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SC Administrative Law Court Decisions

Ambu-Star vs. SCDHHS

South Carolina Department of Health and Human Services


South Carolina Department of Health and Human Services




In the above-captioned matter, Ambu-Star appeals the South Carolina Department of Health and Human Services’ (Department or HHS) determination refusing payment on several claims.


Ambu-Star submitted 647 claims totaling $75,514 for ambulance services rendered from July 14, 2005, through February 7, 2006. However, Ambu-Star incorrectly submitted the provider number as ABO222, rather than AB0222. That is, the provider number contained an “O” rather than a numeric zero. Electronic Data Interchange (EDI), which processes Medicaid claims for the Department, verified acceptance for processing by a Form 997. Usually, errors or deficiencies in the claims will generate an Edit Correction Form (ECF). However, because of the nature of the provider error, the claims sat in electronic limbo, neither being paid nor being kicked out for correction. Ambu-Star resubmitted the forms electronically four times at HHS’ recommendation. It was only when a person at EDI manually reviewed the claims in response to Ambu-Star’s queries as to why the claims had not been paid that she identified the typographical error. Ambu-Star then resubmitted the claims with the correct provider number, but it was well beyond the one-year deadline. The hearing officer affirmed the Department’s refusal of payment on the ground that it is the provider’s responsibility to timely insure claims are “clean” to be processed.


Ambu-Star argues that payment should be authorized because its claims were submitted within a reasonable time, usually within a week of when services were rendered, and it initiated follow-up in a timely manner in part because it never received ECFs. In support of its argument that its claims should be considered as timely filed, Ambu-Star relies on the testimony of Shirley Carrington of HHS that providers have a year to fix what’s wrong on the edit correction sheet. Ambu-Star argues that it had one year from the time the ECF was issued in January 2007 to resubmit or to contact HHS to find out why claims remained unpaid. It is undisputed that Ambu-Star contacted HHS within one year of the initial filing to figure out why the claims were not being paid. However, Ambu-Star points to no legal authority and makes no legal argument to support its theory that the claims should be paid. Rather, federal regulations are clear that HHS properly denied payment of the claims as untimely because the claims submitted were not “clean”.

Only clean claims can be processed.

Clean claim means a claim that has no defect or impropriety (including any lack of required substantiating documentation) or particular circumstance requiring special treatment that prevents timely payment from being made on the claim under title XVIII within the time periods specified in sections 1816(c) and 1842(c) of the Act.

42 C.F.R. § 405.902 (eff. May 1, 2005). Under “Timely claims payment,” the regulations clarify:

Clean claim means one that can be processed without obtaining additional information from the provider of the service or from a third party. It includes a claim with errors originating in a State’s claims system.

42 C.F.R. § 447.45(b). Here, the claim could not be processed because additional information in the form of the correct provider number was needed from the provider of the service. Ambu-Star does not dispute that the claim was not “clean”. While Ambu-Star correctly argues that there is no applicable Medicaid Provider manual for Ambulances because the prior version is undergoing revision, other provider manuals are instructive and closely track the federal regulations. The Home Health Services Provider Manual at 1-22 provides:

In accordance with federal and state laws and regulations, it is required that only “clean” claims and related ECF’s received and entered into the claims processing system within one year from the date of service (or date of discharge for hospital claims) be considered for payment. A “clean” claim is error-free and can be processed without obtaining additional information from the provider or from another third party. This time limit will not be extended on the basis of third-party liability requirements.

In a similar vein, the Physician’s Provider Manual states: “It is the provider’s responsibility to follow up on all claims in a timely manner to ensure that all claims and ECF’s are filed and corrected within Medicaid policy limits.”

By federal regulation, HHS “must require providers to submit all claims no later than 12 months from the date of service.” 42 C.F.R. § 447.45(d)(1). If the claim is untimely submitted, it cannot be paid. This is not only for the benefit of providers to ensure prompt payment by the agency but also for the benefit of the agency and the federal Medicaid funding that HHS in turn relies on to ensure that old claims will not create an administrative backlog. Further, items (3) and (4) of 42 C.F.R. § 447.45 (d) require the following:

The agency must pay 99 percent of all clean claims from practitioners, who are in individual or group practice or who practice in shared health facilities, within 90 days of the date of receipt.

The agency must pay all other claims within 12 months of the date of receipt, except in [limited] circumstances. . . .

42 C.F.R. § 447.45(d)(3) & (4). That section goes on to provide that the federal Medicaid Administrator may waive the time limits of subsection (3), although not of subsection (4), upon showing of a high volume of unclean claims and due diligence to process them. Thus, the one-year time limit for payment is not waivable. HHS’ failure to comply with the one-year deadline for payment of claims would be serious, as it would jeopardize the state’s federal Medicaid funding.

This court’s research disclosed only one case on point, which was not officially reported, indicating the law is well settled in this area that agencies may not pay claims outside the one-year deadline. In St. Therese Medical Center v. Illinois, the court held that a provider’s clean claim able to be processed must be received no later than twelve months from the date services were provided to be eligible for payment, whether it be an initial or resubmitted claim following prior rejection. 45 Ill. Ct. Cl. 370, 1992 WL 121477753 (Ill. Ct. Cl. 1992). “Respondent risks its entitlement to Federal Medicaid funding . . . if compliance with this one-year deadline is not routinely enforced.” Id. at 2. “Accordingly, this Court has consistently determined that a vendor-claimant’s claim does not merit an award, if the vendor has failed to submit a ‘clean claim’ invoice. . . . within one year following the date on which the charged services were rendered.” Id. at 2.

It is clearly the provider’s duty pursuant to federal regulations to ensure clean claims are submitted within twelve months of the date of service, regardless of whether the usual ECF issued. Ambu-Star does not dispute that the clean claims were resubmitted over one year from the dates of service. Thus, HHS properly denied payment.


IT IS THEREFORE ORDERED that the Department’s decision is affirmed.



April 15, 2008 JOHN D. GEATHERS

Columbia, South Carolina Administrative Law Judge

1205 Pendleton Street, Suite 224

Columbia, South Carolina 29201-3731


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