Q&A: When Medicare rejects claims that don't have nine-digit ZIP codes

February 5, 2009

Some ZIP codes have more than one Medicare payment locality. These require the four-digit extension for payment to be rendered.

Q: We've been having significant difficulty regarding our ZIP code and Medicare claims. Our claims are routinely returned as "unprocessable," and when we follow up, Medicare indicates it needs the four-digit extension for our ZIP code. Does Medicare always require a nine-digit ZIP code, and if so, when did this begin? We have two offices in different ZIP codes, and claims from the second office are not a problem, nor are we having a problem with any other insurers.

A: The location where you are experiencing the problem probably falls into one of the five-digit ZIP codes that has more than one payment locality. Medicare payments are based on the location where the service is rendered, and the Centers for Medicare & Medicaid Services has identified some ZIP codes that fall into more than one payment locality. Since October 1, 2007, claims generated from these ZIP codes are required to submit the four-digit extension where the service was rendered. Claims for services in areas that do not cross localities can be submitted with just the five-digit ZIP code. You can find a list of the ZIP codes that fall into more than one payment locality by accessing "Change Request 5208" issued by CMS at http://www.cms.hhs.gov/transmittals/downloads/R1193CP.pdf. The problem can be eliminated simply by adding the four-digit extension to the practice information in your system for each location where services are rendered.