJUSTMENT-IND values will result in those claim and encounter records being excluded from analysis.
The T-MSIS Data Dictionary, Appendix A list of valid values for ADJUSTMENT-IND and LINE-ADJUSTMENT-IND include indicator values that identify adjustments for reporting claims, encounters and service tracking claims. Three of these (0, 1, and 4) apply only to FFS claims, managed care encounters, capitation payments, and supplemental payments.3 The other two (5 and 6) apply only to service-tracking claims.4
Some states have faced challenges when reporting the adjustment indicator values on financial transactions to T-MSIS. For example, some states do not adjudicate beneficiary/enrollee-specific capitation payments and adjustments to capitation payments in the same way that a typical FFS claim is paid and adjusted. As noted above, the ADJUSTMENT-IND and LINE-ADJUSTMENT-IND values ‘0’ (Original), ‘1’ (Void), and ‘4’ (Replacement) are intended to be used for reporting adjustments, including those processed only as financial transactions. However, if a state’s financial transactions are not adjusted in sequence like a typical FFS claim with matching ICNs on the original transaction and subsequent adjustments and where the previous version of the claim is entirely voided or replaced, then ADJUSTMENT-IND and LINE-ADJUSTMENT-IND values ‘1’ (Void) and ‘4’ (Replacement) may never be applicable for those financial transactions. In that case a state may need to report a negative payment amount on an original claim when a beneficiary/enrollee-specific credit financial transaction is processed. Negative payment amounts are not typically expected to be found on original claims.
The guidance here provides clarification on reporting adjustment indicator values for beneficiary-specific financial transactions that are not adjudicated like typical FFS claims.
Payments Adjudicated and Adjusted Like FFS Claims
Many states currently use a similar process to adjudicate both FFS claims and other payments. It is expected that these payments would be reported with ADJUSTMENT-IND and LINE-ADJUSTMENT-IND values of “0”, “1”, and “4”. Additionally, these types of payment adjustments should link to the payment it is adjusting through ICN-ORIG and ICN-ADJ. The most recent adjustment completely voids or replaces any previous versions of the claim. For additional information on reporting adjustment indicators, please refer to the Appendix P.01 of the T-MSIS Data Guide.
Payments Processed as Financial Transactions
For states that process payments not in sequence with related ICNs, and without one transaction being completely voided or replaced by the next, ADJUSTMENT-IND and LINE-ADJUSTMENT-IND values ‘0’ (Original) may be the only applicable value to report. While negative payment amounts are not typically expected to be found on original claims, if a financial transaction is processed with an amount credited (recouped) from the provider or managed care plan and it is not directly related by ICN to any other transaction it must be reported as an original claim with a negative payment amount.
 TYPE-OF-CLAIM values 1 (Medicaid FFS Claim), 2 (Medicaid Capitation Payment), 3 (Medicaid Managed Care Encounter), 5 (Medicaid Supplemental Payment), A (S-CHIP FFS Claim), B (S-CHIP Capitation Payment), C (S-CHIP Managed Care Encounter), E (S-CHIP Supplemental Payment), U (Other FFS Claim), V (Other Capitation Payment), W (Other Managed Care Encounter), Y (Other Supplemental Payment).