Understanding Medicare payment floor

Payment Floor Standards

The “payment floor” establishes a waiting period during which time the contractor may not pay, issue, mail, or otherwise finalize the initial determination on a made.

. The “payment floor date” is the earliest day after receipt of the clean claim that payment may be The payment floor date is determined by counting the number of days since the day the claim was received, i.e., the count begins the day after the day of receipt.

There are different waiting periods, and thus different payment floor dates, for electronic claims and paper claims. The waiting periods are 13 days for electronic claims and 26 days for paper claims. For the purpose of implementing the payment floor, the following definitions apply:

An “electronic claim” is a claim submitted via central processing unit (CPU) to CPU transmission, tape, direct data entry, direct wire, or personal computer upload or download. A claim that is submitted via digital FAX/OCR, diskette, or touch-tone telephone is not considered as an electronic claim.

A “paper claim” is submitted and received on paper, including fax print-outs. This also includes a claim that the contractor receives on paper and then reads electronically with OCR technology.

Also, for the purpose of implementing the payment floor, effective 7/1/04 and for the duration of the HIPAA contingency plan implementation, an electronic claim that does not conform to the requirements of the standard implementation guides adopted for national use under HIPAA, including electronic claims submitted electronically using pre-HIPAA formats supported by Medicare, is considered to be a paper claim.


Based on the waiting periods, the payment floor dates are as follows:

Claim Receipt Date                                     Payment Floor Date


10-01-93 through 6/30/04 14th day for EMC 27th day for paper claims

07-01-04 and later 14th day for HIPAA-compliant EMC  27th day for paper and non-HIPAA EMC

01/01/2006 and later 29th day for paper



Except as noted below, the payment floor applies to all claims. The payment floor does not apply to: “no-payment claims, RAPs submitted by Home Health Agencies, and claims for PIP payments.

NOTE: The basis for treating a non-HIPAA-compliant electronic claim as a paper claim for the purpose of determining the applicable payment floor is as follows: Effective October 16, 2003, HIPAA requires that claims submitted to Medicare electronically comply with standard claim implementation guides adopted for national use under HIPAA. A claim submitted via direct data entry (DDE), if DDE is supported by the contractor is considered to be a HIPAA-compliant electronic claim. A contingency plan has been approved to enable claims to continue to be submitted temporarily after October 15, 2003 in a pre-HIPAA electronic format supported by Medicare. Effective July 1, 2004, the Medicare contingency plan is being modified to encourage migration to HIPAA formats. Effective July 1, 2004, for purposes of the payment floor, only those claims

 submitted in a HIPAA-compliant format will be paid as early as the 14th day after the date of receipt. Claims submitted on paper after July 1, 2004 will not be eligible for payment earlier than the 27th day after the date of receipt. All claims subject to the 27-day payment floor, including non-HIPAA electronically submitted claims, are to be reported in the paper claims category for workload reporting purposes. Effective January 1, 2006, paper claims will not be eligible for payment earlier than the 29th day after the date of receipt.

This differentiation in treatment of HIPAA-compliant and non-HIPAA-compliant electronic claims does not apply to Contractor Performance Evaluation (CPE) reviews of carriers and FIs conducted by CMS. For CPE purposes, carriers and FIs must continue to process the CPE specified percentage of clean paper and clean electronic (HIPAA or non-HIPAA) claims within the statutorily specified timeframes. Effective for claims received January 1, 2006 and later, clean paper claims will no longer be included in CPE scoring for claims processing timeliness.



Payment floor FAQs

Q: How long is the payment floor waiting period?
A: There are different waiting periods for electronic claims and paper claims. The waiting periods are 13 days for electronic claims and 28 days for paper claims. However, the payment may not be issued until day 14 (electronic) or 29 (paper).
Source: CMS IOM, Pub 100-04, Chapter 1, Section 80.2.1.2

Q: What is the definition of "payment floor?"
A: The “payment floor” is a waiting period during which time the contractor may not pay, issue, mail, or otherwise finalize the initial determination on a clean claim.
Source: CMS IOM, Pub 100-04, Chapter 1, Section 80.2.1.2

Q: What is the definition of a "clean" claim?
A: A “clean” claim is one that does not require the carrier or fiscal intermediary to investigate or develop external to their Medicare operation on a prepayment basis. Clean claims must be filed in the timely filing period.