CMS Technical Instructions: Reporting Adjustment Indicator (ADJUSTMENT-IND) for Financial Transactions

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 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-IND and LINE-ADJUSTMENT-IND fields as well as the methodology for reporting adjustment indicators on aggregate-level 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 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 list of valid values for ADJUSTMENT-IND and LINE-ADJUSTMENT-IND include indicator values that identify adjustments for reporting claims, encounters and aggregate-level payments. Three of these (0, 1, and 4) apply only to FFS claims, managed care encounters, and financial transactions attributable to a single beneficiary such as capitation payments, individual health insurance premium payments, and cost sharing offsets. The other two (5 and 6) apply only to aggregate-level payments.

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 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 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 on the Financial Transactions File (FTX) which is a new file type as of the T-MSIS Data Dictionary V4.

When states report adjustments for financial transactions, it is expected that these payments would be reported with ADJUSTMENT-IND (FTX023, FTX070, FTX111, FTX155, FTX198, FTX363) values of “1”, and “4”. Additionally, these types of payment adjustments should link to the payment it is adjusting through ICN-ORIG or ICN-ADJ. The replacement transaction should also have the same MSIS ID and payer ID as the original transaction being voided or replaced. The most recent adjustment completely voids or replaces any previous versions of the transaction. 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 a value ‘0’ (Original) may be the only applicable value to report. While negative payment amounts are not typically expected to be found on original transactions, if a financial transaction is processed with an amount credited (recouped) from the provider or managed care plan and there is no other transaction directly related by ICN that it is completely voiding or replacing, it must be reported as an original transaction with a negative payment amount..