Inpatient Prepayment Review Program

Date: December 6, 2022

Attention: Hospital Providers and Inpatient Facilities

Providers should monitor the Texas Children’s Health Plan (TCHP) Provider Portal regularly for alerts and updates associated to the COVID-19 event.  TCHP reserves the right to update and/or change this information without prior notice due to the evolving nature of the COVID-19 event.

Call to action: The purpose of this communication is to address some of the questions we have been receiving related to prepayment claims reviews.  Texas Children’s Health Plan (TCHP) has engaged Optum Health to perform routine prepayment claims reviews.  As a result, providers may be required to submit medical records and itemized billing statements that support the charges billed.

The prepayment claims review will focus on select diagnosis-related group (DRG) and percent of charges inpatient claims. Optum will perform a comparative analysis of itemized billing statements and supporting medical record documentation for appropriateness of charges to verify accurate reimbursement of claims.

Impacted Lines of Business

The prepayment claims review process will apply to DRG claims and percent of charges claims for inpatient services rendered to any TCHP Medicaid (STAR and STAR Kids) or CHIP member.

Guidelines for DRG Reimbursed Claims

• Inpatient, DRG outlier claims, with an expected payable amount equal to or greater than $100,000, will require a medical record and itemized statement be submitted for claim adjudication.
• When a medical record and itemized statement is not submitted with the UB-04 record, Optum will contact the provider to obtain the documentation within 10 days of receipt of the claim. If the required documentation cannot be obtained within 5 days, the outlier portion of the claim will be denied with remark code CO 95 (Plan procedures not followed), and only the DRG base payment will be allowed.
• If a provider receives such a denial, the claim should be filed as a corrected claim, along with the medical record and itemized bill, within 120 days of the outlier denial.  Failure to submit required documentation within 120 days from the DRG base payment, will result in the DRG base payment being recouped and the entire claim being denied with remark code CO 95.
• Optum will conduct a line-item review to determine charges that are appropriately billed once the required documentation is received. Submitted charges found to be inappropriately billed will be denied with CO 97 and M80,and any additional reimbursement will be released within 30 days of receiving the required documentation.

A findings letter will be sent to the provider to the address on record upon completion of the review and adjudication of the claim.

Guidelines for Claims Reimbursed under a Percent of Charge Methodology

• Inpatient claims that are reimbursed under a percent of charge methodology will be reviewed based on a $100,000 charge amount rather than allowed amount.
• When a medical record and itemized statement for a claim is not submitted with the UB-04 record, Optum will contact the provider to obtain the documentation within 10 days of receipt of the claim.  If the required documentation cannot be obtained within 5 days, the entire claim will be denied as CO 252, N26 and M127.
• If a provider receives such a denial, the claim should be filed as a corrected claim, along with the medical record and itemized bill, within 120 days of the denial.
• Optum will conduct a line-item review to determine charges that are appropriately billed once the required documentation is received. Submitted charges found to be inappropriately billed will be denied with CO 97
• A findings letter will be sent to the provider to the address on record upon completion of the review and adjudication of the claim.

How to Submit Medical Records and Itemized Bills

Providers submitting claims that qualify for review are encouraged to submit a medical record and itemized bill as an attachment to the claim to expedite processing or submit the required documents by visiting the HIPAA secure  share file system FacilityDrop.com to electronically provide the complete medical record and itemized statement within 5 days of submitting the claim or may fax the records to the following:

Attn: Optum Health

c/o Texas Children's Health Plan

Fax: (949) 315-7942

How to File an Appeal

Providers may dispute the findings of a prepayment review by filing an appeal directly to Optum.  When Optum sends its initial findings letter, it will include information about how to submit an appeal and what information to include.  Optum will conduct its review of the appeal and send a resolution letter within 30 days from the date of receipt.  Providers can also follow the standard appeal process and file an appeal directly to TCHP.

Next steps for providers: Providers submitting claims that qualify for review are encouraged to submit a medical record and itemized bill as an attachment to the claim to expedite processing. Providers may dispute these reviews by filing an appeal and submitting to Optum at the e mail address referenced in the findings letter transmittal.  

Providers may receive the following codes displayed below on their electronic remittance report (835) and/or paper Provider Remittance with the following messages when additional documentation is required:

• CARC 252 – An attachment/other documentation is required to adjudicate this claim/service.
• RARC N26 – Missing itemized bill/statement
• RARC  M127- Missing patient medical record for this service
• CARC 97-  The benefit for this service is included in the payment/allowance for another service/procedure that has already been adjudicated. Usage: Refer to the 835 Healthcare Policy Identification Segment (loop 2110 Service Payment Information REF), if present.
• RARC M80 - not covered when performed during the same session/date as a previously processed service for the patient.
• CO-95 - Plan procedures not followed.

Providers should share this communication with their staff so they can follow the guidelines as outlined above for timely reimbursement.  

If you have any questions, please email Provider Relations at: providerrelations@texaschildrens.org.

For access to all provider alerts,log into:
www.thecheckup.org or www.texaschildrenshealthplan.org/for-providers.