Medicare Claims Processing Manual
Chapter 30 - Financial Liability Protections
Table of Contents
(Rev. 4197, 01-11-19)
(Rev. 4250, 03-08-19)
Transmittals for Chapter 30
10 - Financial Liability Protections (FLP) Provisions
20 - Limitation On Liability (LOL) Under §1879 Where Medicare Claims Are Denied
20.1 - LOL Coverage Denials to Which the Limitation on Liability Applies
20.2 - Denials When the LOL Provision Does Not Apply
20.2.1 - Categorical Denials
30 - Determining Liability for Disallowed Claims Under §1879
30.1 - Beneficiary’s Knowledge and Liability
30.1.1 - Other Evidence of Knowledge
30.2 - Healthcare Provider or Supplier Knowledge and Liability
30.2.1 - Evidence of Healthcare Provider or Supplier Knowledge
30.2.2 - Medical Record Evidence of Healthcare Provider or Supplier
Knowledge
30.2.3 - Acceptable Standards of Practice
30.3 – The Right to Appeal
30.4 - Fraud, Abuse, Patently Unnecessary Items and Services
40 - Written Notice as Evidence of Knowledge
40.1 - Sources of Written Notice
40.2 - Written Notice Standards
40.2.1 - Other Written Notice Standards
40.2.2 - Written Notice Special Considerations
40.3 - Medical Emergency or Otherwise Under Great Duress Situations
40.4- Emergency Medical Treatment and Active Labor Act (EMTALA)
Situations
50 - Form CMS-R-131 Advance Beneficiary Notice of Noncoverage (ABN)
50.1 - Introduction - General Information
50.2 - General Statutory Authority- Financial Liability Protections Provisions
(FLP) of Title XVIII
50.2.1 - Applicability to Limitation On Liability (LOL)
50.2.2 - Compliance with Limitation on Liability Provisions
50.3 - ABN Scope
50.3.1 - Mandatory ABN Uses
50.3.2 - Voluntary ABN Users
50.4 - Issuance of the ABN
50.4.1 - Issuers of ABNs (Notifiers)
50.4.2 - Recipients of the ABN
50.4.3 - Representatives of Beneficiaries
50.5 - ABN Triggering Events
50.6 - ABN Standards
50.6.1 - Proper Notice Documents
50.6.2 - General Notice Preparation Requirements
50.6.3 - Completing the ABN
50.6.4 - Retention Requirements
50.6.5 - Other Considerations During ABN Completion
50.7 - ABN Delivery Requirements
50.7.1 - Effective Delivery
50.7.2 - Options for Delivery Other Than In Person
50.7.3 - Effects of Lack of Notification, Medicare Review and Claim
Adjudication
50.7.3.1 - Using ABNs for Medical Equipment and Supplies
Claims When Denials Under §1834(a)(17)(B) of the Act
(Prohibition Against Unsolicited Telephone Contacts) Are
Expected
50.7.3.2 - ABNs for Medical Equipment and Supplies Claims
Denied Under §1834(j)(1) of the Act (Because the Supplier Did
Not Meet Supplier Number Requirements)
50.7.3.3 - ABNs for Medical Equipment and Supplies Claims
Denied in Advance Under §1834(a)(15) of the Act - Prior
Authorization Procedures
50.8 - ABN Standards for Upgraded Durable Medical Equipment, Prosthetics,
Orthotics, and Supplies (DMEPOS)
50.9 - ABNs for Denials Under §1834(a)(17)(B) of the Act (Prohibition Against
Unsolicited Telephone Contacts)
50.10 - ABNs for Claims Denied Under §1834(j)(1) of the Act (Supplier Did Not
Meet Supplier Number Requirements)
50.11 - ABNs for Claims Denied in Advance Under §1834(a)(15) of the Act
(When a Request for an Advance Determination of Coverage is Mandatory)
50.11.1 - Situations In Which Advance Coverage Determinations Are
Mandatory
50.11.2 - Situations In Which Advance Coverage Determinations Are
Optional
50.12 - ABNs for Items Listed in a DMEPOS Competitive Bidding Program
50.13 - Collection of Funds and Refunds
50.13.1 - Physicians’ Services Refund Requirements
50.13.2 - DMEPOS Refund Requirements (RR) Provision for Claims for
Medical Equipment and Supplies
50.13.3 - Time Limits and Penalties for Physicians and Suppliers in
Making Refunds
50.13.4 - Supplier’s Right to Recover Resalable Items for Which Refund
Has Been Made
50.14 - CMS Regional Office (RO) Referral Procedures
50.15 - Special Considerations
50.15.1 - Obligation to Bill Medicare
50.15.2 - Emergencies or Urgent Situations/ Ambulance Transport
50.15.3 - Hospice and Comprehensive Outpatient Rehabilitation Facility
(CORF)
50.15.3.1 - Special Issues Associated with the Advanced
Beneficiary Notice (ABN) for Hospice Providers
50.15.3.2 - Special Issues Associated with the Advanced
Beneficiary Notice (ABN) for CORFS
50.15.4 - Home Health Agency Use of the ABN
50.15.5 - Outpatient Therapy Services
60 - Home Health Change of Care Notice (HHCCN), Form CMS-10280
60.1 - Background on the HHCCN
60.2 - Scope of the HHCCN
60.3 - Triggering Events for HHCCN/ Written Notice
60.4 - Completing the HHCCN
60.5 - HHCCN Delivery
70 - Skilled Nursing Facility Advance Beneficiary Notice of Non-coverage (SNF ABN)
70.1 - SNF ABN Standards
70.2 - Situations in Which a SNF ABN Should Be Given
70.3 - Situations in Which a SNF ABN Is Not Needed to Transfer Financial Liability to
the Beneficiary
70.4 - SNF ABN Specific Delivery Issues
70.5 - Special Rules for SNF ABNs
70.6 - Establishing When Beneficiary Is On Notice of Non-coverage
70.6.1 - Source of Beneficiary Notification
80 - Hospital ABNs (Hospital-Issued Notices of Noncoverage - HINN)
100 - Indemnification Procedures for Claims Falling Within the Limitation on Liability
Provision
100.1 - Contractor and Social Security Office (SSO) Responsibility in
Indemnification Claims
100.2 - Conditions for Indemnification
100.3 - Development and Documentation of Indemnification Requests
100.3.1 - Proof of Payment
100.4 - Beneficiary Requests Indemnification, but Had No Financial Interest in
the Claim
100.5 - Questionable Indemnification Requests Procedure
100.6 - Determining the Amount of Indemnification
100.7 - Notifying the Provider, Practitioner, or Supplier
100.8 - Making Payment Under Indemnification
100.9 - Limitation on Liability Determination Does Not Affect Medicare
Exclusion
100.10 - Exhibits
Exhibit 1 - Letter to Provider
Exhibit 2 - Letter to Beneficiary Who Requests Indemnification
Exhibit 3 - Letter to Someone Other Than Beneficiary Who Requests
Indemnification
Exhibit 4 - Letter to Practitioner or Supplier (Noninstitutional Services)
Exhibit 5 - Letter to Beneficiary Who Requests Indemnification
(Noninstitutional Services)
Exhibit 6 - Letter to Someone Other Than Beneficiary Who Requests
Indemnification (Noninstitutional Services)
Exhibit 7 - Statement of Claimant or Other Person
110 - Contractor Instructions for Application of Limitation On Liability
110.1 - Payment Under Limitation on Liability
110.2 - When to Make Limitation on Liability Decisions
110.3 - Preparation of Denial Notices
110.4 - Bill Processing
110.5 - Contractor Review of ABNs
110.5.1 - General Rules
110.5.2 - Situations in Which Contractor Review of ABNs is Indicated
110.5.3 - Other Reasons for Contractor Request for Copies of ABNs
120 - Contractor Specific Instructions for Application of Limitation on Liability
120.1 - Documentation of Notices Regarding Coverage
120.2 - Availability of Coverage Notices to Operating Personnel
120.3 - Applicability of Limitation on Liability Provision to Claims for Outpatient
Physical Therapy Services Furnished by Clinics
120.4 - Limitation on Liability Notices to Beneficiaries From Contractors
120.5 - Contractor Redeterminaions or Reconsiderations in Assignment Cases
Conducted at the Request of Either the Beneficiary or the Assignee
120.5.1 - Guide Paragraphs for Contractors to Use Where §1879 Is
Applicable at Redetermination Level
130 - A/B MAC (A) and (HHH) Specific Instructions for Application of Limitation on
Liability
130.1 - Applicability of the Limitation on Liability Provision to Claims for
Ancillary, Outpatient Provider and Rural Health Clinic Services Payable Under
Part B
130.1.1 - Determining Beneficiary Liability in Claims for Ancillary and
Outpatient Services
130.1.2 - Determining Provider Liability in Claims for Ancillary and
Outpatient Services
130.2 - Prior Hospitalization and Transfer Requirements for SNF Coverage as
Related to Limitation on Liability
130.3 - Application of Limitation on Liability to SNF and Hospital Claims for
Services Furnished in Noncertified or Inappropriately Certified Beds
130.4 - Determining Liability for Services Furnished in a Noncertified SNF or
Hospital Bed
140 - Physician Refund Requirements (RR) Provision for Nonassigned Claims for
Physicians Services Under §1842(l) - Instructions for Contractors and Physicians
140.1 - Services Furnished Before October 1, 1987
140.2 - Services Furnished Beginning October 1, 1987
140.3 - Time Limits for Making Refunds
140.4 - Situations Where a Refund Is Not Required
140.5 - Appeal Rights
140.6 - Processing Initial Denials
140.6.1 - Initial Beneficiary Notices
140.6.2 - Initial Physician Notices
140.7 - Processing Beneficiary Requests for Appeal
140.8 - Processing Physician Requests for Appeal
140.8.1 - Appeal of the Denial or Reduction in Payment
140.8.2 - Beneficiary Given ABN and Agreed to Pay
140.8.3 - Physician Knowledge
140.9 - Guide Paragraphs for Inclusion in Appeal Determination
140.10 - Physician Fails to Make Refund
140.11 - OIG Referral Procedures
140.12 - Imposition of Sanctions
150 - DMEPOS Refund Requirements (RR) Provision for Claims for Medical Equipment
and Supplies under §§1834(a)(18), 1834(j)(4), and 1879(h) - Instructions for Contractors
and Suppliers
150.1 - Definition of Medical Equipment and Supplies
150.1.1 - Unassigned Claims Denied on the Basis of the Prohibition on
Unsolicited Telephone Contacts
150.1.2 - Unassigned Claims Denied on the Basis of Not Being
Reasonable and Necessary
150.1.3 - Unassigned Claims Denied on the Basis of Failure of the
Supplier to Meet Supplier Number Requirements
150.1.4 - Assigned Claims Denied on the Basis of the Prohibition on
Unsolicited Telephone Contacts
150.1.5 - Assigned Claims Denied on the Basis of Failure of the Supplier
to Meet Supplier Number Requirements
150.1.6 - Assigned Claims Denied on the Basis of Not Being Reasonable
and Necessary
150.2 - Items and Services Furnished on an Unassigned Basis on or After January
1, 1995
150.3 - Items and Services Furnished On an Assigned Basis On or After January
1, 1995
150.4 - Time Limits for Making Refunds
150.5 - Supplier Knowledge Standards for Waiver of Refund Requirement
150.5.1 - Knowledge Standards for §1862(a)(1) Denials
150.5.2 - Knowledge Standards for §1834(a)(15) Denials
150.5.2.1 - Denial of Payment in Advance
150.5.2.2 - When a Request for an Advance Determination of
Coverage Is Mandatory
150.5.2.3 - When a Request for an Advance Determination of
Coverage Is Optional
150.5.2.4 - Presumption for Constructive Notice
150.5.2.5 - Presumption When Advance Determination was
Requested
150.5.2.6 - Presumption for Listed Overutilized Items
150.5.2.7 - Presumption for Listed Suppliers
150.5.2.8 - Presumption for Medical Necessity
150.5.2.9 - Presumption About Beneficiary Knowledge
150.5.3 - Knowledge Standards for §1834(a)(17)(B) Denials
150.5.4 - Knowledge Standards for §1834(j)(1) Denials
150.5.5 - Additional Knowledge Standards for All Medical Equipment and
Supplies Denials
150.6 - Advance Beneficiary Notice Standards for Waiver of Refund Requirement
150.7 - Appeal Rights
150.8 - Processing Initial Denials
150.9 - Processing Beneficiary Requests for Appeal
150.10 - Processing Supplier Requests for Appeal
150.10.1 - Appeal of the Denial of Payment
150.10.2 - Beneficiary Given Advance Beneficiary Notice and Agreed to
Pay
150.10.3 - Supplier Knowledge
150.11 - Guide Paragraphs for Inclusion in Appeal Determination
150.12 - Supplier Fails to Make Refund
150.13 - CMS Regional Office (RO) Referral Procedures
150.14 - Imposition of Sanctions
150.15 - Supplier’s Right to Recover Resaleable Items for Which Refund Has
Been Made
200 - Expedited Review Process for Hospital Inpatients in Original Medicare
200.1- Scope of the Instructions
200.2 - Special Considerations
200.3 - Notifying Beneficiaries of their Right to an Expedited Review
200.3.1 - Delivery of the Important Message from Medicare
200.3.2 - The Follow-Up Copy of the Signed Important Message from
Medicare
200.4 - Rules and Responsibilities when a Beneficiary Requests an Expedited
Review
200.4.1 - The Role of the Beneficiary and Liability
200.4.2 - The Responsibilities of the Hospital
200.4.3 - The Role of the QIOs
200.4.4 - Effect of a QIO Expedited Determination
200.5 - General Notice Requirements
200.5.1 - Number of Copies
200.5.2 - Reproduction
200.5.3 - Length and Page Size
200.5.4 - Contrast of Paper and Print
200.5.5 - Modification
200.5.6 - Font
200.5.7 - Customization
200.5.8 - Retention of the Notices
200.6 - Completing the Notices
200.6.1 - Translated Notices
200.6.2 Exhibit 1 - An Important Message from Medicare (CMS-R-193)
and Form Instructions
200.6.3 Exhibit 2 - The Detailed Notice of Discharge (CMS 10066) and
Form Instructions
220 - Hospital Requested Expedited Review
220.1 - Responsibilities of the Hospital
220.2 - Responsibilities of the QIO
220.3 - Effect of the Hospital Requested Expedited Determination
220.4 - General Notice Requirements
220.5 - Exhibit 3 - Model Language Notice of Hospital Requested Review (HRR)
240 - Preadmission/Admission Hospital Issued Notice of Noncoverage (HINN)
240.1 - Delivery of the Preadmission/Admission HINN
240.2 - Notice Delivery Timeframes and Liability
240.3 - Timeframes for Submitting a Request for a QIO Review
240.4 - Results of the QIO Review
240.5 - Effect of the QIO Review
240.6 - Exhibit 4 - Model Language Preadmission/Admission Hospital Issued
Notice of Noncoverage
260 - Expedited Determinations of Provider Service Terminations
260.1 - Statutory Authority
260.2 - Scope
260.2.1 - Exceptions
260.3 - Notice of Medicare Non-Coverage
260.3.1 - Alterations to the NOMNC
260.3.2 - Completing the NOMNC
260.3.3 - Provider Delivery of the NOMNC
260.3.4 - Required Delivery Timeframes
260.3.5 - Refusal to Sign the NOMNC
260.3.6 - Financial Liability for Failure to Deliver a Valid NOMNC
260.3.7 - Amending the Date of the NOMNC
260.3.8 - NOMNC Delivery to Representatives
260.3.9 - Notice Retention for the NOMNC
260.3.10- Hours of NOMNC Delivery
260.4 - Expedited Determination Process
260.4.1 - Beneficiary Responsibilities
260.4.1.1 - Timeframe for Requesting an Expedited Determination
260.4.1.2 - Provide Information to QIO
260.4.1.3 - Obtain Physician Certification of Risk (Home Health
and CORF services only)
260.4.2 - Beneficiary Liability During QIO Review
260.4.3 - Untimely Requests for Review
260.4.4 - Provider Responsibilities
260.4.5 - The Detailed Explanation of Non-Coverage
260.5 - QIO Responsibilities
260.5.1 - Receive Beneficiary Requests for Expedited Review
260.5.2 - Notify Providers and Allow Explanation of Why Covered
Services Should End
260.5.3 -Validate Delivery of NOMNC
260.5.4 - Solicit the Views of the Beneficiary
260.5.5 - Solicit the Views of the Provider
260.5.6 - Make Determination and Notify Required Parties
260.6 - Effect of a QIO Expedited Determination
260.6.1 - Right to Pursue an Expedited Reconsideration
260.6.2 - Effect of QIO Determination on Continuation of Care
260.6.3 - Right to Pursue the Standard Claims Appeal Process
261 - Expedited Determination Notice Association with Advance Beneficiary Notices
300 - Expedited Reconsiderations
300.1 - The Role of the Beneficiary and Liability
300.2 - The Responsibilities of the IRE
300.3 - The Responsibilities of the QIO
300.4 - The Responsibilities of the Provider
300.5 - Coverage During an Expedited Reconsideration
400 - Part A Medicare Outpatient Observation Notice
400.1 - Statutory Authority
400.2 - Scope
400.3 - Medicare Outpatient Observation Notice
400.3.1 - Alterations to the MOON
400.3.2 - Completing the MOON
400.3.3 - Hospital Delivery of the MOON
400.3.4 - Required Delivery Timeframes
400.3.5 - Refusal to Sign the MOON
400.3.6 - MOON Delivery to Representatives
400.3.7 - Ensuring Beneficiary Comprehension
400.3.8 - Completing the Additional Information Field of the MOON
400.3.9 - Notice Retention for the MOON
400.4 - Intersection with State Observation Notices
500- Glossary
10 - Financial Liability Protections (FLP) Provisions of Title XVIII
(Rev.: 4197; Issued: 01-11-19; Effective: 04-15-19; Implementation: 04-15-19)
The FLP provisions of the Social Security Act (hereinafter referred to as the Act) protect
beneficiaries, healthcare providers, and suppliers under certain circumstances from
unexpected liability for charges associated with claims that Medicare does not pay. The
FLP provisions apply after an item or service’s coverage determination is made. This
chapter discusses the following FLP provisions:
• Limitation On Liability (LOL) under §1879(a)-(g) of the Act.
• Refund Requirements (RR) for Non-assigned Claims for Physicians Services
under §1842(l) of the Act.
• Refund Requirements (RR) for Assigned and Non-assigned Claims for Medical
Equipment and Supplies under §§1834(a)(18), 1834(j)(4), and 1879(h) of the Act.
In most cases, the FLP provisions apply only to beneficiaries enrolled in the Original
Medicare FFS program Parts A and B.
The FLP provisions apply only when both of the following are met:
• Items and/or services are denied on the basis of specific statutory or regulatory
provisions.; and
• Involve determinations about beneficiary and/or healthcare provider/supplier
knowledge of whether Medicare was likely to deny payment for the items and/or
services.
The LOL provisions apply to all Part A services and all assigned claims for Part B
services. The RR apply to both assigned and unassigned claims for medical equipment
and supplies and to unassigned claims for physicians’ services. However, RR do not
apply to claims for Part A services.
20 - Limitation On Liability (LOL) Under §1879 Where Medicare
Claims Are Denied
(Rev.: 4197; Issued: 01-11-19; Effective: 04-15-19; Implementation: 04-15-19)
In general, application of the LOL provisions depends upon two primary factors:
1. Whether the claim for the item and/or service provided was denied for certain
specific reasons. See §21 of this chapter for more examples.
Type of Denial
Description
Example
Statutory Basis
The LOL provisions apply only
to claims for items and/or
services submitted by healthcare
providers or suppliers that have
Items and services found to be
not reasonable and necessary for
the diagnosis or treatment of
illness or injury or to improve the
Type of Denial
Description
Example
taken assignment, and only to
claims for items and/or services
not otherwise statutorily
excluded, that are denied on the
basis of §1862(a)(1),
§1862(a)(9), §1879(e), or
§1879(g) of the Act.
functioning of a malformed body
member. (§1862(a)(1)(A) of the
Act)
Dependent
Services
When Medicare payment is
made under the LOL provisions,
the payment determination
includes claims for any
dependent services that are
denied as an indirect result of
the original denial. Thus, where
a particular qualifying service is
denied as not reasonable and
necessary under §1862(a)(1)(A)
of the Act, any dependent
services are also denied as not
reasonable and necessary under
§1862(a)(1)(A) of the Act. If the
LOL provisions apply to the
denial of the qualifying service,
it will also apply to the
dependent service, and
Medicare will make payment for
both services, provided all other
conditions for coverage and
payment are met.
Under §§1814(a)(2)(C) and
1835(a)(2)(A) of the Act, home
health aide services can be
covered only if a beneficiary
needs intermittent skilled nursing
care. When coverage is denied
for intermittent skilled nursing
services (the qualifying primary
services) under §1862(a)(1) or
(9) of the Act, home health aide
services (the dependent services)
likewise are not covered. In such
cases, if Medicare payment is
made under the LOL provision
for the primary services, it would
be made for the dependent
services as well, provided the
services meet all conditions for
coverage and payment (i.e. a
physician’s certification of the
need for the dependent services
and proof that the services are
reasonable and necessary).
Higher Levels
of Care and
“Excess
Components”
Normally, Medicare payment is
denied for items and/or services
that are not reasonable and
necessary on the basis of
§1862(a)(1)(A) of the Act.
However, the LOL provisions
may apply if a reduction in
payment occurs because the
furnished items or services are
at a higher level of care and
provide more extensive items or
services than was reasonable
and necessary to meet the needs
of the beneficiary.
A deluxe or aesthetic feature of
an upgraded item of medical
equipment is an “excess
component.” Charge increases
on the basis of purported
premium quality services are not
considered to be “excess
components” since that would
constitute circumvention of
payment limits and applicable
charging limits (e.g., limiting
charges in the case of unassigned
claims for physicians’ services
and fee schedule amounts in the
case of assigned claims).
2. Whether the beneficiary and/or the healthcare provider or supplier knew or
could reasonably have been expected to know that the item or service was not
covered.
Knowledge of the Non-
covered Item/Service
Liability
Payment Responsibility
If the beneficiary knew, or
should have known (e.g. a
valid liability notice such as
an ABN, Form CMS-R-131
was issued and the
beneficiary consented to
receiving the item or service).
Rests with the
beneficiary
The beneficiary is responsible for
making payment for the usual and
customary charges to the
healthcare provider or supplier
for the denied item and/or
service.
If the beneficiary did not
know (and should not have
known), and the healthcare
provider or supplier knew, or
should have known.
Rests with the
healthcare
provider or
supplier
The beneficiary may not be
charged for any costs related to
the denied item and/or service,
including copayments and
deductibles.
If neither the beneficiary nor
the healthcare provider or
supplier knew, and could not
reasonably be expected to
have known.
Neither the
beneficiary or the
healthcare
provider or
supplier
The Medicare program makes
payment for the assigned claim.
20.1 - LOL Coverage Denials (Rev. 1, 10-01-03)
(Rev.:4197; Issued: 01-11-19; Effective: 04-15-19; Implementation: 04-15-19)
A. Statutory Basis
The following table provides examples of denials based on §1862(a)(1), §1862(a)(9),
§1879(e), or §1879(g) of the Act:
Statutory Provision
(section of the Act)
§1862(a)(1)(A)
for the diagnosis or treatment of illness or injury or to improve
§1862(a)(1)(B) &
§1861(s)(10)
vaccine and its administration, and hepatitis B vaccine and its
administration furnished to an individual at high or
intermediate risk of contracting hepatitis B, that are not
§1862(a)(1)(C)
reasonable and necessary for the palliation or management of
Statutory Provision
(section of the Act)
§1862(a)(1)(E)
pursuant to §1142 of the Act, are not reasonable and
necessary to carry out the purposes of that section (which
concerns research on outcomes of health care services and
§1862(a)(1)(F)
than is covered under §1834(c)(2) of the Act or that is not
conducted by a facility described in §1834(c)(1)(B) of the Act
and screening pap smears and screening pelvic exams
performed more frequently than is provided for under
§1862(a)(1)(F)
§1862(a)(1)(G)
Act), which are performed more frequently than is covered
§1862(a)(1)(H)
§1862(a)(1)(I)
in excess of normative guidelines that the Secretary shall
§1862(a)(1)(J)
for which payment is made under part B, furnished in a
competitive area under §1847B of the Act, but not furnished by
§1862(a)(1)(K)
more than 1 year after the date the individual’s first coverage
§1862(a)(1)(L)
§1861(xx)(1) of the Act), which are performed more frequently
§1862(a)(1)(M)
Act), which is performed more frequently than is covered
§1862(a)(1)(N)
is performed more frequently than is provided for under
§1862(a)(1)(O)
§1861(ggg)(1) of the Act) which are furnished in excess of the
§1861(dd)(3)(A)
beneficiary was not “terminally ill,” as referenced by
Statutory Provision
(section of the Act)
§1862(a)(1)(O)
(hhh)(1) of the Act), which are performed more frequently than
§1814(a)(2)(C) &
§1835(a)(2)(A) on or
after July 1, 1987
§1879(g)(1) before
December 31, 1995
the beneficiary was not “homebound” or did not require
“intermittent” skilled nursing care.
§1879(e)
payment is denied solely because of an unintentional,
inadvertent, or erroneous action that resulted in the
beneficiary’s transfer from a certified bed (one that does not
meet the requirements of §1861(e) or (j) of the Act) in a skilled
§1862(a)(9)
20.2 - Denials When the LOL Provision Does Not Apply
(Rev.: 4197; Issued: 01-11-19; Effective: 04-15-19; Implementation: 04-15-19)
Type of
Denial
Description
Example(s)
Categorical
Categorical Denials are
circumstances in which the
LOL provision does not apply
because the Medicare payment
denial is based on a statutory
provision not referenced in
§1879 of the Act. Refer to
§1862(a) of the Act for a
complete listing.
• Personal comfort items
(§1862(a)(6) of the Act).
• Routine physicals and most
screening tests (§1862(a)(7) of the
Act).
• Most immunizations (vaccinations)
(§1862(a)(7) of the Act).
• Routine eye care, most eyeglasses
and examinations (§1862(a)(7) of
the Act).
• Hearing aids and hearing aid
examinations (§1862(a)(7) of the
Act).
• Cosmetic surgery (§1862(a)(10) of
the Act).
Type of
Denial
Description
Example(s)
• Orthopedic shoes and foot
supports (orthotics) (§1862(a)(8)
of the Act).
NOTE: §22.1 of this chapter provides
a more expansive list of examples.
Technical
When coverage requirements
are not met for a particular
item or service, it is not a
Medicare benefit; therefore,
Medicare denies payment or
when payment for a medically
unreasonable or unnecessary
item or service that is also
barred because of failure to
meet a condition of payment
required by regulations.
• Payment for the additional cost of
a private room in a hospital or SNF
is denied when the private
accommodations are not required
for medical reasons (§1861(v)(2)
of the Act).
• Payment for a dressing is denied
because it does not meet the
definition for “surgical dressings”
(§1861(s)(5) of the Act).
• Payment for SNF stays not
preceded by the required 3-day
hospital stay or Payment for SNF
stay because the beneficiary did
not meet the requirement for
transfer to a SNF and for receiving
covered services within 30 days
after discharge from the hospital
and because the special
requirements for extension of the
30 days were not met (§1861(i) of
the Act).
• Drugs and biologicals which are
usually self-administered by the
patient.
• Ambulance services denied
because transportation by other
means is not contraindicated or
because regulatory criteria
specified in 42 CFR 410.40, such as
those relating to destination or
nearest appropriate facility, are
not met. (See the Medicare
Benefit Policy Manual, Chapter 10)
• Other items or services that must
be denied under 42 CFR 410.12
Type of
Denial
Description
Example(s)
through 410.105 of the Medicare
regulations.
20.2.1 - Categorical Denials
(Rev.: 4197; Issued: 01-11-19; Effective: 04-15-19; Implementation: 04-15-19)
Below is a more expansive list of examples of categorical denials:
Statutory Provision
(section of the Act)
Description
§1862(a)(12)
Dental care and dentures (in most cases).
§1862(a)(13)
Routine foot care and flat foot care.
§1862(a)(19)
Services under a physician’s private contract.
§1862(a)(3)
Services paid for by a governmental entity that is not Medicare.
§1862(a)(4)
Health care received outside of the U. S. not covered by
Medicare.
§1862(a)(11)
Services by immediate relatives.
§1862(a)(5)
Services required as a result of war.
§1862(a)(2)
Services for which there is no legal obligation to pay.
§1862(a)(21)
Home health services furnished under a plan of care, if the
agency does not submit the claim.
§1862(a)(16)
Items and services excluded under the Assisted Suicide Funding
Restriction Act of 1997.
§1862(a)(17)
Items or services furnished in a competitive acquisition area by
any entity that does not have a contract with the Department of
Health and Human Services (except in a case of urgent need).
§1862(a)(14)
Physicians’ services performed by a physician assistant,
midwife, psychologist, or nurse anesthetist, when furnished to
an inpatient, unless they are furnished under arrangement with
the hospital.
§1862(a)(18)
Items and services furnished to an individual who is a resident
of a skilled nursing facility or of a part of a facility that includes
a skilled nursing facility, unless they are furnished under
arrangements by the skilled nursing facility.
§1862(a)(15)
Services of an assistant at surgery without prior approval from
the peer review organization.
§1862(a)(20)
Outpatient occupational and physical therapy services furnished
incident to a physician’s services.
§1862(a)(22)
Claims submitted other than in an electronic form specified by
the Secretary, subject to the exceptions set forth in §1862(h) of
the Act.
Statutory Provision
(section of the Act)
Description
§1862(a)(23)
Claims for the technical component of advanced diagnostic
imaging services described in §1834(e)(1)(B) of the Act for
which payment is made under the fee schedule established under
§1848(b) of the Act and that are furnished by a supplier (as
defined in §1861(d) of the Act), if such supplier is not accredited
by an accreditation organization designated by the Secretary
under §1834(e)(2)(B) of the Act.
§1862(a)(24)
Claims for renal dialysis services (as defined in §1881(b)(14)(B)
of the Act) for which payment is made under such section unless
such payment is made under such section to a provider of
services or a renal dialysis facility for such services.
30 - Determining Liability for Disallowed Claims Under §1879
(Rev.: 4197; Issued: 01-11-19; Effective: 04-15-19; Implementation: 04-15-19)
When a Medicare contractor determines that a review under the LOL provisions is
appropriate under §20 of this chapter, the Medicare contractor must next determine who
is liable, based on who knew, or should have known that Medicare was going to deny
payment on the item or service. In order to make this determination, the contractor must
take the following steps:
Determine
whether the
beneficiary
is liable.
Evidence
must show
that the
beneficiary
knew or
should have
known the
item and/or
service
would not be
covered.
Knowledge:
* Is established when
the healthcare
provider or supplier
gives a valid ABN,
Form CMS-R-131 or
other written notice.
* May be established
when the beneficiary
receives notice of a
recent claim denial for
the same item or
service.
* The Medicare
program shall not
make a payment to the
beneficiary.
* The beneficiary can
appeal both the
coverage issue, and
the contractor’s
determination of
beneficiary liability
for the cost of the
non-covered item or
service.
If the
beneficiary
is not found
liable, then
the
Medicare
contractor
should
determine if
the
healthcare
provider or
supplier is
liable
Evidence
must show
that the
healthcare
provider/
supplier
knew or
should have
known the
item and/or
service
would not be
covered.
* Had actual knowledge
of the non-coverage of
item and/or service in a
particular case;
* Could reasonably
have been expected to
have such knowledge;
or
* The beneficiary was
shown not to have
knowledge (found not
liable).
* The Medicare
program shall not make
a payment to the
healthcare provider or
supplier.
* The healthcare
provider or supplier can
appeal both the
coverage issue, and the
contractor’s
determination of
healthcare provider or
supplier liability for the
cost of the non-covered
item or service.
If the healthcare provider or supplier
is not found liable, the Medicare
program will accept liability.
NOTE: If both the beneficiary and the healthcare provider or supplier are found to have
knowledge, the beneficiary will be held liable.
30.1 - Beneficiary’s Knowledge and Liability
(
Rev.: 4197; Issued: 01-11-19; Effective: 04-15-19; Implementation: 04-15-19)
Beneficiary knowledge standards vary between the §1879 LOL provision and the two
Refund Requirement (RR) provisions as shown in the table below.
Provision
Description
Beneficiary Knowledge
Limitation On
Liability
§1879(a)(2) of the Act requires
that the beneficiary “did not
know, and could not reasonably
have been expected to know,
that payment would not be
made* * *,” for items or
services that are excluded from
coverage.
• Knowledge based on
written notice having
been provided to the
beneficiary.
• Knowledge based on
any other means from
which it is determined
that the beneficiary
knew, or should have
known, that payment
would not be made.
Medical Equipment
and Supplies RR
§1834(a)(18)(A)(ii) of the Act
[which is incorporated by
reference into §1834(j)(4) and
§1879(h) of the Act] requires
that “before the item was
furnished, the patient was
informed that payment under
this part may not be made for
that item and the patient has
agreed to pay for that item,”
that is, for medical equipment
and supplies denied on the basis
of §1834(a)(17)(B), §1834(j)(1),
§1834(a)(15), or §1862(a)(1) of
the Act.
• Knowledge must be
evidenced by a signed
written notice and
agreement to pay
personally in case of a
denial.
Physician RR
§1842(l)(1)(C)(ii) of the Act
requires that “before the
service was provided, the
individual was informed that
payment under this part may not
be made for the specific service
and the individual has agreed to
pay for that service,” that is, for
physician services that are
denied because they were not
reasonable and necessary under
§1862(a)(1) of the Act.
• Knowledge must be
evidenced by a signed
written notice and
agreement to pay
personally in case of a
denial.
Knowledge is determined on a case by case basis. In certain circumstances, being in
receipt of a valid ABN or other written notice does not guarantee that the beneficiary had
knowledge that an item or service would not be covered. For instance, in a case where a
beneficiary received a valid ABN and then, upon initial determination, the claim was
paid as covered, that original ABN cannot be used as evidence of knowledge for future
claims relating to a similar or reasonably comparable item or service, since the original
ABN was belied by the favorable payment decision.
In reviewing a determination of liability on appeal, a beneficiary’s allegation that s/he
did not know, in the absence of evidence to the contrary, is acceptable evidence for LOL
purposes.
30.1.1 - Other Evidence of Knowledge
(Rev.: 4197; Issued: 01-11-19; Effective: 04-15-19; Implementation: 04-15-19)
While 42 CFR 411.404 provides criteria for beneficiary knowledge based on written
notice, §1879(a)(2) of the Act specifies only that knowledge must not exist in order to
apply the LOL provision. If it is clear and obvious that a beneficiary in fact did know,
prior to receiving an item or service, that Medicare payment for that item or service
would be denied, the administrative presumption favorable to the beneficiary is rebutted.
For example, if the beneficiary admits that s/he had prior knowledge that payment for an
item or service would be denied, no further evidence is required.
In the case in which the Medicare contractor has such evidence of prior knowledge on
the beneficiary’s part, the beneficiary must be held liable under the LOL provision, even
if no written notice was given by the appropriate source.
30.2 - Healthcare Provider or Supplier Knowledge and Liability
(Rev.: 4197; Issued: 01-11-19; Effective: 04-15-19; Implementation: 04-15-19)
In order to determine whether the healthcare provider or supplier had prior knowledge
that the item and/or service furnished to the beneficiary would likely be denied or
whether knowledge of the denial could have been expected, the Medicare contractors
review the information they maintain and/or disseminate to a particular healthcare
provider or supplier and the denial’s relevant facts.
If the healthcare provider or supplier cannot show that the beneficiary received proper
written notice, the healthcare provider or supplier will be presumed to have knowledge
(and, thereby, liability) unless s/he can prove that s/he did not know, and could not
reasonably have been expected to know, that Medicare would not pay for the item and/or
service. If the healthcare provider or supplier can make such a convincing showing, the
Medicare contractor will find that the healthcare provider or supplier did not have the
requisite knowledge and Medicare will be liable for the payment.
30.2.1 - Evidence of Healthcare Provider or Supplier Knowledge
(Rev.: 4197; Issued: 01-11-19; Effective: 04-15-19; Implementation: 04-15-19)
In accordance with regulations at 42 CFR 411.406, evidence that the healthcare provider
or supplier did, in fact, know or should have known that Medicare would not pay for an
item or service includes:
• A Medicare contractor’s prior written notice to the healthcare provider or
supplier of Medicare denial of payment for similar or reasonably comparable
item or service. This also includes notification of Quality Improvement
Organization (QIO) screening criteria specific to the condition of the beneficiary
for whom the furnished item and/or service are at issue and of medical
procedures subject to preadmission review by the QIO. Instructions for
application of the LOL provision to QIO determinations are in the QIO Manual;
• Medicare’s general notices to the medical community of Medicare payment denial
of item or service under all or certain circumstances (such notices include, but are not
limited to, manual instructions, bulletins, and Medicare contractors’ written guidance);
• Provision of the item and service being inconsistent with acceptable standards of
practice in the local medical community.
• Written notification from the healthcare provider or supplier’s utilization review
committee informing the healthcare provider or supplier that the item and/or
service was not covered;
• The healthcare provider or supplier issuing a written notice of the likelihood of
Medicare payment denial for an item and/or service to the beneficiary; or
• The healthcare provider or supplier being previously notified by telephone and/or
in writing that an item or service is not covered or that coverage has ended.
If any of the circumstances described above exists, a healthcare provider or supplier is
held to have knowledge.
30.2.2 - Medical Record Evidence of Healthcare Provider or Supplier
Knowledge
(Rev.: 4197; Issued: 01-11-19; Effective: 04-15-19; Implementation: 04-15-19)
The healthcare provider or supplier is also accountable for information contained in the
beneficiary’s medical records, such as the beneficiary’s medical chart, attending
physicians’ notes, or similar records. When the medical records clearly show that the
beneficiary received only non-covered services as described in the Medicare Benefit
Policy Manual, the healthcare provider or supplier will be presumed to have knowledge
of non-coverage.
Examples:
• A physician clearly indicated in the beneficiary’s medical record that the patient
no longer needed the services or the level of care provided;
• The physician indicated the patient could be discharged;
• The attending physician refused to certify or recertify the beneficiary’s need for a
particular level of care covered by Medicare because he/she determined that the
patient does not require a covered level of care; or
• The contractor requested additional medical evidence after a certain number of
days to determine whether continued coverage is warranted. However, the
healthcare provider or supplier did not submit the evidence within the stipulated
time.
30.2.3 - Acceptable Standards of Practice
(Rev.: 4197; Issued: 01-11-19; Effective: 04-15-19; Implementation: 04-15-19)
When an item and/or service furnished do not meet locally acceptable standards of
practice, the healthcare provider or supplier is considered to have known that Medicare
payment would be denied. Because healthcare provider and supplier licensure is
premised on the assumption that they are knowledgeable about locally acceptable
standards of practice, healthcare providers and suppliers are presumed to have
knowledge about locally acceptable standards of practice for liability determinations.
No other evidence of knowledge of local medical standards of practice is necessary.
In order to determine what “acceptable standards of practice” exist within the local
medical community, Medicare contractors will rely on the following:
• published medical literature;
1
• a consensus of expert medical opinion;
2
and
1
“Published medical literature” refers generally to scientific data or research studies that have been
published in peer-reviewed medical journals or other specialty journals that are well recognized by the
medical profession, such as the “New England Journal of Medicine” and the “Journal of the American
Medical Association.”
2
Consensus of expert medical opinion might include recommendations that are derived from technology
assessment processes conducted by organizations such as the Blue Cross and Blue Shield Association or
the American College of Physicians, or findings published by the Institute of Medicine.
• consultations with their medical staff, medical associations, including local
medical societies, and other health experts.
NOTE: A healthcare provider or supplier may indicate on the claim (via Occurrence
Code 32 or the applicable Healthcare Common Procedure Coding System code modifier
(i.e. GA, GX, ext.) on contractor claims) that they gave the beneficiary a valid written
notice before furnishing the item and/or service. In that instance, the Medicare
contractor will hold the beneficiary, not the healthcare provider or supplier liable for the
denied charges. If it is determined that the written notice was invalid, the contractor will
override the GA code, and the healthcare provider or supplier will be found liable.
30.3 – The Right to Appeal
(Rev.: 4197; Issued: 01-11-19; Effective: 04-15-19; Implementation: 04-15-19)
The beneficiary, healthcare provider, or supplier has the right to appeal both the issue of
coverage for the claim and determination of liability. For purposes of determining the
amount in controversy for an appeal of the coverage determination, payment made under
§1879 of the Act should be disregarded. For more information see Chapter 29 of this
manual, Appeals of Claims Decisions.
30.4 - Fraud, Abuse, Patently Unnecessary Items and Services
(Rev.: 4197; Issued: 01-11-19; Effective: 04-15-19; Implementation: 04-15-19)
Generally, the protection under the FLP provisions cannot be afforded to a healthcare
provider or supplier if a formal finding of fraud or abuse has been made with regard to a
healthcare provider’s or supplier’s billing practices. In cases where a formal finding of
fraud or abuse is made, an immediate finding of liability for the healthcare provider or
supplier results. Abuse exists when a healthcare provider or supplier furnishes item
and/or service that are inconsistent with accepted sound medical practices, are clearly
not within the concept of reasonable and necessary as defined by law or regulations, and,
if paid for, would result in an unnecessary financial loss to the program. The Medicare
contractor will also make an immediate finding of liability in situations where a
healthcare provider or supplier furnishes items and/or services that are so patently
unnecessary that all healthcare providers or suppliers could reasonably be expected to
know that they are not covered.
40 - Written Notice as Evidence of Knowledge
(Rev.: 4197; Issued: 01-11-19; Effective: 04-15-19; Implementation: 04-15-19)
One regulatory basis for determining beneficiary knowledge can be found at 42 CFR
411.404. Under these regulations, there is a presumption that the beneficiary knew, or
could reasonably have been expected to know, that Medicare payment for an item or
service would be denied if written notice was given to the beneficiary that the items or
services were not covered. A written notice that a beneficiary received may be
considered as evidence of prior knowledge with respect to such same or similar item(s)
and/or service(s) that is denied Medicare payment for the same reason in both cases.
In accordance with 42 CFR 411.404, a written notice of Medicare denial of payment
must contain sufficient information to enable the beneficiary to understand the basis for
the denial of the item and/or service that otherwise might be paid for, that Medicare
certainly or probably will not pay for in that particular occasion.
The written notice allows the beneficiary to:
• make an informed decision whether or not to receive the item and/or service, and
• better participate in his/her own health care treatment decisions.
If the healthcare provider or supplier expects payment for the item and/or service to be
denied by Medicare, the healthcare provider or supplier must advise the beneficiary in
advance that, in its opinion, the beneficiary will be personally and fully responsible for
payment. To be “personally and fully responsible for payment” means that the
beneficiary will be liable to make payment “out-of-pocket,” through other insurance
coverage (e.g., employer group health plan coverage), or through Medicaid or other
Federal or non-Federal payment source.
40.1 - Sources of Written Notice
(Rev.: 4197; Issued: 01-11-19; Effective: 04-15-19; Implementation: 04-15-19)
Generally, the written notice of the likelihood of Medicare payment denial (e.g. an ABN,
Form CMS-R-131) should be furnished to the beneficiary:
• By a healthcare provider or supplier before the item and/or service is furnished;
• After the Medicare contractor, during the course of the beneficiary’s stay, advised
the healthcare provider or supplier that covered care had ceased;
• By a healthcare provider or supplier utilization review committee that, on
admission or during the patient’s stay, advised that the beneficiary no longer
required covered care;
• By the Medicare contractor; or
• By a qualified notifier so that the beneficiary may have confidence in and rely
upon the accuracy and credibility of the notice.
40.2 - Written Notice Standards
(Rev.: 4197; Issued: 01-11-19; Effective: 04-15-19; Implementation: 04-15-19)
The healthcare provider or supplier should issue a written notice each time, and as soon
as, it makes the assessment that Medicare payment certainly or probably will not be
made in order to transfer potential financial liability to the beneficiary. A healthcare
provider or supplier, should notify a beneficiary by means of timely and effective delivery
of a written notice document to a qualified recipient. Any written notice should meet the
following written notice standards as evidence of the beneficiary’s knowledge for the
purposes of the FLP provisions, except as otherwise explicitly specified. A notification
which does not meet the following written notice standards may be ruled invalid and may
not serve to protect the interests of the notifier.
A written notice will not be considered as acceptable evidence of knowledge if the written
notice is:
• Unreadable, illegible, or otherwise incomprehensible, or the individual
beneficiary is incapable of understanding the written notice due to the particular
circumstances (even if others may understand);
• Given during any emergency, or the beneficiary is under great duress, or the
beneficiary is, in any way, coerced or misled by the notifier, by the contents of the
written notice, and/or by the manner of delivery of the written notice;
• Routinely given to all beneficiaries for whom the notifier furnishes items and/or
services;
• No more than a statement to the effect that there is a possibility that Medicare
may not pay for the items or services; or
• Delivered to the beneficiary more than one year before the items and/or services
are furnished.
NOTE: A previously furnished written notice is acceptable evidence of written notice for
current items and/or services if the previous written notice cites similar or reasonably
comparable items and/or services for which denial is expected on the same basis in both
cases. A written denial (on the same basis in both cases) of payment from a Medicare
contractor for a claim for the same or similar item and/or service received by the
beneficiary is acceptable evidence of written notice for current item and/or service.
Written Notice Standard
Description
Proper Written Notice Documents
• An approved standard form (e.g.,
Form CMS-R-131); or
• A CMS approved model notice
language (e.g., Form CMS-10055)
Qualified Notifiers
“Notifiers” are generally the healthcare
provider or supplier that furnished or
ordered the item(s) and/or service(s).
Capable Recipient
The beneficiary must:
• Be able to read, understand, act on
his/her rights, and comprehend the
notice;
• Be issued the written notice in a
manner that allows her/him to
comprehend the contents of the
written notice. (e.g., when the
beneficiary (or authorized
representative) is unable to read the
notice due to a disability such as
blindness, visual impairment or
deafness) This can be done by a verbal
or electronic reading of the notice, by
providing the written notice in Braille
or large print, or by the use of other
assistive technology. The notifier
should document any actions taken to
assist with the delivery of the written
notice on the notice; and
• Be afforded the verbal or written
assistance in other languages to assist
in understanding the notice. If a
translator who can speak the
beneficiary’s language is not
available, the notifier should assist by
calling 1-800-MEDICARE so a
customer service representative can
connect the beneficiary with the
Language Line for translation services.
Identification of Notifier
The header of the written notice must
identify the notifier or notifier(s). In
situations where the notifier is not the
billing entity, it is permissible to enter the
names of more than one entity in the
header of the notice.
Written Notice Standard
Description
If the header identifies the entity or
person that obtained the written notice,
rather than the entity or person that is
billing for the item and/or service, the
Medicare contractor will consider the
written notice form to be valid so long as
it was otherwise properly executed.
40.2.1 - Other Written Notice Standards
(Rev.: 4197; Issued: 01-11-19; Effective: 04-15-19; Implementation: 04-15-19)
A. Timeliness
Written notice delivery:
• Must be issued far enough in advance of an event (e.g., receiving a medical
service) so that the beneficiary can make a rational, informed decision without
undue pressure; or
• Should take place before a procedure is initiated and before physical preparation
of the patient (e.g., disrobing, placement in or attachment of diagnostic or
treatment equipment) begins.
Written notice is permissible:
• If a situation arises when a notifier sees a need for a previously unforeseen item
or service and expects that Medicare will not pay for it only in certain specific
denial reasons, provided that the beneficiary is capable of receiving notice and
has a meaningful opportunity to act on it (e.g., the beneficiary is not under
general anesthesia); or
• Where it is foreseeable that the need for service for which Medicare likely would
not pay may arise during the course of an encounter, and the beneficiary is either
certain or likely not to be capable of receiving notice during the initial service
(e.g., the beneficiary will be under anesthesia).
NOTE: Last minute notification can be coercive, and a coercive notice is an invalid
notice.
B. Written Notice Delivery
A written notice:
• Should be delivered in person to the beneficiary or authorized representative
whenever possible. Delivery is the notifier’s responsibility;
• Must be prepared with an original and at least two copies. The notifier should
retain the original and give the copy to the beneficiary or authorized
representative. Legible duplicates (carbons, etc.), fax copies, electronically
scanned copies, or photocopies will suffice;
• Copy should be given to the beneficiary (or authorized representative)
immediately after the beneficiary (or authorized representative) signs it.
If a beneficiary is not given a copy of the written notice and if the beneficiary later
alleges that the written notice presented to the Medicare contractor by the notifier is
different in any material respect from the written notice s/he signed, the Medicare
contractor will give credence to the beneficiary’s allegations. If the notifier is unable to
deliver the notice to the beneficiary, the Medicare contractor will hold that the
beneficiary did not receive proper written notice and will hold the notifier liable.
In a case where the notifier that gives a written notice is not the entity which ultimately
bills Medicare for the item(s) and/or service(s), (e.g., when a physician draws a test
specimen and sends it to a laboratory for testing) the notifier should give a copy of the
signed written notice to the billing entity as well as the beneficiary.
C. Reason for Predicting Denial
The written notice must give the beneficiary a reasonable idea of why the notifier is
predicting the likelihood of Medicare denial so that the beneficiary can make an
informed decision whether or not to receive the item or service and pay for it. Statements
of reasons for predicting Medicare denial of payment at a level of detail similar to the
approved “Medical Necessity” messages for Medicare Summary Notices are acceptable
for written notice purposes. If more than one reason for denial could apply (e.g.,
exceeding a frequency limit and “same day” duplication; cases where the reason for
denial could depend upon the result of a test; etc.), the Medicare contractor will not
invalidate a written notice on the basis of citing more than one reason for denial.
The following could result in an invalid written notice:
• Simply stating “medically unnecessary” or the equivalent is not an acceptable
reason, as it does not explain why the healthcare provider or supplier believes the
item and/or service will be denied as not reasonable and necessary.
• Listing several reasons which apply in different situations without indicating
which reason is applicable in the beneficiary’s particular situation generally is
not an acceptable practice.
40.2.2 - Written Notice Special Considerations
(Rev.: 4197; Issued: 01-11-19; Effective: 04-15-19; Implementation: 04-15-19)
A. Responsiveness to Inquiries
A notifier must answer any questions from a beneficiary regarding the written notice.
This includes requests for further information and/or assistance in understanding and
responding to a notice. The Medicare contractor will hold that a beneficiary did not
receive proper written notice in any case where it finds that the notifier refused to answer
inquiries.
B. Dealing With Beneficiary Refusals
A beneficiary who has been given a written notice may decide to receive the item(s)
and/or service(s). In this case, the beneficiary should indicate that s/he is willing to be
personally and fully responsible for payment. When a beneficiary decides to decline an
item or service, s/he should so indicate. If a beneficiary refuses to sign a valid written
notice, the notifier should consider not furnishing the item or service, unless the
consequences (health and safety of the patient, or civil liability in case of harm) are such
that this is not an option. Additionally, the notifier may annotate the written notice
indicating the circumstances and persons involved. The notifier should have the
annotation witnessed.
• Claims to Which LOL Provisions Apply - If the beneficiary demands the item or
service and refuses to pay, the notifier should have a second person witness the
provision of the written notice and the beneficiary’s refusal to sign. Where there
is only one person on site (e.g., in a “draw station”), the second witness may be
contacted by telephone to witness the beneficiary’s refusal to sign the written
notice by telephone and may sign the written notice annotation at a later time. An
unused patient signature line on the written notice form may be used for such an
annotation; writing in the margins of the form is also permissible. The notifier
should file its claim as having given the written notice. The beneficiary will be
held liable in case of a denial.
• Claims to Which RR Provisions Apply - if the physician or supplier does furnish
the item or service, the beneficiary’s signature is meant to attest both to receipt of
the written notice and to the beneficiary’s agreement to pay. The beneficiary
must receive a valid written notice so that s/he is “on notice” (that is, the
beneficiary “knew, or could reasonably have been expected to know, that
payment could not be made”) and must agree to pay. The beneficiary has the
same two legitimate choices as the cases of claims to which LOL provisions
apply. If the beneficiary demands the item or service and refuses to pay (will not
sign or else marks out the agreement to pay language), the physician or supplier
must take into account the fact that it will not be able to collect from the
beneficiary in deciding whether or not to furnish the items or services. Although
there would be little point in having a second person witness the provision of the
written notice and the beneficiary’s refusal to agree to pay (because the
requirement that the beneficiary agree to pay still would not be fulfilled), the
physician or supplier may annotate the written notice. If the items or services are
furnished despite the beneficiary’s refusal to pay, the physician or supplier should
file the claim as not having obtained a signed written notice. The Medicare
contractor will not hold the beneficiary liable and will hold the physician or
supplier liable.
NOTE: In either case, the beneficiary who does receive an item or service, of course,
always
has the right to a Medicare determination and the claim must be filed with Medicare.
C. Routine Notice Prohibition
In general, the “routine” use of written notices is not effective and therefore is not an
acceptable practice. By “routine” use, CMS means giving written notice to beneficiaries
where there is no specific, identifiable reason to believe Medicare will not pay. Notifiers
should only give written notices to beneficiaries when there is some genuine doubt that
Medicare will make payment. If the Medicare contractor identifies a pattern of routine
notices in situations where such notices clearly are not valid, it will write to the notifier
and remind it of these standards. While in general, routine written notices are invalid
and will not protect the notifier from liability, there are some exceptions.
• Generic Written Notices – “Generic written notices” are routine written notices
to beneficiaries which do no more than state that Medicare denial of payment is
possible, or that the notifier never knows whether Medicare will deny payment.
Such “generic written notices” are not considered to be acceptable evidence of
written notice and will not protect the notifier from liability. The written notice
must specify the item and/or service and a genuine reason that denial by
Medicare is expected. Written notice standards likewise are not satisfied by a
generic document that is little more than a signed statement by the beneficiary to
the effect that, should Medicare deny payment for anything, the beneficiary
agrees to pay for the item and/or service.
• Blanket Written Notices - Giving written notices for all claims or items or
services (i.e., “blanket written notices”) is not an acceptable practice. Notice
must be given to a beneficiary on the basis of a genuine judgment about the
likelihood of Medicare payment for that individual’s claim.
• Signed Blank Written Notices - A notifier is prohibited from obtaining
beneficiary signatures on blank written notices and then completing the written
notices later. In order for a written notice to be effective, it must be completed
before delivery to the beneficiary. The Medicare contractor will hold any written
notice that was blank when it was signed to be an invalid notice that will not
protect the notifier from liability.
• Routine Written Notice Prohibition Exceptions - In general, routine written
notices will not be considered valid. There are, however, a few limited
circumstances when a routine notice can be given to a beneficiary and considered
effective.
Exception
Description
Items or Services Which Are Always
Denied for Medical Necessity
In any case where a national coverage
decision provides that a particular item or
service is never covered, under any
circumstances, as not reasonable and
necessary under §1862(a)(1) of the Act
(e.g., at present, all acupuncture services
by physicians are denied as not
reasonable and necessary), a written
notice that gives as the reason for
expecting denial that: “Medicare never
pays for this item/service” may be
routinely given to beneficiaries, and no
claim need be submitted to Medicare. If
the beneficiary demands that a claim be
submitted to Medicare, the notifier should
submit the claim as a demand bill.
Experimental Items and Services
When any item or service which Medicare
considers to be experimental (e.g.,
“Research Use Only” and
“Investigational Use Only” laboratory
tests) is to be furnished, since all such
items or services are denied as not
reasonable and necessary under
§1862(a)(1) of the Act because they are
not proven safe and effective, the
beneficiary may be given a written notice
that gives as the reason for expecting
denial that: “Medicare does not pay for
items or services which it considers to be
experimental or for research use.”
Language with respect to “Medicare
coverage for clinical trials” may be
substituted as the reason for expecting
denial.
Frequency Limited Items and Services
When Medicare has established a
frequency limit for any item or service, a
routine written notice can be given. This
is applicable anytime a frequency
limitation is made through statute or
regulation, through medical national
coverage determinations, or on the basis
of the Medicare contractor’s local
coverage determinations. In any such
Exception
Description
routine written notice, the notifier must
state the frequency limitation as the
reason for expecting denial (e.g.,
“Medicare does not pay for this item or
service more often than frequency limit”).
Medical Equipment and Supplies Denied
Because the Supplier Had No Supplier
Number or the Supplier Made an
Unsolicited Telephone Contact
Given that Medicare denials of payment
under §1834(j)(1) of the Act, and under
§1834(a)(17)(B) of the Act, apply to all
varieties of medical equipment and
supplies and to all Medicare beneficiaries
equally, the usual prohibition on routine
notices to all beneficiaries does not apply
in these cases.
NOTE: A routine written notice, like any other written notice, is valid only for the denial
reason specified on the notice. A written notice will not be considered a valid notice in
the case of any Medicare denial of the claim for any reason other than that specified on
the notice.
40.3 - Medical Emergency or Otherwise Under Great Duress Situations
(Rev.: 4197; Issued: 01-11-19; Effective: 04-15-19; Implementation: 04-15-19)
A written notice should not be obtained from a beneficiary in a medical emergency or
otherwise under great duress (i.e., when circumstances are compelling and coercive)
since that individual cannot be expected to make a reasoned informed decision. A
beneficiary (or authorized representative) cannot be expected to make an informed,
rational decision when in an emergency situation and therefore cannot be considered a
capable recipient. If the beneficiary is not capable of receiving the notice, then the
beneficiary has not received proper written notice and cannot be held liable where the
LOL or RR provisions apply, and the notifier may be held liable.
Examples:
• Ambulance companies may not give written notices to beneficiaries (or authorized
representatives) in any emergency transport because such beneficiaries are under
great duress.
• Skilled nursing facilities may not give written notices in the case of “middle-of-
the-night” emergencies or in any other emergency circumstances, since the
beneficiary clearly cannot make an informed decision.
NOTE: The Medicare contractor will consider any written notice given in any kind of
coercive circumstances, including medical emergencies, to be invalid. The Medicare
contractor will determine the healthcare provider’s or supplier’s liability by the
appropriate knowledge standards which are used in cases where written notices are not
given and beneficiary agreements to pay are not obtained.
40.4 - Emergency Medical Treatment and Active Labor Act (EMTALA)
Situations
(Rev.: 4197; Issued: 01-11-19; Effective: 04-15-19; Implementation: 04-15-19)
A written notice should not be given to a beneficiary in any case in which EMTALA
(§1867 of the Act) applies, until the hospital has met its obligations under EMTALA.
These include completion of a medical screening examination (MSE) to determine the
presence or absence of an emergency medical condition, or until an emergency medical
condition has been stabilized. The CMS published this policy in the November 10, 1999
OIG/HCFA Special Advisory Bulletin on the Patient Anti-Dumping Statute: “A hospital
would violate the patient anti-dumping statute if it delayed a medical screening
examination or necessary stabilizing treatment in order to prepare an ABN and obtain a
beneficiary signature. The best practice would be for a hospital not to give financial
responsibility forms or notices to an individual, or otherwise attempt to obtain the
individual’s agreement to pay for services before the individual is stabilized. This is
because the circumstances surrounding the need for such services, and the individual’s
limited information about his or her medical condition, may not permit an individual to
make a rational, informed consumer decision.” This policy applies in any case in which
EMTALA applies, not only to EMTALA cases seen in emergency rooms (ERs). This
policy also includes times when a beneficiary does not appear to have a life threatening
condition, rather, h/she is seeking primary care services at an ER, if EMTALA applies.
A written notice that is otherwise appropriate may be given to a Medicare beneficiary
who is seen in the ER after completion of an MSE, but a written notice should not be
given unless there is a genuine reason to expect that Medicare will deny payment for the
item and/or service. EMTALA does not prohibit asking payment questions entirely,
rather, only doing so before screening/stabilization. After screening/stabilization,
EMTALA no longer applies and written notices may be given, as applicable, to
beneficiaries who come to emergency care settings after they have received a medical
screening examination and are stabilized.
50 - Form CMS-R-131 Advance Beneficiary Notice of Noncoverage
(ABN)
(Rev. 1587, Issued: 09-05-08, Effective: 03-03-08, Implementation: 03-01-09)
50.1 - Introduction - General Information
(Rev. 2782, Issued: 09-06-13, Effective: 12-09-13, Implementation: 12-09-13)
Section 50 of the Medicare Claims Processing Manual establishes the standards for use
by providers and suppliers (including laboratories) in implementing the Advance
Beneficiary Notice of Noncoverage (ABN), Form CMS-R-131. This section provides
instructions regarding the notice issued by providers to beneficiaries in advance of
providing what they believe to be noncovered items or services. The ABN must meet all
of the standards found in Chapter 30.
ABN - Quick Glance Guide
3
Notice Name: Advance Beneficiary Notice of Noncoverage (ABN)
Notice Number: Form CMS-R-131
Issued by: Providers and suppliers of Medicare Part B items and services;
Hospice and Religious Non-medical HealthCare Institute (RNHCI) providing Medicare Part A items
and services; and home health agencies(HHAs) for Part A and Part B items and services
Recipient: Original Medicare (fee for service) beneficiary
Additional Information:
The ABN, Form CMS-R-131 replaces the following notices:
• ABN-G
• ABN-L
• Notice of Exclusion of Medicare Benefits (NEMB)
• Home Health Advance Beneficiary Notice of Noncoverage (HHABN), Form CMS-R-
296, Option Box 1 (effective 2013)
Type of
notice:
Must be issued:
Timing of notice:
Optional/Voluntary
use:
Financial
liability
notice
• Prior to providing an item or service that
is usually paid for by Medicare under Part
B (or under Part A for hospice, HHA, and
RNHCI providers only) but may not be
paid for in this particular case because it
is not considered medically reasonable
and necessary
• Prior to providing custodial care
• For hospice providers, prior to caring for
a patient who is not terminally ill
• For DME suppliers, additional situations
requiring issuance are outlined in 50.3.1
• For HHA providers, prior to providing
care when the individual is not confined
to the home or does not need intermittent
skilled nursing care.
Prior to delivery of the item or
service in question. Provide
enough time for the beneficiary
to make an informed decision
on whether or not to receive the
service or item in question and
accept potential financial
liability.
Yes. Prior to providing
an item or service that
is never covered by
Medicare (not a
Medicare benefit).
50.2 - General Statutory Authority - Financial Liability Protection
Provisions (FLP) of Title XVIII
(Rev. 2480, Issued: 06-01-12, Effective: 09-04-12, Implementation: 09-04-12)
The Financial Liability Protection provisions (FLP) of the Social Security Act (the Act)
protect beneficiaries, health care providers and suppliers under certain circumstances
3
This is an abbreviated reference tool and is not meant to replace or supersede any of the directives contained in Section 50.
from unexpected liability for charges associated with claims that Medicare does not pay.
The FLP provisions include:
• Limitation On Liability (LOL) under §1879(a)-(g) of the Act;
• Refund Requirements (RR) for Non-assigned Claims for Physicians Services
under §1842(l) of the Act; and
• Refund Requirements (RR) for Assigned and Non-assigned Claims for
Medical Equipment and Supplies under §§1834(a)(18), 1834(j)(4), and
1879(h) of the Act.
Additional information on the FLP provisions can be found in Sections 10 and 20 of this
chapter.
50.2.1 - Applicability to Limitation On Liability (LOL)
(Rev. 2480, Issued: 06-01-12, Effective: 09-04-12, Implementation: 09-04-12)
The Limitation On Liability (LOL) protections of §1879 of the Act apply only when a
provider believes that a Medicare covered item or service may be denied in a particular
instance because it is not reasonable and necessary under §1862(a)(1) of the Act or
because the item or service constitutes custodial care under §1862(a)(9) of the Act. §1879
of the Act requires a provider to notify a beneficiary in advance when s/he believes that
items or services will likely be denied either as not reasonable and necessary or as
constituting custodial care. If such notice (in the form of an ABN or as otherwise noted in
§40.2) is not given, providers may not shift financial liability to beneficiaries for these
items or services if Medicare denies the claim. Beneficiaries are afforded LOL protection
when items or services are denied for reasons listed in §50.3.1.
50.2.2 - Compliance with Limitation On Liability Provisions
(Rev. 2480, Issued: 06-01-12, Effective: 09-04-12, Implementation: 09-04-12)
A healthcare provider/supplier (herein also referred to as a “notifier”) who fails to
comply with the ABN instructions risks financial liability and/or sanctions. LOL
provisions shall apply as required by law, regulations, rulings and program instructions.
Additionally, when authorized by law and regulations, sanctions under the Conditions of
Participation (COPs) may be imposed.
The Medicare contractor will hold any provider who either failed to give notice when
required or gave defective notice financially liable. A notifier who can demonstrate that
s/he did not know and could not reasonably have been expected to know that Medicare
would not make payment will not be held financially liable for failing to give notice.
However, a notifier who gave defective notice may not claim that s/he did not know or
could not reasonably have been expected to know that Medicare would not make
payment as the issuance of the notice (albeit defective) is clear evidence of knowledge.
See §50.12 for Refund Requirements.
50.3 - ABN Scope
(Rev. 2878, Issued: 02-14-14 Effective: 05-15-14 Implementation: 05-15-14)
The ABN is an Office of Management and Budget (OMB)-approved written notice issued
by providers and suppliers for items and services provided under Medicare Part B,
including hospital outpatient services, and certain care provided under Part A (hospice
and religious non-medical healthcare institutes only). With the exception of DME POS
suppliers (see Section 50.10), providers and suppliers who are not enrolled in Medicare
cannot issue the ABN to beneficiaries.
Provider use of the ABN has expanded to include home health agency (HHA) issuance
for Part A and Part B items and services. The ABN will replace the Home Health
Advance Beneficiary Notice (HHABN), Form CMS-R-296, Option Box 1 issued by
HHAs. The mandatory date for HHAs to use the ABN instead of the HHABN, Option
Box 1 will be posted on the web link for home health notices found at
http://www.cms.gov/Medicare/Medicare-General-Information/BNI/index.html.
Information specific to HHA use of the ABN has been added in §50.15.4. The guidelines
for ABN use published in this section and the ABN form instructions apply to HHAs
unless noted otherwise.
The ABN is given to beneficiaries enrolled in the Medicare Fee-For-Service (FFS)
program. It is not used for items or services provided under the Medicare Advantage
(MA) Program or for prescription drugs provided under the Medicare Prescription Drug
Program (Part D). The ABN is used to fulfill both mandatory and voluntary notice
functions.
The ABN replaces the following notices:
• ABN-G (CMS-R-131-G)
• ABN-L (CMS-R-131-L)
• NEMB (CMS-20007)
• Home Health Advance Beneficiary Notice of Noncoverage (HHABN), Form
CMS-R-296, Option Box 1 (effective 2013)
Skilled Nursing Facilities (SNFs) issue the ABN for Part B services only. The Skilled
Nursing Facility Advance Beneficiary Notice of Noncoverage (SNFABN), CMS Form
10055, is issued for Part A SNF items and services. Section 70 of this chapter contains
information on SNFABN issuance.
50.3.1 - Mandatory ABN Uses
(Rev. 2782, Issued: 09-06-13, Effective: 12-09-13, Implementation: 12-09-13)
The following provisions necessitate delivery of the ABN:
• §1862(a)(1) of the Act (not reasonable and necessary);
• §1834(a)(17)(B) of the Act (violation of the prohibition on unsolicited telephone
contacts);
• §1834(j)(1) of the Act (medical equipment and supplies supplier number
requirements not met);
• §1834(a)(15) of the Act (medical equipment and/or supplies denied in advance);
• §1862(a)(9) of the Act (custodial care);
• §1879(g)(2) of the Act (hospice patient who is not terminally ill); or
• §1879(g)(1) of the Act (home health services requirements are not met – not
confined to the home or no need for intermittent skilled nursing care).
• §1833(g)(5) of the Act (when outpatient therapy services are in excess of therapy
cap amounts and don’t qualify for a therapy cap exception – effective January 1,
2013).
When Medicare considers an item or service experimental (e.g., a “Research Use Only”
or “Investigational Use Only” laboratory test), payment for the experimental item or
service is denied under §1862(a)(1) of the Act as not reasonable and necessary. In
circumstances such as this, the beneficiary must be given an ABN.
Expanded mandatory ABN use in 2011
The Patient Protection and Affordable Care Act, P.L. 111-148, §4103(d)(1)(C) added a
new subparagraph (P) to 1862(a)(1)of the Act. Per §1862(a)(1)(P), Medicare covered
personalized prevention plan services (as defined in section 1861(hhh)(1)) that are
performed more frequently than indicated per coverage guidelines are not reasonable and
necessary for the diagnosis or treatment of illness or injury or to improve the functioning
of a malformed body member. The LOL provisions of §1879 apply to this new
subparagraph; thus, providers must issue an ABN prior to providing a preventative
service that is usually covered by Medicare but will not be covered in this instance
because frequency limitations have been exceeded.
In addition, delivery of an ABN is mandatory under 42 CFR §414.408(e)(3)(ii) when a
noncontract supplier furnishes an item included in the Durable Medical Equipment,
Prosthetic, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program (CBP) for
a Competitive Bidding Area (CBA). Although all other denial reasons triggering
mandatory use of the ABN are found in §1879 of the Act, in this situation,
§1847(b)(5)(D) of the Act permits use of the ABN with respect to these items and
services.
50.3.2 - Voluntary ABN Uses
(Rev. 2480, Issued: 06-01-12, Effective: 09-04-12, Implementation: 09-04-12)
ABNs are not required for care that is either statutorily excluded from coverage under
Medicare (i.e. care that is never covered) or most care that fails to meet a technical
benefit requirement (i.e. lacks required certification). However, the ABN can be issued
voluntarily in place of the Notice of Exclusion from Medicare Benefits (NEMB) for care
that is never covered such as:
• Care that fails to meet the definition of a Medicare benefit as defined in §1861
of the Social Security Act;
• Care that is explicitly excluded from coverage under §1862 of the Social
Security Act. Examples include:
° Services for which there is no legal obligation to pay;
° Services paid for by a government entity other than Medicare (this
exclusion does not include services paid for by Medicaid on behalf of
dual-eligibles);
° Services required as a result of war;
° Personal comfort items;
° Routine eye care;
° Dental care; and
° Routine foot care.
The voluntary ABN serves as a courtesy to the beneficiary in forewarning him/her of
impending financial obligation. When an ABN is used as a voluntary notice, the
beneficiary should not be asked to choose an option box or sign the notice. The provider
or supplier is not required to adhere to the issuance guidelines for the mandatory notice
(as set forth below) when using the ABN for voluntary notification.
NOTE: Certain DME items/services that fail to meet a technical requirement may
require an ABN as outlined in the mandatory use section above.
50.4 - Issuance of the ABN
(Rev. 1587, Issued: 09-05-08, Effective: 03-03-08, Implementation: 03-01-09)
50.4.1 - Issuers of ABNs (Notifiers)
(Rev. 2782, Issued: 09-06-13, Effective: 12-09-13, Implementation: 12-09-13)
Entities who issue ABNs are collectively known as “notifiers”. These entities can
include physicians, practitioners, providers (including laboratories), and suppliers, and/or
utilization review committees for the care provider. In 2013, HHAs are added as ABN
issuers.
The notifier may direct an employee or a subcontractor to deliver an ABN. The billing
entity will always be held responsible for effective delivery regardless of who gives the
notice. When multiple entities are involved in rendering care, it is not necessary to give
separate ABNs. Either party involved in the delivery of care can be the notifier when:
• There are separate “ordering” and “rendering” providers (e.g. a physician orders a
lab test and an independent laboratory delivers the ordered tests);
• One provider delivers the “technical” and the other the “professional” component
of the same service ( e.g. a radiological test that an independent diagnostic testing
facility renders and a physician interprets); or
• The entity that obtains the signature on the ABN is different from the entity that
bills for services (e.g. when one laboratory refers a specimen to another laboratory
which then bills Medicare for the test).
When the notifier is not the billing entity, the notifier must know how to direct the
beneficiary who received the ABN to the billing entity for questions and should annotate
the Additional Information section of the ABN with this information. It is permissible to
enter the names of more than one entity in the header of the notice.
50.4.2.-Recipients of the ABN
(Rev. 2480, Issued: 06-01-12, Effective: 09-04-12, Implementation: 09-04-12)
Notifiers are required to give an ABN to a FFS Medicare beneficiary or his/her
representative before providing him/her with a Medicare covered item or service that may
not be covered in this particular instance or before providing custodial care. Recipients of
ABNs include beneficiaries who have Medicaid coverage in addition to Medicare (i.e.
dual-eligible). A notifier’s inability to give notice to a beneficiary or his/her
representative does not allow the notifier to shift financial liability to the beneficiary.
Note: See §§40.3.4.6 and 50.6.5.B in this chapter for information on beneficiary refusals.
50.4.3 - Representatives of Beneficiaries
(Rev. 2782, Issued: 09-06-13, Effective: 12-09-13, Implementation: 12-09-13)
Notifiers are responsible for determining who may act as a beneficiary’s authorized
representative for the purposes of ABN issuance under applicable State or other law. An
individual who may make health care and financial decisions on a beneficiary’s behalf
(e.g. the beneficiary’s legal guardian or someone appointed according to a properly
executed “durable medical power of attorney”) is an authorized representative. If the
beneficiary has a known, legally authorized representative, the ABN must be issued to
the existing representative. If a beneficiary does not have a representative and one is
necessary, a representative may be appointed for purposes of receiving notice following
CMS guidelines and as permitted by State and Local law. See §40.3.5 of this chapter for
more detailed guidance on representatives.
When a representative is signing the ABN on behalf of a beneficiary, the ABN should be
annotated to identify that the signature was penned by the “rep” or “representative”. If
the representative’s signature is not clearly legible, the representative’s name should be
printed on the ABN.
50.5 - ABN Triggering Events
(Rev. 2480, Issued: 06-01-12, Effective: 09-04-12, Implementation: 09-04-12)
Notifiers are required to issue ABNs when an item or service is expected to be denied
based on one of the provisions in §50.3.1. This may occur at any one of three points
during a course of treatment which are initiation, reduction, and termination, also known
as “triggering events”.
A. Initiations
An initiation is the beginning of a new patient encounter, start of a plan of care, or
beginning of treatment. If a notifier believes that certain otherwise covered items or
services will be noncovered (e.g. not reasonable and necessary) at initiation, an ABN
must be issued prior to the beneficiary receiving the non-covered care.
Example: Mrs. S. asks her physician for an EKG because her sister was recently
diagnosed with atrial fibrillation. Mrs. S. has no diagnosis that warrants medical necessity
of an EKG but insists on having an EKG even if she has to pay out of pocket for it. The
physician’s office personnel issue an ABN to Mrs. S. before the EKG is done.
B. Reductions
A reduction occurs when there is a decrease in a component of care (i.e. frequency,
duration, etc.). The ABN is not issued every time an item or service is reduced. But, if a
reduction occurs and the beneficiary wants to receive care that is no longer considered
medically reasonable and necessary, the ABN must be issued prior to delivery of this
noncovered care.
Example: Mr. T , is receiving outpatient physical therapy five days a week, and after
meeting several goals, therapy is reduced to three days per week. Mr. T wants to achieve
a higher level of proficiency in performing goal related activities and wants to continue
with therapy 5 days a week. He is willing to take financial responsibility for the costs of
the 2 days of therapy per week that are no longer medically reasonable and necessary.
An ABN would be issued prior to providing the additional days of therapy weekly.
C. Terminations
A termination is the discontinuation of certain items or services. The ABN is only issued
at termination if the beneficiary wants to continue receiving care that is no longer
medically reasonable and necessary.
Example: Ms. X has been receiving covered outpatient speech therapy services, has met
her treatment goals, and has been given speech exercises to do at home that do not
require therapist intervention. Ms. X wants her speech therapist to continue to work with
her even though continued therapy is not medically reasonable or necessary. Ms. X is
issued an ABN prior to her speech therapist resuming therapy that is no longer considered
medically reasonable and necessary.
50.6 - ABN Standards
(Rev. 1587, Issued: 09-05-08, Effective: 03-03-08, Implementation: 03-01-09)
50.6.1 - Proper Notice Documents
(Rev. 2782, Issued: 09-06-13, Effective: 12-09-13, Implementation: 12-09-13)
The ABN, Form CMS-R-131, is the Office of Management and Budget (OMB)
approved standard notice. Failure to use this notice as mandated could result in the
notice being invalidated and/or the notifier being held liable for the items or services
in question.
The online replicable copies of the OMB approved ABN (CMS-R-131) and instructions
for notice completion are available on the CMS website at:
http://www.cms.gov/Medicare/Medicare-General-Information/BNI/ABN.html
A. Language Choice
The ABN is available in English and Spanish under a dedicated link on the web page
given above. Notifiers should choose the appropriate version of the ABN based on the
language the beneficiary best understands. Insertions must be in English when the
English language ABN is used. Similarly, when a Spanish language ABN is used, the
notifier should make insertions on the notice in Spanish, if applicable. In addition, verbal
assistance in other languages may be provided to assist beneficiaries in understanding the
document. However, the printed document is limited to the OMB-approved English and
Spanish versions. Notifiers should document any types of translation assistance that are
used in the “Additional Information” section of the notice.
B. Effective Versions
ABNs are effective as of the OMB approval date given at the bottom of each notice. The
routine approval is for 3-year use. Notifiers are expected to exclusively use the current
version of the ABN. Providers/suppliers must be attentive to the OMB approval date on
the notice and seek instruction from the CMS website
http://www.cms.gov/Medicare/Medicare-General-Information/BNI/index.html on
obtaining current versions of notices. CMS will allow a transition period for providers
and suppliers to switch from using expiring notices to newly approved notices. The date
of mandatory use of newly approved notices will be announced on the CMS website with
the notice’s release.
50.6.2 - General Notice Preparation Requirements
(Rev. 2878, Issued: 02-14-14 Effective: 05-15-14 Implementation: 05-15-14)
The following are the general instructions that notifiers must follow in preparing an ABN
for mandatory use:
A. Number of Copies: A minimum of two copies, including the original, must be made
so the beneficiary and notifier each have one. The notifier should retain the original
whenever possible.
B. Reproduction: Notifiers may reproduce the ABN by using self-carbonizing paper,
photocopying, digitized technology, or another appropriate method. All reproductions
must conform to applicable form and manual instructions.
C. Length and Size of Page: The ABN form must not exceed one page in length;
however, attachments are permitted for listing additional items and services. If
attachments are used, they must allow for clear matching of the items or services in
question with the reason and cost estimate information. The ABN is designed as a letter-
sized form. If necessary, it may be expanded to a legal-sized page.
D. Contrast of Paper and Print: A visually high-contrast combination of dark ink on a
pale background must be used. Do not use reversed print (i.e. white print on black
paper), or block-shaded (highlighted) text.
E. Font: To the extent practicable, the fonts as they appear in the ABN downloaded
from the CMS web site should be used. Any changes in the font type must be based
solely on limitations of the notifier’s software and/or hardware. In such cases, notifiers
should use alternative fonts that are easily readable, such as Arial, Arial Narrow, Times
New Roman, and Courier. Font style and formatting must be maintained regardless of
font type used.
Any other changes to the font, such as italics, embossing, bold, etc., should not be used
since they can make the ABN more difficult to read. The font size generally should be 12
point. Titles should be 14-16 point, but insertions in blanks of the ABN can be as small
as 10 point if needed.
Information inserted by notifiers in the blank spaces on the ABN may be typed or legibly
hand-written.
F. Customization: Notifiers are permitted to do some customization of ABNs, such as
pre-printing information in certain blanks to promote efficiency and to ensure clarity for
beneficiaries. Notifiers may develop multiple versions of the ABN specialized to
common treatment scenarios, using the required language and general formatting of the
ABN. Blanks (G)-(I) must be completed by the beneficiary or his/her representative
when the ABN is issued and may never be pre-filled. Lettering of the blanks (A-J) should
be removed prior to issuance of an ABN.
If pre-printed information is used to describe items/services and/or common reasons for
noncoverage, the notifier must clearly indicate on the ABN which portions of the pre-
printed information are applicable to the beneficiary. For example, pre-printed items or
services that are inapplicable may be crossed out, or applicable items/services may be
checked off.
Providers who pre-print a menu of items or services may wish to list a cost estimate
alongside each item or service. For example, notifiers may merge the items/service
section (Blank D) with the estimated cost section (Blank F) as long as the beneficiary can
clearly identify the services and related costs that may not be covered by Medicare.
G. Modification: The ABN may not be modified except as specifically allowed by
these instructions.
Notifiers must exercise caution before adding any customizations beyond these
guidelines, since changing ABNs too much could result in invalid notice and provider
liability for noncovered charges. Validity judgments are generally made by Medicare
contractors, usually when reviewing ABN-related claims; however, any complaints
received may be investigated by contractors and/or CMS central or regional offices.
An example of an approved customization of the ABN which can be used by providers of
laboratory services (Sample Lab ABN) is available for download
http://www.cms.gov/Medicare/Medicare-General-Information/BNI/ABN.html.
50.6.3 - Completing the ABN
(Rev. 2782, Issued: 09-06-13, Effective: 12-09-13, Implementation: 12-09-13)
Step by step instructions for notice completion are posted along with the notice on the
CMS website and can be downloaded via this link:
http://www.cms.gov/Medicare/Medicare-General-Information/BNI/ABN.html
Notifiers must follow guidance provided in this section and the instructions posted on the
CMS website to construct a valid notice.
50.6.4 – Retention Requirements
(Rev. 2480, Issued: 06-01-12, Effective: 09-04-12, Implementation: 09-04-12)
The ABN must be prepared with an original and at least one copy. The beneficiary is
given his/her copy of the signed and dated ABN immediately, and the notifier should
retain the original ABN in the beneficiary’s record. In certain situations, such as delivery
by fax, the notifier may not have access to the original document upon signing. Retention
of a copy of the signed document would be acceptable in specific cases such as this.
In a case where the notifier that gives an ABN is not the entity that ultimately bills
Medicare for the item or service (e.g. when a physician issues an ABN, draws a test
specimen, and sends it to a laboratory for testing), the notifier must give a copy of the
signed ABN to the billing entity. The copy provided must be legible and may be a
carbon, fax, electronically scanned, or photo reproduction copy.
Applicable retention periods for the ABN are discussed in Chapter 1 of this manual,
§110. In general, it is 5 years from discharge/completion of delivery of care when there
are no other applicable requirements under State law. Retention is required in all cases,
including those cases in which the beneficiary declined the care, refused to choose an
option, or refused to sign the notice. Electronic retention of the signed paper document is
acceptable. Notifiers may scan the signed paper or “wet” version of the ABN for
electronic medical record retention and if desired, give the paper copy to the beneficiary.
50.6.5 - Other Considerations During ABN Completion
(Rev. 2782, Issued: 09-06-13, Effective: 12-09-13, Implementation: 12-09-13)
A. Beneficiary Changes His/Her Mind
If after completing and signing the ABN, a beneficiary changes his/her mind, the notifier
should present the previously completed ABN to the beneficiary and request that the
beneficiary annotate the original ABN. The annotation must include a clear indication of
his/her new option selection along with the beneficiary's signature and date of annotation.
In situations where the notifier is unable to present the ABN to the beneficiary in person,
the notifier may annotate the form to reflect the beneficiary's new choice and
immediately forward a copy of the annotated notice to the beneficiary to sign, date, and
return.
In both situations, a copy of the annotated ABN must be provided to the beneficiary as
soon as possible. If a related claim has been filed, it should be revised or cancelled if
necessary to reflect the beneficiary’s new choice.
B. Beneficiary Refuses to Complete or Sign the Notice
If the beneficiary refuses to choose an option and/or refuses to sign the ABN when
required, the notifier should annotate the original copy of the ABN indicating the refusal
to sign or choose an option and may list witness(es) to the refusal on the notice although
this is not required. If a beneficiary refuses to sign a properly delivered ABN, the notifier
should consider not furnishing the item/service, unless the consequences (health and
safety of the patient, or civil liability in case of harm) are such that this is not an option.
In any case, the notifier must provide a copy of the annotated ABN to the beneficiary,
and keep the original version of the annotated notice in the patient’s file.
50.7 - ABN Delivery Requirements
(Rev. 1587, Issued: 09-05-08, Effective: 03-03-08, Implementation: 03-01-09)
50.7.1 - Effective Delivery
(Rev. 2782, Issued: 09-06-13, Effective: 12-09-13, Implementation: 12-09-13)
A. Delivery Requirements
ABN delivery is considered to be effective when the notice is:
1. Delivered by a suitable notifier to a capable recipient and comprehended by that
recipient.
2. Provided using the correct OMB approved notice with all required blanks
completed.
Failure to use the correct notice may lead to the notifier being found liable since the
burden of proof is on the notifier to show that knowledge was conveyed to the
beneficiary according to CMS instructions.
3. Delivered to the beneficiary in person if possible.
4. Provided far enough in advance of delivering potentially noncovered items or
services to allow sufficient time for the beneficiary to consider all available options.
5. Explained in its entirety, and all of the beneficiary’s related questions are answered
timely, accurately, and completely to the best of the notifier’s ability.
The notifier should direct the beneficiary to call 1-800-MEDICARE if the beneficiary has
questions s/he cannot answer. If a Medicare contractor finds that the notifier refused to
answer a beneficiary’s inquiries or direct them to 1-800-MEDICARE, the notice delivery
will be considered defective, and the notifier will be held financially liable for
noncovered care.
6. Signed by the beneficiary or his/her representative.
B. Period of Effectiveness/ Repetitive or Continuous Noncovered Care
An ABN can remain effective for up to one year. Notifiers may give a beneficiary a
single ABN describing an extended or repetitive course of noncovered treatment
provided that the ABN lists all items and services that the notifier believes Medicare will
not cover. If applicable, the ABN must also specify the duration of the period of
treatment. If there is any change in care from what is described on the ABN within the 1-
year period, a new ABN must be given. If during the course of treatment additional
noncovered items or services are needed, the notifier must give the beneficiary another
ABN. There is a one year limit for using a single ABN for an extended course of
treatment. A new ABN is required when the specified treatment extends beyond one year.
If a beneficiary is receiving repetitive non-covered care, but the provider or supplier
failed to issue an ABN before the first or the first few episodes of care were provided, the
ABN may be issued at any time during the course of treatment. However, if the ABN is
issued after repetitive treatment has been initiated, the ABN cannot be retroactively dated
or used to shift liability to the beneficiary for care that had been provided before ABN
issuance. In cases such as this, care that was provided before ABN delivery would be the
financial responsibility of the supplier/provider.
C. Incomplete ABNs
Allegations of improper or incomplete notices will be investigated by Medicare
contractors. If the notifier is found to have given improper or incomplete written notice,
the applicable Medicare contractor will not hold the beneficiary liable in the individual
case.
D. Electronic Issuance of the ABN
Electronic issuance of ABNs is not prohibited. If a provider elects to issue an ABN that
is viewed on an electronic screen before signing, the beneficiary must be given the option
of requesting paper issuance over electronic if that is what s/he prefers. Also, regardless
of whether a paper or electronic version is issued and regardless of whether the signature
is digitally captured or manually penned, the beneficiary must be given a paper copy of
the signed ABN to keep for his/her own records. As stated earlier in §50.6.4, electronic
retention of the signed ABN is permitted.
50.7.2 - Options for Delivery Other than In-Person
(Rev. 2782, Issued: 09-06-13, Effective: 12-09-13, Implementation: 12-09-13)
ABNs should be delivered in-person and prior to the delivery of medical care which is
presumed to be noncovered. In circumstances when in-person delivery is not possible,
notifiers may deliver an ABN through one of the following means:
• Direct telephone contact;
• Mail;
• Secure fax machine; or
• Internet e-mail
All methods of delivery require adherence to all statutory privacy requirements under
HIPAA. The notifier must receive a response from the beneficiary or his/her
representative in order to validate delivery.
When delivery is not in-person, the notifier must verify that contact was made in his/her
records. In order to be considered effective, the beneficiary should not dispute such
contact. Telephone contacts must be followed immediately by either a hand-delivered,
mailed, emailed, or faxed notice. The beneficiary or representative must sign and retain
the notice and send a copy of this signed notice to the notifier for retention in the
patient’s record.
The notifier must keep a copy of the unsigned notice on file while awaiting receipt of the
signed notice. If the beneficiary does not return a signed copy, the notifier must
document the initial contact and subsequent attempts to obtain a signature in appropriate
records or on the notice itself.
50.7.3 - Effects of Lack of Notification, Medicare Review and Claim
Adjudication
(Rev. 2782, Issued: 09-06-13, Effective: 12-09-13, Implementation: 12-09-13)
A. Beneficiary Liability
A beneficiary who has been given a properly written and delivered ABN and agrees to
pay may be held liable. The charge may be the supplier/provider’s usual and customary
fee for that item or service and is not limited to the Medicare fee schedule. If the
beneficiary does not receive proper notice when required, s/he is relieved from liability.
Notifiers may not issue ABNs to shift financial liability to a beneficiary when full
payment is made through bundled payments. In general, ABNs cannot be used where the
beneficiary would otherwise not be financially liable for payment for the service because
Medicare made full payment. See 50.13 for information on collection of funds.
B. Provider Liability
A notifier will likely have financial liability for items or services if s/he knew or should
have known that Medicare would not pay and fails to issue an ABN when required, or
issues a defective ABN. In these cases, the notifier is precluded from collecting funds
from the beneficiary and is required to make prompt refunds if funds were previously
collected. Failure to issue a timely refund to the beneficiary may result in sanctions.
A notifier may be protected from financial liability when an ABN is required if s/he is
able to demonstrate that s/he did not know or could not reasonably have been expected to
know that Medicare would not make payment. However, issuance of a defective notice
establishes the notifier’s knowledge of potential noncoverage, and will not afford the
notifier financial protection under the LOL or refund provisions.
HHAs: Please see 50.15.4 for additional information specific to HHA claim
determinations and liability.
50.7.3.1 - Using ABNs for Medical Equipment and Supplies Claims
When Denials Under §1834(a)(17)(B) of the Act (Prohibition Against
Unsolicited Telephone Contacts) Are Expected
(Rev. 1, 10-01-03)
To qualify for waiver of the Refund Requirements under §1834(a)(18) or §1879(h)(3) of
the Act (unassigned and assigned claims, respectively), an ABN must clearly identify the
particular item or service and state that the supplier expects that Medicare will deny
payment for that particular medical equipment or supplies because the supplier violated
the prohibition on unsolicited telephone contacts. The supplier must obtain a signed ABN
before furnishing the item to the beneficiary. Since it is the unsolicited telephone contact
which is prohibited by law, giving advance beneficiary notice by telephone does not
qualify as notice and is not permissible. Telephone notice may not be used in this case.
The contractor will not accept any telephone ABN as effective notice to the beneficiary.
Since giving or mailing a written ABN and obtaining the beneficiary’s agreement to pay
before telephoning is equivalent to obtaining the beneficiary’s written permission for the
supplier to telephone under §1834(a)(17)(A)(i) of the Act, a supplier has little to gain
from using the ABN process instead of simply seeking the beneficiary’s written
permission to contact him or her. If a supplier does use a written ABN prior to calling,
the beneficiary’s agreement to pay is essential under the Refund Requirements in order
for the supplier to collect from the beneficiary. Medicare denial of payment because of
the prohibition on unsolicited telephone contacts applies to all varieties of medical
equipment and supplies and to all Medicare beneficiaries equally. Therefore, the usual
restriction on routine notices to all beneficiaries does not apply in this case. (See
§40.3.6.4.D, “Routine ABN Prohibition Exceptions.”)
50.7.3.2 - ABNs for Medical Equipment and Supplies Claims Denied
Under §1834(j)(1) of the Act (Because the Supplier Did Not Meet
Supplier Number Requirements)
(Rev. 1, 10-01-03)
To qualify for waiver of the Refund Requirements under §1834(j)(4)(A) and §1879(h)(1)
of the Act (unassigned and assigned claims, respectively) for medical equipment and
supplies for which payment will be denied due to failure to meet supplier number
requirements under §1834(j)(1) of the Act, the ABN must state that Medicare will deny
payment for any medical equipment or supplies because the supplier does not have a
supplier number. The ABN must convey to the beneficiary the certainty of denial, so that
the beneficiary can make an informed consumer decision whether to receive the medical
equipment or supplies and pay for it out of pocket. The following is acceptable language
for the ABN-G “Because:” box: “Medicare will pay for items furnished to you by a
supplier of medical equipment and supplies only if the supplier has a Medicare supplier
number. Payment for such items furnished to you by a supplier which does not have a
supplier number is prohibited under the Medicare law. We do not have a Medicare
supplier number, therefore, Medicare will not pay for any medical equipment and
supplies which we furnish to you.” It is particularly important that the beneficiary’s
signed agreement to pay should be dated by the beneficiary because, in this type of
denial, any proper written advance notice with the beneficiary’s signed agreement to pay
shall be effective for any medical equipment or supplies purchased or rented from the
same supplier within the one year following the date of the beneficiary’s signed
agreement to pay. This exception relieves the supplier, which has duly notified a
beneficiary of its lack of a supplier number and the fact that Medicare will not pay, from
the necessity of obtaining a signed agreement from the beneficiary every time the
beneficiary does business with the supplier.
Exception to ABN Requirement
A supplier which can show that it did not know and could not reasonably have been
expected to know that a customer was a Medicare beneficiary, or that a customer was
making a purchase for a Medicare beneficiary, can seek protection under the LOL
provision, §1879 of the Act, or, in the case of unassigned claims, under the applicable RR
provision, §1834(j)(4) of the Act. If the supplier can show that a person who is not a
Medicare beneficiary made a purchase on behalf of a person who is a Medicare
beneficiary and did not apprise the supplier of the fact that the purchase was being made
on behalf of a Medicare beneficiary, the supplier may be protected. If the supplier can
show that a Medicare beneficiary who made a purchase did not identify himself or herself
as a Medicare beneficiary and that the person’s age or appearance was such that the
supplier could not reasonably have been expected to know or surmise that the person was
a Medicare beneficiary, the supplier may be protected. These protections are meant for
an honest supplier in the rare case where a Medicare beneficiary who is relatively
youthful, healthy and able in appearance does not identify himself or herself as a
beneficiary and the supplier understandably does not surmise that he or she might be a
Medicare beneficiary. If the beneficiary disputes the supplier’s allegation and conclusive
proof of the allegation is not presented, the supplier’s allegation may not be accepted. If
the involved Medicare beneficiary is found to be obviously aged and/or disabled, such
that any adult person working for a supplier would reasonably surmise that he or she
could be a Medicare beneficiary, the supplier’s allegation may not be accepted. If the
beneficiary purchased an item which would strongly suggest to any reasonable adult
person working for a supplier that the beneficiary is aged and/or disabled, the supplier’s
allegation may not be accepted. If a supplier can show that a customer, who is a Medicare
beneficiary or was making a purchase for a Medicare beneficiary and did not identify
him/herself accordingly to the supplier, was on notice of the necessity to so self-identify,
the beneficiary may be held liable under §1879 or §1834(j)(4) of the Act, in which case
the supplier could collect from the beneficiary. Given the possible difficulty of showing
conclusively that it did not know and could not reasonably have been expected to know
that a customer was a Medicare beneficiary, or that a customer was making a purchase
for a Medicare beneficiary, a supplier would be well advised to consider using signage,
giving public notice alerting customers that they need to inform the supplier if they are a
Medicare beneficiary or are making a purchase for a Medicare beneficiary. If a supplier
which does not have a supplier number provides adequate public notice to a Medicare
beneficiary before medical equipment or supplies are furnished, e.g., by means of clearly
visible signs, and if the adequacy of such public notice is not disputed by the beneficiary,
the supplier can qualify for waiver of the Refund Requirements. Such public notices
must be such that Medicare beneficiaries:
1. Are virtually certain to see them before purchasing or renting Medicare-covered
medical equipment or supplies from the supplier (that is, they are posted in places
where they are most likely to be seen by the target audience), and
2. May reasonably be expected to be able to read them and understand them.
Therefore, such public notices must be readily visible, in easily readable plain language,
in large print, and would have to be provided in the language(s) commonly used in the
locality. The following is acceptable language for the public notice:
Notice to Medicare Beneficiaries. Medicare will pay for medical equipment and supplies
only if a supplier has a Medicare supplier number. We do not have a Medicare supplier
number. Medicare will not pay for any medical equipment and supplies we sell or rent to
you. You will be personally and fully responsible for payment.
Do not hold any beneficiary who cannot read any such public notice of a supplier to be
properly notified in advance by the supplier that Medicare will not pay. If a supplier
alleges that it provided adequate public notice to Medicare beneficiaries but a beneficiary
disputes the allegation, in the absence of conclusive evidence in favor of the supplier, do
not hold the beneficiary to be properly notified in advance by the supplier that Medicare
will not pay; hold the supplier liable. The RR provision that the beneficiary must agree to
pay for the item or service makes the use of signage without an ABN a risk for the
supplier. It would be in a supplier’s best interest to issue ABNs advising beneficiaries
that they will have to pay for supplies and to post public notices in its store(s) which
inform beneficiaries of the fact that it is not a Medicare enrolled supplier, and that claims
for supplies purchased from that supplier will be denied payment by Medicare.
Medicare denial of payment on the basis of a supplier’s lack of a supplier number applies
to all varieties of medical equipment and supplies and to all Medicare beneficiaries
equally. Therefore, the usual restriction on routine notices to all beneficiaries does not
apply in this case. (See §40.3.6.4.D, “Routine ABN Prohibition Exceptions.”) Given the
potential for beneficiary disputes over suppliers’ public notice efforts to result in supplier
liability, all suppliers which do not have supplier numbers would be very well advised to
provide the standard written ABN to all Medicare beneficiaries, obtaining their signed
agreement. The use of written notices in conjunction with public notices will provide
maximum protection to suppliers as well as more surely providing proper advance notice
to beneficiaries so that they can make informed consumer decisions.
50.7.3.3 - ABNs for Medical Equipment and Supplies Claims Denied in
Advance Under §1834(a)(15) of the Act - Prior Authorization
Procedures
(Rev. 1, 10-01-03)
To qualify for waiver of the Refund Requirements under §1834(j)(4)(B) and §1879(h)(2)
of the Act (unassigned and assigned claims, respectively) for medical equipment and
supplies for which payment is denied in advance under §1834(a)(15) of the Act, the
ABN-G must clearly identify the particular item of medical equipment and supplies and
must state in the “Because:” box either: “Medicare has denied payment in advance and
we expect that Medicare will continue to deny payment.” or “Medicare requires that we
request an advance determination of coverage of this medical equipment and/or supplies.
We have not requested an advance determination, so we expect that Medicare will deny
payment.” as applicable. Denial of payment in advance under §1834(a)(15) of the Act
refers both to cases in which the supplier requested an advance determination and you
determined that the item would not be covered, and to cases in which the supplier failed
to request an advance determination when such a request is mandatory. (See §150.5.2,
“Knowledge Standards for §1834(a)(15) Denials.”)
50.8 - ABN Standards for Upgraded Durable Medical Equipment,
Prosthetics, Orthotics, and Supplies (DMEPOS)
(Rev. 2480, Issued: 06-01-12, Effective: 09-04-12, Implementation: 09-04-12)
Notifiers must give an ABN before a beneficiary receives a Medicare covered item
containing upgrade components that are not medically reasonable and necessary and not
paid for by the supplier. For example, an ABN must be issued when a notifier expects
that Medicare will not pay for additional parts or features of a usually covered item
because those parts and/or features are not medically reasonable and necessary. DME
upgrades involve situations in which the upgraded item or component has a different
Heath Insurance Common Procedure Coding System (HCPCS) code than the item that
will be covered by Medicare. Please refer to Chapter 20, Section 120 in this manual for
information on billing procedures for ABN upgrades.
ABNs cannot be used to charge beneficiaries for premium quality services described as
“excess components.” Similarly, ABNs cannot be used to shift liability for an item or
service that is described on the ABN as being “better” or “higher quality” on an ABN but
do not exceed the HCPCS code description.
50.9 - ABNs for Denials Under §1834(a)(17)(B) of the Act (Prohibition
Against Unsolicited Telephone Contacts)
(Rev. 2480, Issued: 06-01-12, Effective: 09-04-12, Implementation: 09-04-12)
A refund is required under §1834(a)(18) or §1879(h)(3) of the Act for both assigned and
unassigned claims unless prior to furnishing the item, a valid ABN was issued notifying
the beneficiary of potential nonpayment because the supplier violated the prohibition
against unsolicited telephone contacts. The supplier must obtain a signed ABN before
furnishing the item to the beneficiary.
Giving advance beneficiary notice by telephone does not qualify as notice in this case and
is not permissible. The supplier must either hand deliver or mail a written ABN and
obtain the beneficiary’s signature prior to making the unsolicited telephone contact.
Since unsolicited telephone contacts are expressly prohibited by statute, there is
presumption of supplier knowledge of this provision. To rebut this presumption, the
supplier must submit convincing evidence showing ignorance of the prohibition. A
previous denial of a claim for any item furnished by a particular supplier on the basis of
this prohibition is considered actual notice to that supplier. Such a denial shall be
construed as actual knowledge on all future claims.
50.10 - ABNs for Claims Denied Under §1834(j)(1) of the Act (Supplier
Did Not Meet Supplier Number Requirements)
(Rev. 2480, Issued: 06-01-12, Effective: 09-04-12, Implementation: 09-04-12)
Sections 1834(j)(4)(A) and 1879(h)(1) of the Act require issuance of a valid ABN
notifying the beneficiary of potential nonpayment because a supplier did not meet the
supplier number requirement. These provisions apply to both assigned and unassigned
claims.
Suppliers without a Medicare supplier number have the option of giving public notice to
beneficiaries regarding their Medicare status in lieu of issuing individual ABNs to all
Medicare beneficiaries. The supplier can qualify for a waiver of the refund requirements
if adequate public notice is given to beneficiaries informing them of the supplier’s failure
to meet Medicare’s supplier number requirements as long as the adequacy of such public
notice is not disputed by the beneficiary. An example of adequate public notice would
include clearly visible signs posted at the supplier’s place of business. If a supplier only
conducts business via the internet, a clearly visible notice on the supplier’s internet
business site is acceptable as long as such notice is also available in printed materials,
such as a supplier’s catalog. These public notices must be readily visible, in easily
readable plain language, in large print, and must be provided in the language(s)
commonly used in the locality.
In the event that the beneficiary disputes receipt of public notice, there is a presumption
that the supplier did not properly notify the beneficiary unless the supplier can provide
evidence to the contrary. Medicare contractors will not hold a beneficiary who cannot
read any such public notice liable.
If a supplier can show that s/he did not know that a purchase was being made either by or
for a Medicare beneficiary, s/he may seek protection from the refund requirements under
§1834(j)(4) of the Act.
Medicare contractors presume that suppliers know that a supplier number is required in
order for Medicare to make payment. Thus, a supplier would have to submit evidence to
the contrary to rebut this presumption. However, this presumption is not rebuttable if a
supplier has previously received a claim denial §1834(j)(1).
50.11 - ABNs for Claims Denied in Advance Under §1834(a)(15) of the
Act (When a Request for an Advance Determination of Coverage Is
Mandatory)
(Rev. 2480, Issued: 06-01-12, Effective: 09-04-12, Implementation: 09-04-12)
50.11.1 - Situations In Which Advance Coverage Determinations Are
Mandatory
(Rev. 2480, Issued: 06-01-12, Effective: 09-04-12, Implementation: 09-04-12)
A request for an advance determination of coverage of medical equipment and supplies is
mandatory under §1834(a)(15)(C)(i) & (ii) of the Act when:
• The item is listed by the Secretary as being subject to unnecessary utilization in
your contractor’s service area under §1834(a)(15)(A); or
• The supplier is listed by the Secretary under §1834(a)(15)(B) of the Act as a
supplier who has submitted a substantial number of claims, which have been
denied as not medically reasonable and necessary under §1862(a)(1) of the Act or
the Secretary has identified a pattern of over utilization.
In cases in which an advance coverage determination is mandatory, an ABN must be
issued to the beneficiary prior to furnishing the item. If the advance coverage
determination has not been received, or if the determination is that Medicare will not pay
for the care, an ABN is required prior to furnishing the requested item.
50.11.2 - Situations In Which Advance Coverage Determinations Are
Optional
(Rev. 1587, Issued: 09-05-08, Effective: 03-03-08, Implementation: 03-01-09)
A request for an advance determination of coverage of medical equipment and supplies is
optional under §1834(a)(15)(C)(iii) of the Act when the item is customized and either the
patient or the supplier requests an advance determination. In cases where an advance
coverage determination is optional and the beneficiary requests such a determination, an
ABN must be furnished prior to furnishing the requested item.
Every supplier is expected to know whether or not an advance coverage determination is
required for Medicare payment. The presumption of that supplier’s knowledge becomes
non-rebuttable after a single denial under §1834(a)(15) of a claim by a particular supplier.
50.12 - ABNs for items listed in a DMEPOS Competitive Bidding
Program
(Rev. 2480, Issued: 06-01-12, Effective: 09-04-12, Implementation: 09-04-12)
§1862 (a)(17) excludes Medicare payment for Competitive Bidding Program (CBP)
items/ services that are provided by a non-contract supplier in a Competitive Bidding
Area (CBA) except in special circumstances. A non-contracted supplier is permitted to
provide a beneficiary with an item or service listed in the CBP when the supplier properly
issues an ABN prior to delivery of the item or service per 42 CFR §414.408(e)(3)(ii). In
order for the ABN to be considered valid when issued under these circumstances, the
reason that Medicare may not pay must be clearly and fully explained on the ABN that is
signed by the beneficiary.
Sample wording for the “Reason Medicare May Not Pay” blank of the ABN:
Since we are not a contracted supplier, Medicare will not pay for this item. If you get this
item from a contracted supplier such as ABC Medical Supplies, Medicare will pay for it.
To be a valid ABN, the beneficiary must understand the meaning of the notice. Suppliers
must explain to the beneficiary that Medicare will pay for the item if it is obtained from a
different supplier in the area. While some suppliers may be reluctant to direct
beneficiaries to a specific contracted supplier, the non-contracted supplier should at least
direct the beneficiary to 1-800 –MEDICARE to find a local contracted supplier at the
beneficiary’s request.
50.13 - Collection of Funds and Refunds
(Rev. 2782, Issued: 09-06-13, Effective: 12-09-13, Implementation: 12-09-13)
A. Collection of Funds
A beneficiary’s agreement to be responsible for payment on an ABN means that the
beneficiary agrees to pay for expenses out-of-pocket or through any insurance other than
Medicare that the beneficiary may have. The notifier may bill and collect funds from the
beneficiary for noncovered items or services immediately after an ABN is signed, unless
prohibited from collecting in advance of the Medicare payment determination by other
applicable Medicare policy, State or local law. Regardless of whether they accept
assignment or not, providers and suppliers are permitted to charge and collect the usual
and customary fees; therefore, funds collected are not limited to the Medicare allowed
amounts.
If Medicare ultimately denies payment of the related claim, the notifier retains the funds
collected from the beneficiary unless the claim decision finds the provider/supplier liable.
When Medicare finds the provider/supplier liable or if Medicare or a secondary insurer
subsequently pays all or part of the claim for items or services previously paid by the
beneficiary to the notifier, the notifier must refund the beneficiary the proper amount in a
timely manner.
B. Refund Requirements Requiring Liability Notice
Under the Refund Requirements in §§1842(l) and 1879(h) of the Act, a beneficiary must
receive a properly executed ABN so that he or she is “on notice” of liability. By signing
the ABN, the beneficiary acknowledges that s/he understands the potential for liability
and agrees to pay for the item or service described. The refund requirements requiring
ABNs are:
1. Supplier claims under §1879(h) of the Act, citing three specific requirements
when assignment is accepted:
a. §1834(j)(1), when supplier number requirements for medical equipment
and supplies are not met;
b. §1834(a)(15), when medical equipment and/or supplies are denied in
advance; or
c. §1834(a)(17)(B), when there is a violation of the prohibition on
unsolicited telephone contacts for medical equipment and supplies.
2. Physician claims under §1842(l) from non-participating physicians when
assignment is not accepted for individual items and services that are denied on
the basis of §1862(a)(1).
Physicians must make prompt refunds unless they could not have been expected to know
that Medicare would not provide coverage or they notified the beneficiary in advance by
issuing the ABN. Refunds are considered prompt when made within 30 days of notice of
denial from Medicare or within 15 days after a determination on an appeal if an appeal is
made.
50.13.1 - Physicians’ Services Refund Requirements
(Rev. 2480, Issued: 06-01-12, Effective: 09-04-12, Implementation: 09-04-12)
The physicians’ services refund requirement provision, found in §1842(l) of the Act as
amended by the Omnibus Budget Reconciliation Act (OBRA) of 1986, requires timely
refunds for certain services. When a reduction in payment, not a full denial, occurs, the
physician must refund to the beneficiary amounts collected which exceed the Medicare
payment for the less extensive item or service. These refund requirements apply to both
participating and non-participating physicians.
When the beneficiary signs an ABN agreeing to accept responsibility for payment before
services are delivered, the collected funds can be retained. A refund is not required if the
physician did not know and could not reasonably have been expected to know that
Medicare would not pay for the services because they were not reasonable and necessary.
The Medicare contractor must notify the beneficiary in any case in which the physician
requests review of the denial or reduction in payment or asserts that a refund is not
required.
50.13.2 - DMEPOS Refund Requirements (RR) Provision for Claims for
Medical Equipment and Supplies
(Rev. 2480, Issued: 06-01-12, Effective: 09-04-12, Implementation: 09-04-12)
All suppliers who sell or rent medical equipment and supplies to Medicare beneficiaries
are subject to the refund provisions of §§1834(a)(18), 1834(j)(4) and 1879(h) of the Act,
whether accepting assignment or not. Medical equipment and supplies are defined in the
following statutes applicable to this section:
• Durable medical equipment, as defined in §1861(n) of the Act;
• Prosthetic devices, as described in §1861(s)(8) of the Act;
• Orthotics and prosthetics, as described in §1861(s)(9) of the Act;
• Surgical dressings, as described in §1861(s)(5) of the Act;
• Home dialysis supplies and equipment, as described in §1861(s)(2)(F) of the Act;
• Immunosuppressive drugs, as described in §1861(s)(2)(J) of the Act;
• Therapeutic shoes for diabetics, as described in §1861(s)(12) of the Act;
• Oral drugs prescribed for use as an anticancer therapeutic agent, as described in
§1861(s)(2)(Q) of the Act;
• Self-administered erythropoietin, as described in §1861(s)(2)(P) of the Act; and
• Other items as determined by the Secretary.
If a proper ABN is not issued prior to the receipt of one of the preceding items and the
above provisions apply, the beneficiary has no financial responsibility. The refund
provisions of the Act apply to both assigned and unassigned claims.
50.13.3 - Time Limits and Penalties for Physicians and Suppliers in
Making Refunds
(Rev. 2480, Issued: 06-01-12, Effective: 09-04-12, Implementation: 09-04-12)
A required refund must be made within specified time limits:
• The refund must be made to the beneficiary within 30 days after the date the
physician/supplier receives the remittance advice (RA) if the physician/supplier
does not request review of an initial full or partial denial; or
• The refund must be made to the beneficiary within 15 days after the date the
physician/supplier receives the notice of the review determination if the
physician/supplier requests review within 30 days of receipt of the notice of the
initial determination.
Physicians/suppliers who knowingly and willfully fail to make a refund where required
within these time limits may be subject to civil money penalties and/or exclusion from
the Medicare program.
The beneficiary should contact the contractor or CMS when a physician/supplier fails to
make a timely refund. If the contractor determines that a physician/supplier failed to
make a refund, it will contact the physician/supplier in person or by telephone to discuss
the facts of the case. The contractor will attempt to determine why the required refund
has not been made and will explain the legal requirements. The contractor will determine
whether referral to the Office of Inspector General (OIG) or CMS is appropriate and will
make appropriate referrals OIG if necessary. The OIG or CMS may impose civil money
penalties, assessments, and sanctions if he or she fails to make the required refund. The
contractor will retain a detailed written report of contact.
50.13.4 - Supplier’s Right to Recover Resalable Items for Which Refund
Has Been Made
(Rev. 2480, Issued: 06-01-12, Effective: 09-04-12, Implementation: 09-04-12)
If the Medicare contractor denies Part B payment for an item of medical equipment or
supplies on the basis of §1862(a)(1), §1834(a)(17)(B), §1834(j)(1), or §1834(a)(15) of the
Act, and the beneficiary is relieved of liability for payment for that item under
§1834(a)(18) of the Act, the effect of the denial, subject to State law, cancels the contract
for the sale or rental of the item. If the item is resalable or re-rentable, the supplier is
permitted to repossess the item. Suppliers are strongly discouraged from recovering items
which are consumable or not fit for resale or re-rental.
If a supplier makes proper refund under §1834(a)(18) of the Act, Medicare rules do not
prohibit the supplier from recovering from the beneficiary items which are resalable or
re-rentable. When the contract of sale or rental is cancelled on the basis described above,
the supplier may enter into a new sale or rental transaction with the beneficiary as long as
the beneficiary has been informed of their liability. If the circumstances which preclude
payment for the item have been removed (e.g. the supplier has now obtained a supplier
number when that supplier did not have one before), the supplier may submit to the
Medicare contractor a new claim based on the resale or re-rental of the item to the
beneficiary. If payment is still precluded, the supplier can issue an ABN.
Under the capped-rental method, if the Medicare contractor determines that the supplier
is obligated to make a refund, the supplier must repay Medicare those rental payments
that the supplier has received for the item. However, the Medicare beneficiary must
return the item to the supplier.
50.14 - CMS Regional Office (RO) Referral Procedures
(Rev. 4250; Issued: 03-08-10; Effective: 04-08-19; Implementation: 04-08-19)
The term Medicare beneficiary identifier (Mbi) is a general term describing a
beneficiary's Medicare identification number. For purposes of this manual, Medicare
beneficiary identifier references both the Health Insurance Claim Number (HICN) and
the Medicare Beneficiary Identifier (MBI) during the new Medicare card transition
period and after for certain business areas that will continue to use the HICN as part of
their processes.
Prior to submitting any materials to the RO, the Medicare contractor will contact the RO
to determine how to proceed in referring a potential sanction case for violation of refund
requirements. When referring these types of cases to the region, the contractor should
include the following:
A. Background of the Subject
The subject’s business name, address, Medicare Identification Number, owner’s full
name and Social Security Number, Tax Identification Number (if different), and a brief
description of the subject’s special field of medical equipment, supplies, or services.
B. Origin of the Case
A brief description of how the violations were discovered.
C. Statement of Facts
A statement of facts in chronological order describing each failure to comply with the
refund requirements.
D. Documentation
Include copies of written correspondence and written summaries of any meetings or
telephone contacts with the beneficiary and the supplier regarding the supplier’s failure to
make a refund. Include a listing of the following for each item or service not refunded to
the beneficiary by the supplier (grouped by beneficiary):
• Beneficiary Name and Medicare beneficiary identifier;
• Claim Control Number;
• Procedure Code (CPT-4 or HCPCS) of nonrefunded item or service;
• Procedure Code modifier;
• Date of Service;
• Place of Service Code;
• Submitted Charge;
• Units (quantity) of Item or Service; and
• Amount Requested to be Refunded.
Include any additional information that may be of value to the RO.
50.15 - Special Considerations
(Rev. 2480, Issued: 06-01-12, Effective: 09-04-12, Implementation: 09-04-12)
50.15.1 - Obligation to Bill Medicare
(Rev. 2782, Issued: 09-06-13, Effective: 12-09-13, Implementation: 12-09-13)
Upon receipt of an ABN, beneficiaries always have the right to ask the notifer to submit a
claim to Medicare for an official payment decision. A beneficiary must receive the
item/service described in the ABN and choose Option 1 in order to request Medicare
claim submission.
Providers/suppliers should refer to Publication 100-4, Chapter 1, Section 60 for
instructions on submitting claims for statutorily noncovered items or services.
Note: Providers/suppliers will not violate mandatory claims submission rules under
Section1848 of the Social Security Act when a claim is not submitted to Medicare at the
beneficiary’s request by their choice of Option 2 on the ABN.
50.15.2 - Emergencies or Urgent Situations/ Ambulance Transport
(Rev. 2782, Issued: 09-06-13, Effective: 12-09-13, Implementation: 12-09-13)
A. ABN issuance in emergency or urgent situations -
In general, a notifier may not issue an ABN to a beneficiary who has a medical
emergency or is under similar duress. Forcing delivery of an ABN during an emergency
may be considered coercive. ABN usage in the ER may be appropriate in some cases
where the beneficiary is medically stable with no emergent health issues.
B. ABN issuance for ambulance transport -
Issuance of the ABN is mandatory for ambulance transport services if all of the following
3 criteria are met:
1. The service being provided is a Medicare covered ambulance benefit under
§1861(s)(7) of the SSA and regulations under this section as stipulated in 42 CFR
§410.40 -.41;
2. The provider believes that the service may be denied, in part or in full, as “not
reasonable and necessary” under § 1862(a)(1)(A) for the beneficiary on that particular
occasion; and
3. The ambulance service is being provided in a non-emergency situation. (The
patient is not under duress.)
Simplified, there are three questions to ask when determining if an ABN is required for
an ambulance transport. If the answer to all of the following 3 questions is “yes”, an
ABN must be issued:
1. Is this service a covered ambulance benefit? AND
2. Will payment for part or all of this service be denied because it is not reasonable
and necessary? AND
3. Is the patient stable and the transport non-emergent?
Example: A beneficiary requires ambulance transportation from her SNF to dialysis
but insists on being transported to a new dialysis center 10 miles beyond the nearest
dialysis facility.
Medicare covers this type of transport; however, since this particular transport is not
to the nearest facility, it is not considered a covered Medicare benefit. Therefore, NO
ABN is required. As a courtesy to the beneficiary, an ABN could be issued as a
voluntary notice alerting her to the financial responsibility.
Example: A beneficiary requires non-emergent ground transport from a local hospital
to the nearest tertiary hospital facility; however, his family wants him taken by air
ambulance.
The ambulance service is a covered benefit, but the level of service (air transport) is
not reasonable and necessary for this patient’s condition. Therefore, an ABN MUST
be issued prior to providing the service in order for the provider to shift liability to the
beneficiary.
ABN issuance is mandatory only when a beneficiary’s covered ambulance transport is
modified to a level that is not medically reasonable and necessary and will incur
additional costs. If an ambulance transport is statutorily excluded from coverage because
it fails to meet Medicare’s definition of the ambulance benefit, a voluntary ABN may be
issued to notify the beneficiary of his/her financial liability as a courtesy.
50.15.3 - Hospice and Comprehensive Outpatient Rehabilitation Facility
(CORF)
(Rev. 2480, Issued: 06-01-12, Effective: 09-04-12, Implementation: 09-04-12)
50.15.3.1 - Special Issues Associated with the ABN for Hospice
Providers
(Rev. 2782, Issued: 09-06-13, Effective: 12-09-13, Implementation: 12-09-13)
A. General Use - Hospice
Hospice providers issue the ABN, Form CMS-R-131, according to the instructions given
in this section. Mandatory use of the ABN is very limited for hospices. Hospice
providers are responsible for providing the ABN when required as listed below for items
and services billable to hospice. Hospices are not responsible for issuing an ABN when a
hospice patient seeks care outside of the hospice’s jurisdiction.
The three situations that would require issuance of the ABN by a hospice are:
• Ineligibility because the beneficiary is not determined to be “terminally ill” as
defined in §1879(g)(2) of the Act;
• Specific items or services that are billed separately from the hospice payment,
such as physician services, are not reasonable and necessary as defined in either
§1862(a)(1)(A) or §1862(a)(1)(C); or
• The level of hospice care is determined to be not reasonable or medically
necessary as defined in §1862(a)(1)(A) or §1862(a)(1)(C), specifically for the
management of the terminal illness and/or related conditions.
Below are examples of scenarios that mandate ABN issuance and the accompanying
denial reason that could be listed in Blank (E) on the ABN.
Example A:
Patient with chronic obstructive pulmonary disease and congestive heart failure is
referred for hospice care; however, the hospice physician determines that the severity
of the patient’s diseases has recently improved with medical management, and the
patient is not terminal.
Reason in Blank “E” on the ABN: “Medicare does not pay for hospice care when
your illness is not considered terminal.”
Example B:
A hospice patient’s care was upgraded from Routine Home Care (RHC) to
Continuous Home Care (CHC) during a period of crisis. The medical crisis improved
and resolved so that CHC was no longer medically reasonable and necessary. The
family requested that CHC services be provided for two more days and were willing
to pay out of pocket for the additional care. (The family did not want respite care
services.)
Reason in Blank “E” on the ABN: “Medicare will not pay for this level of care when
it is not medically reasonable and necessary.”
Example C:
A hospice patient’s family requests daily physician visits that are not medically
reasonable and necessary for the patient’s current condition.
Reason in Blank “E” on the ABN: “Medicare will not pay for physician visits that are
not medically reasonable and necessary.”
End of all Medicare covered hospice care –
When it is determined that a beneficiary who has been receiving hospice care is no longer
terminally ill and the patient is going to be discharged from hospice, the hospice may be
required to issue the Notice of Medicare Noncoverage (NOMNC), CMS 10123 (see the
“FFS ED Notices” link on the CMS website at http://www.cms.gov/Medicare/Medicare-
General-Information/BNI/index.html for details). If upon discharge the patient wants to
continue receiving hospice care that will not be covered by Medicare, the hospice would
issue an ABN to the beneficiary in order to transfer liability for the noncovered care to
the beneficiary. If no further hospice services are provided after discharge, ABN
issuance would not be required.
B. Hospice Care Delivered by Non-Hospice Providers
It is the hospice’s responsibility to issue an ABN when a beneficiary who has elected the
hospice benefit chooses to receive inpatient hospice care in a hospital that is not under
contract with the hospice. The hospice may delegate delivery of the ABN to the hospital
in these cases.
C. When ABNs Are Not Required for Hospice Services
1. Revocations
Hospice beneficiaries or their representatives can revoke the hospice benefit.
Revocations are not considered terminations under liability notice policy since the
beneficiary is exercising his/her own freedom of choice. Therefore, no ABN is
required.
2. Respite Care Beyond Five Consecutive Days
Respite care is limited to five consecutive days under the Act. When respite care
exceeds five consecutive days, an ABN is not required since additional days of respite
care are not part of the hospice benefit. CMS encourages hospice providers to give
the ABN as a voluntary notice to inform patients of financial liability when more than
five days of respite care will be provided.
3. Transfers
Beneficiaries are allowed one transfer to another hospice during a benefit period.
However, subsequent transfers within the same benefit period are not permitted. In
either case, an ABN is not required.
4. Failure to Meet the Face to Face Requirement
The ABN must not be issued when the face to face requirement for hospice
recertification is not met within the required timeframe. Failure to meet the face to
face requirement for recertification should not be misrepresented as a determination
that the beneficiary is no longer terminally ill.
5. Room and Board Costs for Nursing Facility Residents
Since room and board are not part of the hospice benefit, an ABN would not be
required when the patient elects hospice and continues to pay out of pocket for long
term care room and board.
50.15.3.2 - Special Issues Associated with the ABN for CORFs
(Rev. 2782, Issued: 09-06-13, Effective: 12-09-13, Implementation: 12-09-13)
Since Comprehensive Outpatient Rehabilitation Facility (CORF) services are billed under
Part B, CORF providers must issue the ABN according to the instructions given in this
section. The ABN is issued by CORFs before providing a service that is usually covered
by Medicare but may not be paid for in a specific case because it is not medically
reasonable and necessary.
When all Medicare covered CORF services are going to end, CORF’s are required to
issue a notice regarding the beneficiary’s right to an expedited determination called a
Notice of Medicare Noncoverage (NOMNC), CMS 10123. Please see the “FFS ED
Notices” link on the CMS website at http://www.cms.gov/Medicare/Medicare-General-
Information/BNI/index.html for these notification requirements. Upon termination of all
CORF care, the ABN would be issued only if the beneficiary wants to continue receiving
some or all services that will not be covered by Medicare because they are no longer
considered medically reasonable and necessary. An ABN would not be issued if no
further CORF services are provided.
50.15.4 - Home Health Agency use of the ABN
(Rev. 2878, Issued: 02-14-14 Effective: 05-15-14 Implementation: 05-15-14)
A. General Use - HHAs
The ABN replaces the Home Health Advance Beneficiary Notice (HHABN), Form CMS-
R-296, Option Box 1. Background information on the HHABN and information
pertaining to the Home Health Change of Care Notice (HHCCN), Form CMS-10280,
which replaces the HHABN Option Box 2 and 3 formats, can be found in Section 60 of
this chapter. Do not use the ABN in place of HHABN Option Box 2 or HHABN Option
Box 3.
HHAs are required to issue an ABN to Original Medicare beneficiaries in specific
situations where “limitation on liability” (LOL) protection is afforded under §1879 of the
Act for items and/or services that the HHA believes Medicare will not cover (see Table 1
below). In these circumstances, if the beneficiary chooses to receive the items/services in
question and Medicare does not cover the home care, HHAs may use the ABN to shift
liability for the non-covered home care to the beneficiary.
ABNs are not used in managed care; however, when a beneficiary transitions to Medicare
managed care from Original Medicare during a home health episode, ABN issuance is
required when there are potential charges to the beneficiary that fall under the LOL
protections.
HHAs should contact their A/B MAC (HHH) if they have questions on the ABN or
related instructions, since A/B MACs (HHH) process home health claims for Original
Medicare. The following chart summarizes the statutory provisions related to ABN
issuance for LOL purposes:
Table 1.
Application of LOL for the Home Health Benefit
Citation from
the Act
Brief Description of Situation
Recommended Explanation for “Reason
Medicare May Not Pay” section of ABN
§1862(a)(1)(A)
Care is not reasonable and
necessary
Medicare does not pay for care that is not
medically reasonable and necessary.
§1862(a)(9)
Custodial care is the only care
delivered
Medicare does not usually pay for custodial
care, except for some hospice services.
§1879(g)(1)(A)
Beneficiary is not homebound
Medicare requires that a beneficiary cannot
leave home (with certain exceptions) in
order to cover services under the home
health benefit
Citation from
the Act
Brief Description of Situation
Recommended Explanation for “Reason
Medicare May Not Pay” section of ABN
§1879(g)(1)(B)
Beneficiary does not need
skilled nursing care on an
intermittent basis
Medicare requires part-time or intermittent
need for skilled nursing care in order to
cover services under the home health
benefit
B. Home Health Care Triggering Events
HHAs may be required to provide an ABN to an Original Medicare beneficiary when a
triggering event occurs. Section 50.5 explains triggering events in general, and they are
outlined specific to home health care below.
Table 2 - Triggering Events for ABN issuance by HHAs*
*ABN issuance is only required when the HHA is going to provide the beneficiary with
the item or service that is being initiated, reduced, or terminated as described in the Table
2. If the beneficiary does not want the item or service that is being initiated, reduced, or
terminated, no ABN is required.
HHA Initiations
Initiations occur at the start of home health care and may also occur when a service is
added to an existing home health plan of care (POC). An ABN must be issued to the
beneficiary prior to receiving care that is usually covered by Medicare, but in this
particular instance, it is not covered or may not be covered by Medicare because:
• the care is not medically reasonable and necessary,
• the beneficiary is not confined to his/her home (considered homebound),
• the beneficiary does not need skilled nursing care on an intermittent basis,
or
• the beneficiary is receiving custodial care only.
EVENT
DESCRIPTION
Initiation
When an HHA expects that Medicare will not
cover an item and/or service delivered under a
planned course of treatment from the start of a
spell of illness, OR before the delivery of a one-
time item and/or service that Medicare is not
expected to cover.
Reduction
When an HHA expects that Medicare coverage
of an item or service will be reduced or stopped
during a spell of illness while continuing others,
including when one home health discipline ends
but others continue.
Termination
When an HHA expects that Medicare coverage
will end for all items and services in total.
If the HHA believes that Medicare will not or may not pay for care for a reason other
than one listed directly above, issuance of the ABN is not required.
An ABN is required at initiation only when there is potential for the beneficiary or his/her
secondary insurance to incur a charge. The ABN informs the beneficiary of the potential
charges and allows him/her to make a decision regarding whether or not s/he wants care
that won’t be paid for by Medicare. An ABN signed at initiation of home health care for
items and/or services not covered by Medicare is effective for up to a year, as long as the
items/services being given remain unchanged from those listed on the notice.
Example 1 – Initiation:
A beneficiary requires skilled nursing wound care 3 times weekly; however, she is
not confined to the home. She wants the care done at her home by the HHA.
The ABN must be issued to this beneficiary before providing home care that will not
be paid for by Medicare. This allows the beneficiary to make an informed decision on
whether or not to receive the non-covered care and accept the financial obligation.
Any one-time care that is provided and completed in a single encounter is considered an
initiation in terms of triggering events and is subject to ABN issuance requirements if
applicable. When an HHA performs an initial assessment of a beneficiary prior to
admission but does not admit the beneficiary, an ABN is not required if there is no charge
for the assessment. However, if an HHA charges for an assessment, the HHA must
provide notice to the beneficiary before performing and charging for this service.
Since Medicare has specific requirements for payment of home health services, there may
be occasions where a payment requirement is not met, and therefore, the HHA expects
that Medicare will not pay for the services. The HHA cannot use the ABN to transfer
liability to the beneficiary when there is concern that a billing requirement may not be
met. (For example, a home health agency can’t issue an ABN at initiation of home care
services in order to charge the beneficiary if the provider face to face encounter
requirement is not met.)
Reductions
Reductions involve any decrease in services or supplies, such as frequency, amount, or
level of care, provided by the HHA and/or care that is part of the POC. If a reduction
occurs for an item or service that will no longer be covered by Medicare but the
beneficiary wants to continue to receive the care and assume the financial charges, the
HHA must issue the ABN prior to providing the noncovered items or services.
Technically, this is an initiation of noncovered services following a reduction of services.
Example 2 - Reduction with subsequent initiation:
The beneficiary requires physical therapy (PT) for gait retraining 5 times per week for
2 weeks, then reduce to 3 times weekly for 2 weeks. After 2 weeks of PT, the
beneficiary wants to continue therapy 5 times a week even though this amount of
therapy is no longer medically reasonable and necessary. The HHA would issue an
ABN to the beneficiary so that he understands the situation and can consent to
financial responsibility for the PT not covered by Medicare.
3. Terminations
A termination is the cessation of all Medicare covered services provided by the HHA. If
the patient wants to continue receiving care from the HHA that will not be covered by
Medicare for any of the statutory reasons listed in Table 1 and a physician orders the
services, an ABN must be issued to the beneficiary in order for the HHA to charge the
beneficiary or secondary insurer. If the beneficiary won’t be getting any further home
care after discharge, there is no need for ABN issuance.
When all Medicare covered home health care is terminated, HHAs may sometimes be
required to deliver the Notice of Medicare Provider Non-Coverage, (NOMNC), CMS-
10123. The NOMNC informs beneficiaries of the right to an expedited determination by
a Quality Improvement Organization (QIO) if they feel that termination of home health
services is not appropriate. Detailed information and instructions for issuing the NOMNC
can be found on the CMS website under the link for “FFS ED Notices” at:
http://www.cms.gov/Medicare/Medicare-General-Information/BNI/index.html.
If a beneficiary requests a QIO review upon receiving a NOMNC, the QIO will make a
fast decision on whether covered services should end. If the QIO decides that Medicare
covered care should end and the patient wishes to continue receiving care from the HHA
even though Medicare will not pay, an ABN must be issued to the beneficiary since this
would be an initiation of non-covered care.
C. Effect of Other Insurers/Payers
If a beneficiary is eligible for both Original Medicare and Medicaid (dually eligible) or is
covered by Original Medicare and another insurance program or payer, ABN
requirements still apply. Other payers can include waiver programs, Office on Aging
funds, community agencies (e.g., Easter Seals) or grants. When issuing ABNs to dual
eligibles, HHAs are permitted to direct the beneficiary to select a particular option box on
the notice to facilitate coverage by the other payer. This is an exception to the usual
ABN issuance guidelines prohibiting the notifier from selecting one of the options for the
beneficiary. When a Medicare claim denial is necessary to facilitate payment by
Medicaid or a secondary insurer, HHAs should instruct beneficiaries to select Option 1
on the ABN. HHAs may add a statement in the “Additional Information” section to help
a dual eligible better understand the payment situation such as, “We will submit a claim
for this care with your other insurance,” or “Your Medical Assistance plan will pay for
this care.” HHAs may also use the “Additional Information” on the ABN to include
agency specific information on secondary insurance claims or a blank line for the
beneficiary to insert secondary insurance information. Agencies can pre-print language
in the “Additional Information” section of the notice.
Some States have specific rules established regarding HHA completion of liability
notices in situations where dual eligibles need to accept liability for Medicare noncovered
care that will be covered by Medicaid. Medicaid has the authority to make this assertion
under Title XIX of the Act, where Medicaid is recognized as the “payer of last resort”,
meaning other Federal programs like Medicare (Title XVIII) must pay in accordance with
their own policies before Medicaid picks up any remaining charges. In the past, some
States directed HHAs to select the third checkbox on the HHABN to indicate the choice
to bill Medicare. On the ABN, the first check box under the “Options” section indicates
the choice to bill Medicare and is similar to the third checkbox on the outgoing HHABN.
Note: If there has been a State directive to submit a Medicare claim for a denial,
HHAs must mark the first check box when issuing the ABN.
HHAs serving dual eligibles should comply with existing HHABN State policy within
their jurisdiction as applicable to the ABN unless the State instructs otherwise. The
appropriate option selection for dual eligibles will vary depending on the State’s
Medicaid directive. If the HHA’s State Medicaid office does NOT want a claim filed
with Medicare prior to filing a claim with Medicaid, the HHA should direct the
beneficiary to choose Option 2. When Option 2 is chosen based on State guidance, but
the HHA is aware that the State sometimes asks for a Medicare claim submission at a
later time, the HHA must add a statement in the “Additional Information” box such as
“Medicaid will pay for these services. Sometimes, Medicaid asks us to file a claim with
Medicare. We will file a claim with Medicare if requested by your Medicaid plan.”
D. HHA Exceptions to ABN Notification Requirements
ABN issuance is NOT required in the following HHA situations:
• initial assessments (in cases where beneficiaries are not admitted) for which
HHAs do not charge;
• care that is never covered by Medicare under any circumstances (i.e., an HHA
offers complimentary hearing aid cleaning and maintenance);
• telehealth monitoring used as an adjunct to regular covered HH care; or
• noncovered items/services that are part of care covered in total under a Medicare
bundled payment (e.g., HH prospective payment system (PPS) episode payment).
E. ABN for Voluntary Notice by HHAs
HHAs may also use the ABN as a voluntary notice as described in Section 50.3.2.
Example 3 - Voluntary ABN issuance by an HHA:
A beneficiary is receiving home health services, and his physician orders telehealth
monitoring as an adjunct to the regular home health visits. The HHA elects to issue
the ABN before telehealth monitoring begins as a courtesy to the beneficiary and to
prepare him for future billing statements. Per §1895(e) of the SSA, telehealth
services are outside of the scope of HHA services covered by the prospective
payment system. Thus, HHAs providing telehealth as an addition to covered
Medicare services are not required to issue an ABN for the never covered telehealth
services.
F. Effect of Initial Payment Determinations on Liability
An ABN informs a beneficiary of his/her HHA’s expectation with regard to Medicare
coverage. If the care described on the ABN is provided, Medicare makes an actual
payment determination on the items and/or services at issue when adjudicating the related
claim. Such adjudications may uphold the provider’s expectation, in which case the
beneficiary will remain liable for payment if agreeing to accept this liability based on a
valid ABN. However, adjudication may not conform to the provider’s expectation, in
which case the decision made on the claim supersedes the expectation given on the ABN.
That is, Medicare may cover and pay for care despite the HHA’s expectation, or deny the
claims and find the provider liable. In such cases, if the HHA collected funds from the
beneficiary, the HHA must promptly refund the appropriate amount to the beneficiary.
G. Use of abbreviations
HHAs were instructed to avoid using abbreviations when using the HHABN. When
completing the ABN, HHAs must avoid using abbreviations in the body of the notice
unless the abbreviation is already spelled out elsewhere. For example, an abbreviation
such as “PT” that can have multiple meanings in a home health setting (part-time,
physical therapy, prothrombin time) should be spelled out at least once on the ABN next
to the abbreviation of the word(s). When this is done, the abbreviation can be used again
on the notice. ABNs containing abbreviations that are not defined in this manner on the
notice may be invalidated by contractors.
H. Cost Estimate
HHAs should follow the ABN form instruction guidelines for providing cost estimates
for items or services. The cost estimate must be a good faith estimate based on agency
charges and the expected frequency and duration of each service. Cost estimates per visit
or per number of visits weekly are acceptable. A difference in the cost estimate and
actual cost will not automatically invalidate the ABN. The cost estimate must give the
beneficiary an idea of what his/her out of pocket costs might be if s/he chooses to receive
the care listed on the ABN.
Cost estimate examples:
$440 for 4 weekly nursing visits in 1/13.
$260 for 3 physical therapy visits 1/3-1/7/13.
$50 for spare right arm splint.
When more than one item and/or service is at issue, the HHA must enter separate cost
estimates for each item or service as clearly as possible, including information on the
period of time involved when appropriate.
50.15.5 - Outpatient Therapy Services
(Rev. 2782, Issued: 09-06-13, Effective: 12-09-13, Implementation: 12-09-13)
A. American Taxpayer Relief Act (ATRA) of 2012 (PL 112-240, January 3, 2013)
and Outpatient Therapy Services
Section 603 (c) of the ATRA amended §1833(g)(5) of the Act to provide limitation of
liability protections to beneficiaries receiving outpatient therapy services on or after
January 1, 2013, when services are denied and the services provided are in excess of
therapy cap amounts and don’t qualify for a therapy cap exception. This amendment
affected financial liability for certain therapy services that exceed the cap.
Prior to the ATRA, claims for therapy services at or above therapy caps that did not
qualify for a coverage exception were denied as a benefit category denial, and the
beneficiary was financially liable for the non-covered services. CMS had encouraged
suppliers and providers to issue a voluntary ABN as a courtesy; however, ABN issuance
wasn’t required for the beneficiary to be held financially liable. Now, the
provider/supplier must issue a valid, mandatory ABN to the beneficiary before
providing services above the cap when the therapy coverage exceptions process isn’t
applicable. ABN issuance allows the provider to charge the beneficiary if Medicare
doesn’t pay. If the ABN isn’t issued when it is required and Medicare doesn’t pay the
claim, the provider/supplier will be liable for the charges.
B. Mandatory ABN issuance for therapy services
Therapists are required to issue the ABN to beneficiaries prior to providing therapy that is
not medically reasonable and necessary regardless of the therapy cap. Statutory changes
(described in the section above) mandate ABN issuance when therapy services that aren’t
medically reasonable and necessary exceed the cap amount. Policies for mandatory ABN
issuance for services below the therapy cap remain unchanged. If a beneficiary will be
getting therapy services that won’t be covered by Medicare because the services aren’t
medically necessary, an ABN must be issued before the services are provided so that the
beneficiary can choose whether or not to get the services and accept financial
responsibility for them.
Example 1 – Therapy cap is not met - ABN Mandatory
Mr. X has been receiving physical therapy (PT) three times per week, and currently,
he has achieved all his PT goals established in the plan of care (POC). The total
amount applied to his therapy cap this year is $780. Mr. X requests continued PT
services two times per week even though PT is no longer medically necessary. In this
example, the ABN must be issued prior to providing the services that won’t be
covered by Medicare because they are no longer medically necessary.
Example 2 – Therapy cap has been met - ABN Mandatory
Ms. Z has recently been receiving physical therapy (PT) three times per week, and
she has achieved all her PT goals established in the POC. The total amount applied
towards her therapy cap this year is $1900. Ms. Z. requests continued PT services
two times a week even though PT is no longer medically necessary. In this example,
the ABN must be issued prior to providing the services that are not medically
necessary and exceed the cap in order for the therapist to transfer liability and charge
the beneficiary.
Sample wording for ABN completion in either Example 1 or 2:
1
st
column of ABN table labeled “D”. (Remove “D” and all other lettering on the ABN
prior to issuance and insert “Services” in all blanks labeled “D”.)
“Physical therapy services two times per week for three weeks.”
Under column labeled “Reason Medicare May Not Pay”:
“You have met your physical therapy goals, and physical therapy is no longer medically
necessary. Medicare doesn’t pay for physical therapy services that aren’t medically
reasonable and necessary.”
In cases such as these, if Medicare denies the claim and a valid ABN was issued,
financial liability shifts to the beneficiary. If the provider fails to issue an ABN for
therapy that is not medically necessary, the provider will be held financially liable if
Medicare denies the claim.
Example 3 – Therapy cap met - No ABN required
Mr. A has been receiving PT three times a week and has not met his PT goals. Mr. A
has met his therapy cap of $1900, but additional PT above the cap is medically
reasonable and necessary. Since Mr. A qualifies for a therapy cap exception, his
continued therapy above the cap will be covered by Medicare. When the therapist
submits claims for the necessary therapy that exceeds the cap amount, the –KX
modifier is used to attest that therapy beyond the cap amount is medically reasonable
and necessary. In this example, an ABN is not issued to Mr. A. since the ABN is only
issued for therapy above the cap that is not medically reasonable and necessary.
Providers/suppliers must not issue the ABN to all beneficiaries who receive services that
exceed the cap amount.
C. Voluntary ABN issuance for therapy services
With the aforementioned ATRA changes to liability protections for therapy services, a
provider/supplier will seldom encounter situations for using a voluntary ABN or an
optional notification for non-covered therapy services. (See 50.3.2 for information on
voluntary ABN issuance.)
An example of therapy services that are never covered by Medicare are physical therapy
services rendered by a chiropractor. So, a chiropractor offering physical therapy services
as allowed by his/her state’s scope of practice could issue a voluntary ABN to the
beneficiary.
D. ABN issuance for services above the therapy threshold
Therapy threshold amounts are greater than therapy cap amounts. Since the ATRA
amendment of §1833(g)(5) of the Act provides limitation of liability protections for
therapy services above the cap, therapy services above the threshold are affected. Prior to
this statutory amendment, providers weren’t required to issue an ABN when providing
services in excess of the threshold, and if Medicare denied a claim for services above the
threshold, the beneficiary could be held financially liable. Now, ABN issuance is
required in order to transfer liability to the beneficiary for therapy services above the
threshold that are not medically reasonable and necessary. In some cases, an ABN issued
for therapy services above the cap will be effective for therapy above the threshold.
When the beneficiary nears the annual threshold, a step-wise approach can help
determine if ABN issuance is required.
Step 1: Was an ABN already issued for therapy above the cap?
a. Yes – ABN issued, services above the threshold listed
If the beneficiary has already received an ABN for therapy above the cap listing the
therapy services to be provided in excess of the threshold, the ABN requirement has
been met. No additional beneficiary notification is needed.
b. Yes – ABN issued, services above the threshold not listed
If the beneficiary has already received an ABN for therapy above the cap and the
ABN doesn’t include the therapy services to be provided in excess of the threshold,
the provider must issue a new ABN listing the services that won’t be covered.
Example: Mr. Jones requires both PT and SLP services. He reached the cap
amount for PT-SLP services, and PT goals were met. However, Mr. Jones
requested continued PT services that were not medically necessary; so, an ABN
for continued PT services was issued per CMS guidelines. Mr. Jones had not met
SLP goals when he reached the cap amount for PT-SLP services. SLP services
above the cap were medically reasonable and necessary and covered by the
Medicare therapy exceptions process. He met SLP goals just as he reached the
threshold for PT-SLP services. He has requested continued SLP services that
aren’t medically necessary. A separate ABN for the SLP services must be issued.
c. No – ABN never issued.
An ABN was never issued for therapy services because the beneficiary received
therapy above the cap amount that was medically reasonable and necessary and
covered as a Medicare therapy exception.
Go to Step 2.
Step 2: Are therapy services above the threshold medically reasonable and
necessary?
a. Yes
When the provider believes that therapy services above the threshold are medically
reasonable and necessary, an ABN should not be issued. Go to Step 3.
b. No
At any point, when the provider believes that therapy services won’t be covered by
Medicare because they aren’t medically reasonable and necessary, an ABN must be
issued.
60 - Home Health Change of Care Notice (HHCCN), Form CMS-10280
(Rev. 2781, Issued: 09-06-13, Effective: 12-09-13, Implementation: 12-09-13)
This section provides the standards for use by home health agencies (HHAs) in
implementing the Home Health Change of Care Notice (HHCCN), Form CMS-10280,
requirements. The HHCCN is issued to Original Medicare beneficiaries before reducing
or terminating most ongoing care provided by the HHA.
HHCCN Quick Glance Guide
This is an abbreviated reference tool and is not meant to replace or supersede any of the directives contained in
Section 60.
Notice Name
Home Health Change of Care Notice (HHCCN)
Notice Number
Form CMS-10280
Issued by
Home Health Agency (HHA) provider
Recipient
Original Medicare (fee for service) beneficiary receiving home health care
Pertinent Information
The HHCN replaces HHABN Option Box 2 and Option Box 3.
The Advance Beneficiary Notice of Noncoverage (ABN), CMS-R-131, replaces
HHABN Option Box 1.
See section 50 for ABN information and instructions.
Change of care notice
Prior to the HHA reducing or
discontinuing care listed in the
beneficiary’s plan of care (POC) for
administrative reasons specific to the
HHA on that occasion
Immediately on determination, or if
possible, provide enough time for
the beneficiary to arrange to obtain
the reduced or discontinued home
health care service(s) from a
different HHA.
No.
Prior to the HHA reducing or
discontinuing Medicare covered care
listed in the POC because of a
physician ordered change in the plan
of care or a lack of orders to
continue the care
Notify the beneficiary before the
actual reduction or discontinuation,
if possible.
No.
The HHCCN replaces the Home Health Advance Beneficiary Notice (HHABN), CMS-R-
296, Option Box 2 and Option Box 3. Option Box 1 of the HHABN is replaced by the
existing Advance Beneficiary Notice of Noncoverage (ABN),CMS-R-131, which is
detailed in Section 50 of this chapter. HHAs should begin using the ABN and HHCCN
in place of the HHABN as soon as possible since the HHABN will be discontinued. The
date for mandatory use of the HHCCN and ABN in place of the HHABN will be posted
on the web link for home health notices at http://www.cms.gov/Medicare/Medicare-
General-Information/BNI/index.html.
Table 1 HHA Notice Changes
Instead of:
Use:
HHABN Option Box 1
ABN (CMS-R-131)
HHABN Option Box 2
HHCCN
HHABN Option Box 3
HHCCN
60.1 - Background on the HHCCN
(Rev. 2781, Issued: 09-06-13, Effective: 12-09-13, Implementation: 12-09-13)
HHAs have issued HHABNs related to the absence or cessation of Medicare coverage
when a beneficiary had liability protection under §1879 of the Social Security Act (the
Act) since 2002. The HHABN gained additional notification capabilities in 2006
following the U.S. Court of Appeals (2nd Circuit) decision in Lutwin v. Thompson, 361
F.3d 146; 2004 U.S. App. LEXIS 3774. Following Lutwin, the HHABN was modified so
that it could also be used by HHAs to notify beneficiaries receiving home health services
of any care changes in accordance with the HHA conditions of participation (COPs) in
§1891 of the Act.
To account for this expanded use, the HHABN was revised to contain three
interchangeable Option Boxes within the body of the notice designated as Option Box 1,
Option Box 2, and Option Box 3. Option Box 1 language was applicable to situations
involving potential beneficiary liability for HHA services as directed by §1879 of the
Act. Option Box 2 or Option Box 3 was inserted into the HHABN form to notify
beneficiaries of changes in a home health plan of care that are subject to the requirements
of § 1891 of the Act.
In order to streamline, reduce, and simplify notices issued to Medicare beneficiaries, the
HHABN is being discontinued. HHABN, Option Box 1, which is the liability portion of
the notice, is replaced by the existing Advance Beneficiary Notice of Noncoverage
(ABN), CMS-R-131. The change of care notification portions of the HHABN, Option
Box 2 and Option Box 3, is replaced by the newly approved HHCCN.
60.2 - Scope of the HHCCN
(Rev. 2781, Issued: 09-06-13, Effective: 12-09-13, Implementation: 12-09-13)
A. Statutory Authorization for HHCCN
The requirement to give an HHCCN is based on the HHA COPs in §1891 of the Act. The
COPs are further implemented through Title 42 of the Code of Federal Regulations
(CFR), Part 484.
§1891(a)(1)(E) stipulates that beneficiaries have:
“The right to be fully informed orally and in writing (in advance of coming under the care
of the [home health] agency) of –
all items and services furnished by (or under arrangement with) the agency for which
payment may be made under this title,
the coverage available for such items and services under this title, title XIX or any
other Federal program of which the agency is reasonably aware,
any charges for items and services not covered under this title and any charges the
individual may have to pay with respect to items and services furnished by (or under
arrangement with) the agency, and
any changes in the charges or items and services described in clause (i), (ii) or (iii).”
HHAs are required to use the HHCCN to notify the beneficiary of reductions and
terminations in health care in accordance with Medicare COPs.
B. HHAs and Other CMS Notices
HHAs will now use the Advanced Beneficiary Notice (ABN), Form CMS-R-131 for
liability notification instead of the HHABN Option Box 1. The ABN and form
instructions can be downloaded from the CMS website at:
http://www.cms.gov/Medicare/Medicare-General-Information/BNI/ABN.html
HHAs must continue to issue an expedited determination notice called the Notice of
Medicare Provider Non-Coverage, (NOMNC), CMS-10123, if applicable, when all
covered services are being terminated. Please see the “FFS ED Notices” link at:
http://www.cms.gov/Medicare/Medicare-General-Information/BNI/FFSEDNotices.html
for information on the delivery of expedited determination notices.
C. HHCCN Issuers and Recipients
HHAs are the only type of Medicare provider that issues the HHCCN to notify the
beneficiary of care changes involving reductions or terminations of items and/or services.
The recipients of the HHCCN are beneficiaries enrolled in Original Medicare only.
HHCCNs are not used in Medicare managed care. When a beneficiary transitions to
Medicare managed care from Original Medicare during a home health episode, HHCCN
issuance is required only if there is a specific need to provide notification of changes in
care as the transfer occurs.
Subcontractors may deliver HHCCNs under the direction of a primary HHA; however,
notification responsibility, including effective delivery, always rests with the primary
HHA. HHAs are always responsible for providing HHCCNs associated with the care that
they provide. In the form instructions and instructions in this section, the term
“beneficiary” is used to mean the beneficiary or the beneficiary's representative, as
applicable. For more information on representatives, see §40.3.5 and §40.3.4.3 of this
chapter.
HHAs should contact their CMS Regional Office if they have questions on the HHCCN
or related instructions. Beneficiaries who need assistance may be directed to call 1-800-
MEDICARE.
60.3 - Triggering Events for HHCCN/Written Notice
(Rev. 2781, Issued: 09-06-13, Effective: 12-09-13, Implementation: 12-09-13)
HHAs may be required to provide an HHCCN to an Original Medicare beneficiary at two
points in time, for reasons not related to Medicare coverage called “triggering events”:
Table 2
Triggering Events for HHCCN Issuance
EVENT
DESCRIPTION
Reduction
of a service
When an HHA reduces or stops an item and/or
service during a spell of illness while continuing
others, including when one home health
discipline ends but others continue.
Termination
of all services
When an HHA ends delivery of all services.
A. Reductions
Reductions involve any decrease in items and/or services, such as frequency, amount, or
level of care, provided by the HHA. When care that is listed on the POC or provided by
the HHA is reduced, the beneficiary must receive the HHCCN listing the items/services
being reduced and the reason for the reduction, regardless of who is responsible for
paying for that service.
When a reduction occurs because the HHA decides to stop providing the service for
administrative reasons or because of a physician’s order, the HHCCN must be issued.
Example 1 – Reduction for HHA reasons:
Because of a temporary staffing shortage, an HHA reduces daily physical therapy
(PT) to PT 3 times weekly for 2 weeks.
The HHCCN must be issued to the beneficiary prior to this care reduction that is
due to an agency administration issue.
Example 2 –Reduction based on physician’s orders:
The beneficiary met PT goals sooner than expected, and the attending physician
writes an order to discontinue home PT. Physical therapy services are
discontinued with no change in existing skilled nursing orders.
The HHCCN must be issued to the beneficiary prior to this care reduction that is a
change to the existing POC because of a physician’s order. Reductions include
cases, such as this, where one type of care ends, but the beneficiary continues to
receive another type of home health service.
An ABN is issued (and not the HHCCN) if a reduction occurs for an item or service that
will no longer be covered by Medicare but the beneficiary wants to continue to receive
the care and assume the financial charges. See Section 50.15.4.
B. Terminations
A termination is the cessation of all services provided by the HHA and can include
Medicare covered and noncovered care. When all home health care is ending for reasons
not related to Medicare coverage, the HHA issues the HHCCN with information
appropriate to the specific situation.
Example 1 – care termination due to agency reasons (such as staffing, closure of the
HHA, concerns for staff safety), not related to Medicare coverage.
An HHA decides to stop providing care because guard dogs at the home where
the care is being furnished have posed safety issues for staff.
Because termination is due to an HHA administrative decision, the HHCCN must be
given to the beneficiary prior to discontinuation of services.
Example 2 – care termination due to agency reasons (failure to meet face to face
encounter requirement)
An HHA has initiated care for a beneficiary, and the beneficiary has not yet had
the required face to face encounter with the certifying physician or an allowed
non-physician practitioner (NPP). The HHA believes that the face to face
encounter requirement will not be met in the allowed time frame and decides to
stop providing care.
This termination is due to an HHA administrative decision; thus, the HHCCN must be
given to the beneficiary prior to discontinuation of services. Issuing the HHCCN does not
affect financial liability but serves as a written change of care notice as required by the
HHA COPs.
Example 3 – care termination due to a physician’s orders to discontinue care or a
lack of orders to continue care
A physician orders discontinuation of all home health services or fails to order
continued home health services.
The Notice of Medicare Provider Non-Coverage (NOMNC), CMS-10123 must be issued
to the beneficiary when all Medicare covered services are ending based on the
physician’s orders. Since the NOMNC provides written notification of the forthcoming
termination of all home health care, it satisfies the regulatory requirement for change of
care advisement (HHCCN issuance). Thus, when the NOMNC is issued as required, the
HHA doesn’t have to issue a separate HHCCN. When home health services end because
of physician’s orders, HHAs have the option of issuing the NOMNC alone or both the
NOMNC and the HHCCN.
Detailed information and instructions for issuing the NOMNC can be found on the CMS
website at: http://www.cms.gov/Medicare/Medicare-General-
Information/BNI/FFSEDNotices.html
C. Effect of Other Insurers/Payers
HHCCN requirements apply only when home health services are expected to be partially
or fully covered by Medicare. When a beneficiary is not receiving any services that are
expected to be covered under the Medicare home health benefit, the HHCCN is not
required. For example, if a dual eligible beneficiary (having both Medicare and
Medicaid) is not receiving any Medicare covered home health services, HHCCN issuance
wouldn’t be required when changes of care occur. (NOTE: HHAs are required to issue
the ABN to dual eligible beneficiaries when applicable. See Section 50.15.4 C)
D. Exceptions to HHCCN Notification Requirements
The HHCCN is NOT required when changes in care involve:
• increase in care;
• changes in HHA caregivers or personnel as decided by the HHA;
• changes in expected arrival or departure time for HHA staff as determined by the
HHA;
• changes in brand of product, ( i.e., the same item produced by a different
manufacturer) as determined by the HHA;
• change in the duration of services that has been included in the POC and
communicated to the beneficiary by the HHA, ( i.e., shorter therapy sessions as
health status improves, such as a reduction from an hour to 45 minutes);
• lessening the number of items or services in cases where a range of services is
included in the POC;
Example: The POC order states: PT 3-5x per week as needed for gait
training. The therapist begins therapy at 5 times per week, and as the patient
progresses, therapy is reduced to 3 times per week. No HHCCN would be
needed in this case.
• changes in the mix of services delivered in a specific discipline (e.g., skilled
nursing) with no decrease in frequency with which that discipline is delivered;
Example: A beneficiary is receiving several skilled nursing services during
visits that are scheduled 3 times a week. One service within that discipline, a
blood draw 1 time a week, is discontinued. Other skilled nursing services
(wound care and education) continue, such that skilled nursing visits continue
to occur 3 times per week. No HHCCN is required when the blood draws are
discontinued, only when skilled nursing is reduced in frequency.
• changes in the modality affecting supplies employed as part of specific treatment
(e.g., wound care) with no decrease in the frequency with which those supplies
are provided; or
Example: A specific wound care product like Alldress is stopped, and a
Hydrogel pad is started. Since this represents a change in the modality (or
intervention) and not a reduction, no HHCCN is necessary.
• changes in care that are the beneficiary’s decision and are documented in the
medical record.
60.4 - Completing the HHCCN
(Rev. 2781, Issued: 09-06-13, Effective: 12-09-13, Implementation: 12-09-13)
A. Notices and General Notice Requirements
The HHCCN and the general instructions for preparing the HHCCN are available for
download at the home health notice link found at
http://www.cms.gov/Medicare/Medicare-General-Information/BNI/index.html.
The notice is available in English and Spanish, and in PDF and Word formats. The
HHCCN is the Office of Management and Budget (OMB) approved standard notice for
use by Medicare HHAs to inform beneficiaries of changes in the POC when required by
the COPs for HHAs. HHAs must use the OMB approved standard notice. HHAs must
not add any customizations to the notice beyond what is permitted by the accompanying
HHCCN form instructions and the guidelines published in this section.
B. Choosing the Correct Language Version
HHAs should choose the appropriate version of the HHCCN based on the language the
beneficiary best understands. When a Spanish-language HHCCN is used, the HHA
should make insertions on the notice in Spanish. If this is impossible, the HHA must take
additional steps needed to assure beneficiary comprehension and document this on the
HHCCN.
If needed, HHAs must provide verbal assistance in other languages to assist beneficiaries
in understanding the document. HHAs should document any types of translation
assistance used in the “Additional Information” section of the notice.
C. Compliance with Paperwork Reduction Act of 1995
Consistent with the Paperwork Reduction Act of 1995, the valid OMB control number for
this information collection appearing on the HHCCN is 0938-1196. The estimated time
required to complete this information collection is 4 minutes for a single notice. This
includes the time to prepare the notice, review it with the beneficiary, and obtain the
beneficiary’s signature.
D. Effective Dates
HHCCNs are effective for HHA use per the OMB assigned date given at the bottom of
each notice unless CMS instructs HHAs otherwise. The routine approval is for 3-year
use. HHAs are expected to exclusively use the effective version of the HHCCN per CMS
directives.
60.5 - HHCCN Delivery
(Rev. 2781, Issued: 09-06-13, Effective: 12-09-13, Implementation: 12-09-13)
HHAs must make every effort to ensure beneficiaries understand the entire HHCCN prior
to signing it. When delivering HHCCNs, HHAs are required to explain the notice and its
content, and answer beneficiary questions to the best of their ability. If abbreviations are
used, the HHA should explain their meaning to the beneficiary. If the beneficiary
requests additional information while completing the HHCCN, the HHA must respond
timely, accurately, and completely to the information request.
While in-person delivery of the HHCCN is preferable, it is not required consistent with
general ABN requirements, see Medicare Claims Processing Manual, Chapter 30,
§40.3.4.1.
If a mode other than in person delivery is used, the HHA must adhere to the requirements
under the Health Insurance Portability and Accountability Act (HIPAA). Instructions on
ABN telephone notice found in §40.3.4.2 of this chapter are also applicable to HHCCNs.
Delivery when change of care is due to agency administrative reasons
The HHA should review the text associated with the box that was checked on the
HHCCN by the HHA and verbally explain to the beneficiary that he/she may be able to
obtain the same or similar care from another HHA, since coverage through Medicare is
not affected. HHAs are encouraged to do as much as possible to offer ideas to
beneficiaries for contacting other HHAs and must inform ordering physicians of
reductions/terminations consistent with the COPs for HHAs.
Delivery when change of care is due to physician orders
The HHA should review the text associated with the box that was checked on the
HHCCN by the HHA, and inform the beneficiary that the HHA will no longer provide
certain care because the physician’s order has changed. When requested, the HHA may
facilitate contact and understanding between the physician and beneficiary. The
beneficiary may also seek to contact the physician directly.
Retention of the HHCCN
The HHA keeps a copy of the completed, signed or annotated HHCCN in the
beneficiary’s record, and the beneficiary receives a copy. HHA’s may retain a scanned
copy of the paper copy document in an electronic medical record if desired. The primary
HHA must retain the HHCCN if a subcontractor is used.
Applicable retention periods are discussed in Chapter 1 of this manual, §110. In general,
this is 5 years from discharge when there are no other applicable requirements under
State law.
Other Considerations During Completion
1. Beneficiary Unable to Sign
If the beneficiary is physically unable to sign the HHCCN and is fully capable of
understanding the notice a representative is not required for signature. The beneficiary
may allow the HHA to annotate the HHCCN on his/her behalf regarding this
circumstance. For example, a fully cognizant beneficiary with two broken hands may
allow an HHA staff person to sign and date the notice in the presence of and under the
direction of the beneficiary, inserting the beneficiary’s name along with his/her own
name, i.e., “John Smith, Shiny HHA, signing for Jane Doe.” Such signatures should be
witnessed by a second person whenever possible. Further, the medical record should
support the beneficiary’s inability to write in the applicable time period.
2. Timely Notice
There are no exact time frames for HHCCN delivery. Delivery timing of the notice may
sometimes occur immediately upon the HHA finding that a change in care is warranted.
However, in general, HHCCN should be delivered far enough in advance of the care
change so that the beneficiary may pursue alternatives to continue receiving the care
noted on the HHCCN. When plans for issuance of the notice are known in advance, the
HHCCN should not be issued so far in advance as to cause confusion regarding the
information it conveys.
Some allowance is made for “immediate” delivery prior to furnishing the care at issue
when unforeseen circumstances arise such as an impending, unforeseen agency staffing
shortage or a dangerous home situation. This should be avoided whenever possible, but
is permissible when a situation occurs prompting an immediate determination to reduce
or end services that could not have been made in advance.
70 - Skilled Nursing Facility Advance Beneficiary Notice of Non-(Rev.: 4198; Issued:
01-11-19; Effective: 04-30-18; Implementation: 04-30-18)
The following are the standards for use by Skilled Nursing Facilities (SNFs) in
implementing the SNF ABN (CMS-Approved Model Form CMS-10055) requirements.
This section provides instructions, consistent with the SNF prospective payment system
(SNF PPS), regarding the SNF ABN.
SNF ABN - Quick Glance Guide
4
Notice Name: SNF ABN
Notice Number: CMS-Approved Model, Form CMS-10055
Issued by: SNFs for non-covered SNF PPS extended care items or services.
Recipient: Original Medicare fee-for-service (FFS) beneficiary
Additional Information:
The ABN, Form CMS-R-131 should be used for Part B non-covered items or services. SNFs should no
longer use the 5 SNF Notices of Non-coverage (Denial Letters) or the NEMB-SNF (CMS-20014) as these
have been discontinued with the 2018 SNF ABN revision.
Type of
Notice:
Must be issued in order to transfer
liability to the beneficiary:
Timing of notice:
Optional/Voluntary
use:
4
This is an abbreviated reference tool and is not meant to replace or supersede any of the directives contained in Section 70.
Financial
liability
notice
Before SNF PPS extended care items or
services are furnished, reduced, or
terminated when the SNF, the UR
entity, the QIO, or the Medicare
contractor believes that Medicare may
not pay for, or will not continue to pay
for, those extended care services on the
basis of one of the following statutory
exclusions:
• Not reasonable and necessary
(“medical necessity”) for the
diagnosis or treatment of illness,
injury, or to improve the
functioning of a malformed body
member (§1862(a)(1) of the Act);
or
• Custodial care (“not a covered
level of care”) (§1862(a)(9) of the
Act).
Prior to delivery of the
care item or service in
question. Provide enough
time for the beneficiary to
make an informed
decision on whether or
not to receive the service
or item in question and
accept potential financial
liability.
Yes. It is
recommended, but
not necessary to
transfer liability, for
SNFs to issue prior
to furnishing a care
item or service that
is never covered by
Medicare (i.e. not a
Medicare benefit).
70.1 - SNF ABN Standards
(Rev.: 4198; Issued: 01-11-19; Effective: 04-30-18; Implementation: 04-30-18)
Step by step instructions for notice completion are posted along with the online replicable
copies of the CMS-Approved Model, Form CMS-10055 on the CMS website. SNFs must
not add any customizations to the notice beyond what is permitted by the accompanying
SNF ABN form instructions and the guidelines published in this section. SNFs should
follow the same standards when completing the SNF ABN as the ABN, Form CMS-R-
131 in §50.6 of this chapter, as applicable.
70.2 - Situations in Which a SNF ABN Should Be Given
(Rev.: 4198; Issued: 01-11-19; Effective: 04-30-18; Implementation: 04-30-18)
A. Triggering Events
A SNF ABN is evidence of beneficiary knowledge about the likelihood of a Medicare
denial, for the purpose of determining financial liability for expenses incurred for
extended care items or services furnished to a beneficiary and for which Medicare does
not pay. If Medicare is expected to deny payment (entirely or in part) on the basis of one
of the exclusions listed in §70 of this chapter for extended care items or services that the
SNF furnishes to a beneficiary, a SNF ABN must be given to the beneficiary in order to
transfer financial liability for the item or service to the beneficiary. The initiation,
reduction and termination of such extended care items or services, that Medicare may not
pay, are considered triggering events. The following describe the three triggering events
for a SNF ABN:
EVENT
DESCRIPTION
Initiation
In the situation in which a SNF believes Medicare
will not pay for extended care items or services
that a physician has ordered, the SNF must
provide a SNF ABN to the beneficiary before it
furnishes those non-covered extended care items
or services to the beneficiary.
Reduction
In the situation in which a SNF proposes to
reduce a beneficiary’s extended care items or
services because it expects that Medicare will
not pay for a subset of extended care items or
services, or for any items or services at the
current level and/or frequency of care that a
physician has ordered, the SNF must provide a
SNF ABN to the beneficiary before it reduces
items or services to the beneficiary.
Termination
In the situation in which a SNF proposes to stop
furnishing all extended care items or services to
a beneficiary because it expects that Medicare
will not continue to pay for the items or services
that a physician has ordered and the beneficiary
would like to continue receiving the care, the
SNF must provide a SNF ABN to the
beneficiary before it terminates such extended
care items or services.
B. Effect of Other Insurers/Payers
Some States have specific rules established regarding completion of liability notices in
situations where dual-eligibles need to accept liability for Medicare non-covered care that
will be covered by Medicaid. Medicaid has the authority to make this assertion under
Title XIX of the Act, where Medicaid is recognized as the “payer of last resort”, meaning
other Federal programs like Medicare (Title XVIII) must pay in accordance with their
own policies before Medicaid picks up any remaining charges. If the patient is a
Medicare-Medicaid dual-eligible and a triggering event occurs, the SNF needs to give the
beneficiary a SNF ABN.
On a practical basis, physician-prescribed items or services continue without interruption
or reduction when a patient changes “payer eligibility” from Medicare to Medicaid.
From the Medicare coverage vantage-point, however, there is a reduction or termination
when Medicare, which has been paying, stops paying. In other words, there is a
triggering event, which underlies the change in “payer eligibility.” In these instances, a
SNF ABN must be issued to transfer financial liability to the beneficiary.
70.3 - Situations in Which a SNF ABN Is Not Needed to Transfer
Financial Liability to the Beneficiary
(Rev.: 4198; Issued: 01-11-19; Effective: 04-30-18; Implementation: 04-30-18)
SNFs need not issue a SNF ABN to transfer financial liability to the beneficiary:
• If the extended care item or service is not a Medicare benefit (e.g., personal
comfort items excluded under §1862(a)(6)).
• If a beneficiary is being furnished post-hospital extended care services while a
resident in a SNF and payment is expected to be denied for an otherwise
Medicare covered benefit because it does not meet a technical benefit
requirement (e.g., SNF stay not preceded by the required prior three-day
hospital stay or the beneficiary is exhausting his/her 100 benefit days).
• If Medicare is expected to deny payment for Part B covered medical and other
health services which the SNF furnishes, either directly or under arrangements
with others, to an inpatient of the SNF, where payment for these services
cannot be made under Part A (e.g., the beneficiary has exhausted his/her
allowed days of inpatient SNF coverage under Part A in his/her current spell
of illness or was determined to be receiving a non-covered level of care).
• If the SNF will not furnish the extended care items or services. A SNF must
not give a beneficiary a SNF ABN and then refuse to furnish extended care
items or services even though the beneficiary elects to receive these items or
services by selecting Option 1, as this is equivalent to the prohibited practice
of the SNF pre-selecting Option 2 (not to receive items or services) on a SNF
ABN. This rule also applies when the beneficiary agrees with the triggering
event (i.e., terminating therapy) and the beneficiary will not be receiving the
extended care items or services.
NOTE: This rule is not applicable in the situation where the beneficiary
elects to receive extended care items or services but refuses to sign the SNF
ABN attesting to being personally and fully responsible for payment, in which
case, the SNF may then consider not furnishing the specified items or
services.
• For Medicare Advantage (Part C) enrollees nor for non-Medicare patients
because it is to be used solely for individuals enrolled in the Medicare FFS
program (Parts A and B).
• When extended care items or services are reduced or terminated in accordance
with a physician’s order, where a physician does not order the items or
services at issue, or where the physician agrees in writing with the SNF’s, the
UR entity’s, the QIO’s, or the Medicare contractor’s assessment that the
extended care items or services are not necessary.
• For swing-bed determinations. The Preadmission/Admission HINN (HINN 1)
should be given.
NOTE: An ABN, Form CMS-R-131 may be required if a SNF has been acting as a
supplier of Part B services or supplies outside a physician’s plan of care. See Section 50
of this manual, as applicable.
70.4 - SNF ABN Specific Delivery Issues
(Rev.: 4198; Issued: 01-11-19; Effective: 04-30-18; Implementation: 04-30-18)
When completing and delivering the SNF ABN, SNFs must meet the written notice
standards in §50.6 and 50.7 of this chapter, unless otherwise specified. Failure to provide
a proper SNF ABN in situations where a physician has ordered the extended care item or
service may result in the SNF being held financially liable under the LOL provisions,
where such provisions apply. SNFs may also be sanctioned for violating the conditions
of participation (42 CFR 483.10) regarding resident (beneficiary) rights.
NOTE: The SNF ABN is not a replacement for, but is in addition to, the required UR
entity notices. The SNF ABN protects the SNF from liability in the event the
beneficiary, for some reason, does not receive the UR entity notice.
70.5 - Special Rules for SNF ABNs
(Rev.: 4198; Issued: 01-11-19; Effective: 04-30-18; Implementation: 04-30-18)
A. Collection from Beneficiary
When a SNF ABN is properly executed and given timely to a beneficiary and Medicare
denies payment on the related claim, the SNF must wait for the beneficiary to receive a
Medicare Summary Notice (MSN) before it can collect payment on the related claim.
Medicare does not limit the amount that the SNF may collect from the beneficiary in such
a situation. A beneficiary’s agreement to “be personally and fully responsible for
payment” means that the beneficiary agrees to pay out of pocket or through any other
insurance that the beneficiary may have, e.g., through employer group health plan
coverage, through Medicaid, or through some other Federal or non-Federal payment
source.
NOTE: The beneficiary may request a demand bill at any point in her or his care.
B. Unbundling Prohibition
The SNF ABNs may not be used to shift financial liability to a beneficiary in the case of
services for which full payment is bundled into other payments; that is, where the
beneficiary would otherwise not be financially liable for payment for an extended care
item or service because Medicare made a bundled payment. Using a SNF ABN to collect
from a beneficiary where full payment is made on a bundled basis would constitute
double billing. A SNF ABN may be used to shift financial liability to a beneficiary in the
case of extended care items or services for which partial payment is bundled into other
payments; that is, where part of the cost is not included in the bundled payment made by
Medicare.
C. Acceptance or Rejection of SNF ABN
These instructions are to assist the Medicare contractor in advising SNFs with respect to
their responsibilities in advising beneficiaries with respect to their rights and protections
and in dealing with complaints from beneficiaries, or authorized representatives, about
the lack of notice or defective notice. The SNF should:
• Answer inquiries from a beneficiary regarding the basis for the SNF’s, the UR
entity’s, the QIO’s, or the Medicare contractor’s assessment that extended care
items or services may not be covered and, if requested by the beneficiary, the SNF
must give the beneficiary access to medical record information or other
documents upon which these entities based their assessment, to the extent
permissible or required under applicable state law.
NOTE: Where state law prohibits such direct disclosure, the SNF should advise
a beneficiary who has requested access to such information how to obtain that
information from the SNF once a demand bill has been submitted.
• Respond timely, accurately, and completely to a beneficiary who requests
information about the extent of the beneficiary’s personal financial liability.
• Timely submit additional information to the Medicare contractor, if a beneficiary
or a physician provides that additional information with respect to Medicare
coverage of the subject extended care items or services.
70.6 - Establishing When Beneficiary Is On Notice of Non-coverage
(Rev.: 4198; Issued: 01-11-19; Effective: 04-30-18; Implementation: 04-30-18)
If the beneficiary has previously been informed in writing that similar or reasonably
comparable extended care items or services were non-covered and it was clear that the
beneficiary knew that the circumstances were the same, the beneficiary is liable. With
this exception, the beneficiary is presumed not to have known, nor to have been expected
to know, that the extended care items or services are not covered unless, or until, s/he
receives notification from an appropriate source.
70.6.1 - Source of Beneficiary Notification
(Rev.: 4198; Issued: 01-11-19; Effective: 04-30-18; Implementation: 04-30-18)
Written Notification must be given by one of the following sources:
A. The SNF that is furnishing non-covered extended care items or services.
Examples:
• On or before the day of admission, the SNF furnishes to the beneficiary a SNF
ABN notifying the beneficiary that the extended care item(s) or service(s) is non-
covered; or
• During the inpatient stay, the SNF timely furnishes to the beneficiary a SNF ABN
notifying the beneficiary that the covered extended care item(s) or service(s) will
no longer be covered.
B. The UR entity of the SNF that is furnishing non-covered extended care items or
services.
Example:
• The UR entity timely furnishes to the beneficiary a SNF ABN notifying the
beneficiary that the extended care item(s) or service(s) is no longer covered.
C. The QIO or Medicare contractor.
Example:
• The QIO, where a beneficiary is in a swing bed, timely furnishes to the
beneficiary, a SNF ABN notifying the beneficiary that the extended care item(s)
or service(s) is not covered or the item(s) or service(s) is no longer covered.
NOTE: This occurs after the beneficiary receives a HINN 1
(Preadmission/Admission HINN) and after the QIO’s decision of the non-
coverage.
• The Medicare contractor sends the beneficiary her or his first notification of non-
coverage (e.g., the MSN).
70.7 – 70.13 New sections to be added
80 - Hospital ABNs (Hospital-Issued Notices of Noncoverage - HINN)
(Rev. 594, Issued: 06-24-05, Effective: 07-01-05, Implementation: 07-01-05)
Instructions for the Hospital ABN have been retracted. Instructions related to HINNs
have been relocated as follows:
• Instructions regarding HINNs are found in this instruction, CR 3903, which
precedes the placement of full instructions in Chapter 30.
• Instructions regarding hospital billing for cases involving QIO review will be
relocated to a new section in Chapter 1 of this manual in the near future. Current
procedures should not change in the interim.
Related instructions for QIOs can be found in the Medicare Quality Improvement
Organization Manual, Publication 100-10, Chapter 7.
100 - Indemnification Procedures for Claims Falling Within the
Limitation on Liability Provision
(Rev. 1, 10-01-03)
Section 1879(b) of the Act provides that when a provider, practitioner, or supplier is held
liable for the payment of expenses incurred by a beneficiary for noncovered items or
services and such provider, practitioner, or supplier requests and receives payment from
the beneficiary or any person(s) who assumed financial responsibility for payment of
expenses, the Medicare program indemnifies the beneficiary or other person(s).
Further, any such indemnification payments are considered overpayments to the provider,
practitioner, or supplier.
A provider, practitioner, or supplier who is determined liable may not seek payment from
a third party payer. (See §30.2.B.)
100.1 - Contractor and Social Security Office (SSO) Responsibility in
Indemnification Claims
(Rev. 1, 10-01-03)
The contractor, SSO, RO, or central office may receive requests or inquiries concerning
indemnification. However, a beneficiary or person(s) who made payment on behalf of the
beneficiary to a liable provider usually visits his/her nearest SSO or deals directly with
the contractor to file a request for indemnification.
Those offices are responsible for assisting beneficiaries or any person(s) in filing claims
for indemnification.
100.2 - Conditions for Indemnification
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
A beneficiary or any person(s) who assumed financial responsibility for payment is
indemnified for claims filed if all of the following conditions are met:
• The contractor has determined that the beneficiary is without liability under
authority of §1879 of the Act for items and services furnished by a provider,
practitioner, or supplier;
• The contractor or the QIO has determined that the provider, practitioner, or
supplier is liable under §1879 for the items and services furnished to the
beneficiary. A provider, practitioner, or supplier is considered to have knowledge
that payment will not be made under Medicare for items or services in a particular
claim where the following evidence is established regarding the provider,
practitioner, or supplier;
(1) Evidence that a provider, practitioner, or supplier knew, or could reasonably
be expected to have known, of exclusion of items or services
o General notice to the medical community regarding exclusion of certain
items or services: e.g., colonic irrigation, acupuncture.
o General notice to the medical community that services exceeding certain
frequencies would be denied or subject to additional review, e.g., vitamin B12
injections, or nursing home visits more frequent than once a month.
o Written notice to the particular provider, practitioner, or supplier that a
type of service or item would be noncovered in all or certain circumstances.
A distinction must be maintained between coverage rules that specify that a type
of service or item would be not reasonable or necessary in all or certain
circumstances, and utilization guidelines the contractor established to identify
excessive services. Any written policies or other internal edits that are disclosed
to a provider, practitioner, or supplier would not be considered as a “notice” of
exclusion, since they are used for referring claims for further development rather
than as rules to make a contractor coverage decision.
In addition to instances when the Medicare program has given notice, the
allegation of a provider, practitioner, or supplier is not accepted without further
verification in situations of potential program abuse involving a pattern of
unnecessary services by a provider, practitioner, or supplier to a number of
beneficiaries. When a provider, practitioner, or supplier frequently renders
unnecessary services, i.e., services that significantly exceed the frequency with
which the general medical community renders them, it is reasonable to expect the
provider, practitioner, or supplier to know that such a pattern deviates from the
standard practice.
(2) Evidence that provider, practitioner, or supplier did not have knowledge of
exclusion of services.
In contrast to subsection 1, there may be situations where an assumption can be
made that neither the beneficiary nor the provider, practitioner, or supplier had
knowledge of exclusion, and liability can be limited by the reviewer without a
statement by either party. In the following situations, further development would
not be necessary:
a. The service is for a type of treatment that can be rendered only by a
physician, but the contractor has not previously denied payment for the
treatment, and it is not unreasonable that a particular physician might
consider the treatment appropriate. In order to determine whether the
services are reasonable and necessary, the contractor requests its physician
consultant or CMS to advise whether the services are covered. This is a
case for which there are no general coverage guidelines for the services;
the contractor has not advised either the physician or the medical
community regarding the coverage of the services; and the contractor is
uncertain without expert consultation. In such a case, it may be presumed
that neither the beneficiary nor the physician could have known that the
services would be noncovered.
b. The item or service is ordinarily covered, but a question is raised as to
whether it is reasonable and necessary in treatment of a particular
diagnosis. Neither the provider, practitioner, or supplier nor the medical
community has been advised that the item or service is not covered for
that diagnosis. The case requires a determination by the contractor’s
medical consultant or is referred to CMS for guidance. As in example (a),
the liability of both parties should be limited.
c. The provider, practitioner, or supplier is newly arrived in the contractor
service area, and the contractor has not yet communicated to the provider,
practitioner, or supplier information in an existing general notice that the
item or service is not covered, always or under certain circumstances.
NOTE: If any provider, practitioner, or supplier could reasonably be
expected, by virtue of normal medical knowledge, to know that the service
was unneeded, the presumption suggested in the above examples would
not apply.
• The requester for indemnification has paid the provider, /practitioner or supplier
all or some of the charges for items and services for which the beneficiary’s
liability has been waived under §1879 of the Act; and
• The requester seeks indemnification by filing a written statement prior to the end
of the sixth month following:
o The month in which payment was made to the provider, practitioner or
supplier; or
o The month in which the contractor advised the beneficiary that the beneficiary
was not liable for the noncovered items or services, whichever is later.
The contractor extends the six month time limit if good cause is shown. The contractor
uses the principles for determining good cause outlined in Chapter 29, “Appeals of Claim
Decisions.”
100.3 - Development and Documentation of Indemnification Requests
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
When the contractor receives a request or inquiry concerning indemnification directly
from the beneficiary or the beneficiary’s authorized representative, it must obtain the
following information and documentation:
• Identifying information sufficient for the contractor to locate the claim(s) for
noncovered items or services for which payment has been made to the provider,
practitioner, or supplier by the beneficiary or other person and for which the
liability of the beneficiary was limited. Ordinarily, the initial MSN or appeal
determination suffices.
• A statement on Form SSA-795, “Statement of Claimant or Other Person,” (see
§100.10, Exhibit 4 ) to the effect that the requester paid the provider, practitioner,
or supplier all or some of the charges for the noncovered items or services for
which the beneficiary’s liability was limited. The statement must specify the
amount the requester has paid the provider, practitioner, or supplier. If the
requester submits this information in a letter, the letter serves as the signed
statement.
100.3.1 - Proof of Payment
(Rev. 1, 10-01-03)
The following types of documentation are sufficient to establish that payment was made
in the amount alleged:
• An itemized bill from the provider, practitioner, or supplier reflecting the items
and services for which the provider, practitioner, or supplier has been found liable
and has received payment along with the payer’s cancelled check, money order
receipt, or statement of receipt from the provider, physician, or supplier;
• A summary bill from the provider, practitioner, or supplier which pertains to the
items and services for which the provider, practitioner, or supplier has been found
liable and has collected from the beneficiary or other person along with the
payer’s cancelled check, money order receipt, or a statement of receipt from the
provider, practitioner, or supplier showing the same total amount;
• The payer’s cancelled check, money order receipt, or the statement of receipt
from the provider, practitioner, or supplier if the contractor’s records reflect the
provider, practitioner, or supplier’s charges for the items and services for which
the provider, practitioner, or supplier has been found liable and these equal the
total of the amount paid; or
• If the requester alleges that the provider, practitioner, or supplier did not furnish
an itemized bill or a receipted statement and no other proof of payment is
available, the contractor obtains a statement on Form SSA-795 to this effect from
all parties involved, including the provider, physician, or supplier if possible. The
statement should describe the circumstances, such as the manner of payment, and
the reasons for not obtaining a receipt or any proof of payment. If there were any
witnesses to the payment, the contractor obtains their statements on Form
SSA-795. The contractor refers any questions as to the acceptability of proof of
payment to the RO.
When the beneficiary or other person on behalf of the beneficiary initially contacts the
SSO, that office sends the statements and evidence relevant to the indemnification claim
to the appropriate contractor. If future contact with the beneficiary or other person is
necessary, the contractor proceeds with a direct contact unless the assistance of the SSO
is needed.
100.4 - Beneficiary Requests Indemnification, but Had No Financial
Interest in the Claim
(Rev. 1, 10-01-03)
If a request for indemnification is received from the beneficiary but the beneficiary did
not have full financial interest in the claim, then any other person(s) who made full or
partial payment to the provider, practitioner, or supplier must be contacted to ascertain if
that person wishes to file for indemnification.
If the individual declines to file for the indemnification payment, the SSO or contractor
staff should assist in preparing a statement to that effect for the individual’s signature. No
payment is made in this instance; however, the contractor notifies all involved parties.
If more than one person helped pay the bill; e.g., sons and daughters of the beneficiary
got together and each paid a portion of the bill; the contractor must determine the
indemnification amount for each payer unless they all agree in writing that payment is to
be made to one person. Explain this to the requester for indemnification in such
instances.
100.5 - Questionable Indemnification Requests Procedure
(Rev. 1, 10-01-03)
If the contractor receives a request for indemnification that does not appear to meet the
conditions outlined in §100.2, and there is some uncertainty concerning the
indemnification claim, it undertakes development to resolve the issues. If the issues
cannot be adequately resolved, it obtains the assistance of the RO.
100.6 - Determining the Amount of Indemnification
(Rev. 1, 10-01-03)
In accordance with §1879(b) of the Act, the contractor indemnifies the beneficiary or
other person(s) for actual charges paid to a provider, practitioner, or supplier, rather than
the usual allowable charges as determined by the Medicare program, PPS amounts, or
established per diem rates that apply to certain provider, practitioner, or suppliers.
Additionally, §4096 of P.L. 100-203 (OBRA of 1987) revises certain limitation on
liability requirements for indemnification under §1879(b) of the Act. A beneficiary
qualifying for indemnification for denied items and services furnished on or after
January 1, 1988 is no longer responsible for paying deductible and coinsurance charges
related to the denied claim. Where such indemnification is made, the contractor may not
charge the beneficiary’s Medicare utilization record for the denied items and services
furnished.
100.7 - Notifying the Provider, Practitioner, or Supplier
(Rev. 1, 10-01-03)
After the contractor has reviewed the claim for indemnification and the indemnification
amount has been determined, it notifies the provider or physician/supplier of the
proposed indemnification action. (A sample letter for these situations is contained in
§100.10, Exhibit l.) The essential elements of this written notice are:
• An explanation of the items and services for which the provider or
physician/supplier is liable with reference to the original notice to the provider or
physician/supplier;
• A statement of the provision of §1879 which allows the program to indemnify the
beneficiary and recover an overpayment from the provider, practitioner, or
supplier;
• An explanation of the amount determined payable to the requester for
indemnification;
• A statement that the amount the contractor has determined to be payable is paid to
the requester and that it constitutes an overpayment to the provider, practitioner,
or supplier which is to be recovered from future Medicare payments made to it;
• A statement encouraging the provider, practitioner, or supplier to refund any
amount(s) already collected; and
• A reminder to the provider, practitioner, or supplier of his/her/its Medicare appeal
rights.
If the provider, practitioner, or supplier does not respond to this notice within 15 days, the
contractor makes payment to the requester in accordance with §100.8. If the provider,
practitioner, or supplier disputes the indemnification or the amount to be paid, the
contractor resolves any discrepancies before making payment. The payment process takes
place even if the provider, practitioner, or supplier might appeal the contractor’s initial
determination which held the provider, practitioner, or physician liable and that appeal is
still pending at the time payment of the indemnification amount is to take place. If the
appeal decision reverses the initial determination, then adjustments are to be made at that
time in the contractor and provider, practitioner, or supplier records. In all cases, the
contractor encourages the provider, practitioner, or supplier to refund any and all amounts
collected to this point. If the provider, practitioner, or supplier chooses to refund any
money collected, the contractor verifies that such a refund has actually been made to the
requester.
100.8 - Making Payment Under Indemnification
(Rev. 1, 10-01-03)
The contractor pays the indemnification amount if the provider, practitioner, or supplier
does not make refund. It takes action to recover this amount as an overpayment from the
provider, practitioner, or supplier. Also, it issues a letter of explanation to the requester
for indemnification. (See §100.10, Exhibit 2 and Exhibit 3.) It sends a copy of this notice
to the provider, /practitioner or supplier. The fundamental points of the notice include:
• Name of the provider, practitioner, or supplier and dates the services in question
were rendered; and
• the amount of the indemnification check that the requester is to receive.
100.9 - Limitation on Liability Determination Does Not Affect Medicare
Exclusion
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
A determination to limit the liability of the beneficiary, as well as a finding that the
physician’s or supplier’s liability may be limited and program payment made, does not
change noncovered items or services into covered items or services. This means that the
coverage question can still be raised as an issue at a level subsequent to an appeal
determination that authorized program payment under §1879. It also means that, for
purposes of determining an amount in controversy for an appeal, payment made under
§1879 should be disregarded because coverage is still at issue and the amount charged is
still in controversy.
100.10 - Exhibits
(Rev. 1, 10-01-03)
1. Letter to Provider (Institutional Services).
2. Letter to Beneficiary Who Requests Indemnification (Institutional Services).
3. Letter to Someone Other Than Beneficiary Who Requests Indemnification.
4. Letter to Practitioner or Supplier (Noninstitutional Services)
5. Letter to Beneficiary Who Requests Indemnification (Noninstitutional Services)
6. Letter to Someone Other Than Beneficiary Who Requests Indemnification
(Noninstitutional Services)
7. Form SSA-795, Statement of Claimant or Other Person.
Exhibit 1 - Letter to Provider
(Rev. 1, 10-01-03)
To: Provider
Dear Administrator:
Under §1879 of the Social Security Act, a Medicare beneficiary is relieved of the liability
for certain noncovered services if the beneficiary did not know and could not reasonably
have been expected to know that the items or services were not covered. Further, the law
provides that the provider is liable if it is found that the provider knew or could
reasonably have been expected to know that the items or services were not covered by
Medicare.
On (date of limitation on liability notice), your facility was notified that the services
provided to (beneficiary’s name) during the period (_________) to (_________) were not
covered under Medicare and that you were liable for these items and services.
(Requester’s name) has submitted evidence that establishes that he paid your facility
(amount paid) for the services received by (beneficiary’s name). Because your facility
has collected payment from (requester’s name) after being determined liable for these
services, §1879(b) of the Act requires that the Medicare program make direct payment
(indemnification) to him for this amount, for which (beneficiary’s name) is responsible.
A check in the amount of (amount of check) is being sent to (requester’s name). This
indemnification payment represents an overpayment to your facility and it will be
withheld from future Medicare payments due you unless you advise this office that
refund of the incorrect amount(s) has been made to (requester’s name).
If you do not agree with the amount determined to have been paid you, please contact this
office in writing within 15 days of the date of this letter.
Sincerely yours,
Exhibit 2 - Letter to Beneficiary Who Requests Indemnification
(Rev. 1, 10-01-03)
Dear (Beneficiary’s Name):
Your request for refund of improper payment under §1879 of the Social Security Act (the
limitation on liability provision) for the noncovered services provided you at (name of
provider) from (date) to (date) has been received.
The evidence submitted establishes that, even though you were not responsible for the
services you received, you paid (provider’s name) (amount paid) for the services. Your
refund for these payments to (name of provider) has been calculated to be
(indemnification amount). This figure represents full repayment for the charges you paid.
Your Medicare utilization record will not be charged where noncovered services were
provided to you and you were determined not liable.
If you have any questions concerning the matters discussed in this letter or the amount of
the check enclosed, please call this office. If you prefer to visit your local social security
office, please take this letter with you.
Sincerely yours,
Exhibit 3 - Letter to Someone Other Than Beneficiary Who Requests
Indemnification
(Rev. 1, 10-01-03)
Dear (Person’s Name):
Your request for refund of improper payment under Section 1879 of the Social Security
Act (limitation of liability provision) for the noncovered services provided (beneficiary’s
name) at (name of provider) from (date) to (date) has been received.
It was determined that (beneficiary’s name) was not liable for the services. The evidence
you submitted establishes that you paid (provider) (amount paid) for the services
provided (beneficiary’s name). Your refund has been calculated to be (indemnification
amount). This figure represents full repayment based on the expenses incurred by
(beneficiary’s name) in the amount of $(amount).
If you have any questions concerning the matters discussed in this letter or the amount of
the check enclosed, please call this office. If you prefer, you may visit the local social
security office. If you do, take this letter with you.
Sincerely yours,
Exhibit 4 - Letter to Practitioner or Supplier (Noninstitutional Services)
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
Dear ____________________:
Under §1879 of the Social Security Act, a Medicare beneficiary is relieved of the liability
for certain categories of noncovered items or services submitted as assigned claims if the
beneficiary did not know and could not reasonably be expected to know that the items or
services would not be covered. Further, the law provides that the practitioner or supplier
will be liable for the charges if it is found that he/she knew or could reasonably be
expected to know that Medicare would not cover the items or services.
On (date of limitation on liability notification), you were notified that the following items
or services provided to (name of beneficiary) were not covered and that you were liable
for the charges for these items or services:
Description of Services
Date Provided
(Beneficiary or other person on behalf of beneficiary) has submitted evidence which
establishes that he/she paid you $______ for the items or services described above. Since
it has been determined that you are liable for the items or services, §1879(b) of the Act
requires that the Medicare program make payment (indemnification) to him/her for this
amount. The amount of this payment will be treated as an overpayment to you and
appropriate collection action will be taken unless you advise this office that refund has
been made to (name of requester).
If you do not agree with the amount that (name of requester(s)) has established he/she
paid you, please notify this office.
If we do not hear from you regarding the amount of the payment or that you will make
refund directly by_____________ (15 days after date of this notice) payment will be
made to (name of requester(s)) and action will be taken to collect the overpayment from
you.
If you disagree with this determination, you may request a redetermination. The bases for
such a request are: (1) that the services you provided were reasonable and necessary; (2)
that you did not know, and could not reasonably have been expected to know, that
Medicare would not pay for the services; or (3) that you notified the beneficiary in
writing, before the services were furnished, that Medicare likely would not pay for the
services. The request for redetermination must be in writing, and it must be filed within
120 days of the date you received the initial determination. If you have already received
an adverse redetermination, you may request a reconsideration within 180 days of the
date you received the redetermination. Our office will assist you if you need help in
requesting a redetermination or a reconsideration. You need not file another request for a
redetermination or a reconsideration if you already have taken such action.
Exhibit 5 - Letter to Beneficiary Who Requests Indemnification
(Noninstitutional Services)
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
Dear (Beneficiary’s name):
Your request for indemnification (i.e., refund of improper payment) under §1879 of the
Social Security Act (the limitation on liability provision) for the noncovered services
provided you by (physician’s/supplier’s name) on (date) has been received.
The evidence submitted establishes that you paid (physician/supplier) (amount paid) for
the noncovered services. It was determined upon redetermination that you were not liable
for these charges. Your refund for these payments to (physician/supplier) has been
calculated to be (indemnification amount). This figure represents full repayment for the
charges you paid.
If your (physician/supplier) requests an appeal of this claim, it is possible that Medicare
might find that your (physician/supplier) also did not know that Medicare would not pay
for this service, or that this service should not have been denied. In that case, Medicare
would pay your (physician/supplier) for this service. Also, you would be responsible for
any deductible and coinsurance amounts. If this happens, you will receive a copy of the
notice to your (physician/supplier).
Any future items or services of this type provided to you will be your responsibility
because this is your notice that Medicare does not cover these services.
If you have further questions concerning this matter, please call this office. If you prefer
to visit your social security office, please take this letter with you.
Exhibit 6 - Letter to Someone Other Than Beneficiary Who Requests
Indemnification (Noninstitutional Services)
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
Dear (Person’s name):
Your request for indemnification (i.e., refund of improper payment) under §1879 of the
Social Security Act (limitation on liability provision) for the noncovered services
provided (beneficiary’s name) by (name of physician/supplier) on (date) has been
received.
It was determined upon redetermination that (beneficiary’s name) was not liable for the
charges.
The evidence establishes that you paid (physician/supplier) (amount paid) for the services
provided (beneficiary’s name). Your refund has been calculated to be (indemnification
amount). This figure represents full repayment for the expenses incurred by
(beneficiary’s name).
If his/her (physician/supplier) requests an appeal of this claim, it is possible that Medicare
might find that the (physician/supplier) also did not know that Medicare would not pay
for this service, or that this service should not have been denied. In that case, Medicare
would pay the (physician/supplier) for this service. Also, (beneficiary’s name) would be
responsible for any deductible and coinsurance amounts. If this happens, (beneficiary’s
name) will receive a copy of the notice to his/her (physician/supplier).
Any future items or services of this type provided to (beneficiary’s name) will be his/her
responsibility because this is your notice that Medicare does not cover these services.
If you have further questions concerning the matters discussed in this letter or the amount
of the check enclosed, please call this office. If you prefer to visit the social security
office, please take this letter with you.
Exhibit 7 - Statement of Claimant or Other Person
(Rev. 1, 10-01-03)
Link to an exhibit of the Form SSA-795, “Statement of Claimant or Other Person,” at:
http://www.ssa.gov/online/ssa-795.pdf.
110 - Contractor Instructions for Application of Limitation On Liability
(Rev. 1, 10-01-03)
110.1 - Payment Under Limitation on Liability
(Rev. 1, 10-01-03)
When it is determined during the course of a beneficiary’s inpatient stay or during the
patient’s course of home health visits, or during a patient’s course of treatment from a
practitioner, physician or other supplier that the care is not covered but both the
beneficiary and the provider of services are entitled to limitation on liability, the
Medicare program may make payment for the noncovered services up to the date of
notice and, if, for inpatient or home health services, the A/B MAC (A) or (HHH)
determines that additional time is needed to arrange for post-discharge care, also for a
“grace period” of l day after the date of notice to the provider or to the beneficiary,
whichever is earlier. If it is determined that even more time is required in order to arrange
post-discharge care, 1 additional “grace period” day may be paid for. (See §§30 and 40
for definition of notice.)
When the provider is given notice as described in §40.1, it is required to advise the
beneficiary in writing of the determination on the same date it received the A/B MAC (A)
or (HHH) notice. Where the provider fails to give the beneficiary such timely notice, the
beneficiary is protected from liability until the beneficiary receives the notice.
For example, if a SNF received the A/B MAC (A)’s notice of noncoverage on February
15 but failed to advise the beneficiary until February 19, the beneficiary is protected from
liability through February 19 - the date on which the beneficiary first received notice.
However, the SNF is entitled to program payment only through the date - February 15 -
on which it received notice, and for whatever “grace period” is allowed thereafter. In a
case in which a SNF received the A/B MAC (A)'s notice on February 15 but failed to
give the beneficiary notice until the next day - February 16 - the beneficiary and provider,
if the A/B MAC (A) determines that additional time is needed to arrange post-discharge
care, would be protected from liability under the “grace period” only for the additional
day - February 16 - unless it is determined that even more time is required to arrange
post-discharge care, in which case 1 additional “grace period” day may be paid for.
NOTE: The “grace period” is applicable only where circumstances have permitted
program payment under §1879 of the Act, i.e., limitation on liability was applicable both
to the beneficiary and the provider of services. Where the A/B MAC (A) or (HHH)
concurs with a URC’s decision that covered care has ended, any payments made during
the “grace period” after the URC’s notice are made under the authority of that statutory
provision (§1814 of the Act) rather than under §1879.
110.2 - When to Make Limitation on Liability Decisions
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
A - Initial Claims
In implementing the limitation on liability provision, the contractor makes a coverage
decision before making a limitation on liability decision. Section 1879 of the Act
provides that limitation on liability can be allowed only in cases:
Where - (1) a determination is made that, by reason of §1862(a)(l) or (9)
or by reason of a coverage denial described in subsection (g) of the Act,
payment may not be made under Part A or Part B of this title for any
expenses incurred for items or services furnished an individual by a
provider of services... (Section 1879(a)(1) of the Social Security Act.)
NOTE: Subsection (g) refers to home health service denials under §§1814(a)(2)(C) and
1835(a)(2)(A), i.e., the patient is or was not confined to home; or the patient does or did
not need skilled nursing care on an intermittent basis; and to hospice denials under
§1861(dd)(3)(A) for services determined to be noncovered because the beneficiary was
not “terminally ill”.
Only after the contractor makes a decision that care is not reasonable or necessary, is
custodial, is not reasonable and necessary for the palliation or management of terminal
illness in hospice denials, or does not meet the homebound or intermittent nursing care
requirements in home health service denials, or does not meet the “terminally ill”
condition for hospice care, should a determination be made regarding limitation on
liability. In every such case there will be two parts to the limitation on liability
determination:
1. Whether and when the beneficiary knew or should have known that the services
were noncovered, and
2. Whether and when the provider knew or should have known that the services
were noncovered.
In any case where the provider gave the beneficiary notice that the services would be
noncovered, the contractor will find that the provider knew that the services were
noncovered.
B – Redetermination
At the redetermination level, again the contractor first makes a determination on the
coverage issue. It considers the question of limitation on liability, if applicable, only if
the initial adverse coverage decision is wholly or partially affirmed. (See Chapter 29,
“Appeals of Claim Decisions,” for discussion of the appeals process.)
110.3 - Preparation of Denial Notices
(Rev. 3560, Issued: 07-15-16, Effective: 10-17-16, Implementation: 10-17-16)
The provider and beneficiary notification procedures discussed in §§30 and 40 for
determining liability do not change the instructions for the preparation and issuance of
denial notices in Medicare Claims Processing Manual, Chapter 21, “Medicare Summary
Notices.”
Accordingly, in cases where the services are found to be custodial care or not reasonable
and necessary, or in the case of HHA services, are denied for technical reasons under
§1814(a)(2)(C) or §1835(a)(2)(A) of the Act, or in the case of hospice services, are
denied for technical reasons under §1861(dd)(3)(A) of the Act:
An MSN denying the service(s) is sent to the beneficiary in cases where only the
beneficiary is entitled to limitation on liability for any part of the noncovered stay. The
notice advises the beneficiary of the beneficiary’s entitlement to indemnification (see
§100.) in the event the provider seeks payment from the beneficiary for the noncovered
services. It uses MSN messages 50.36.2:
It appears that you did not know that we would not pay for this service, so
you are not liable. Do not pay your provider for this service. If you have
paid your provider for this service, you should submit to this office three
things: (1) a copy of this notice, (2) your provider’s bill, and (3) a receipt
or proof that you have paid the bill. You must file your written request for
payment within 6 months of the date of this notice. Future services of this
type provided to you will be your responsibility.
All denial notices explain any decision regarding limitation on liability for either the
provider, practitioner, or supplier or the beneficiary. (See Chapter 21, “Medicare
Summary Notices.”)
All denial notices, where either the beneficiary or provider, practitioner, or supplier has
been found liable, must state that the provider has a right to a redetermination.
Providers, practitioners, and suppliers do not receive a separate written notification or
copy of the MSN. Providers, practitioners, and suppliers must utilize the coding
information (e.g., Remittance Advice Remark Codes) conveyed via the Remittance
Advice (RA) to ascertain reasons associated with Medicare claims determinations
affecting payment and applicable appeal rights and/or appeals information.
110.4 - Bill Processing
(Rev. 3187, Issued: 02-06-15, Effective: 03-06-15, Implementation: 03-06-15)
Where payment is made under the limitation on liability provision, because it was
determined that both the provider, practitioner, or supplier and the beneficiary did not
know and could not have been expected to know that services were not reasonable and
necessary, the usual deductible and coinsurance amounts apply.
When payment under limitation on liability is made for noncovered services, the
contractor processes the bill in the same manner as any payment bill for covered services.
For institutional services, if both the beneficiary and the provider have liability waived,
the A/B MAC (A) charges the number of days or visits paid for under the limitation on
liability provision to the beneficiary’s utilization record. For noninstitutional services, it
applies deductible and coinsurance, and, where applicable, statutory limits on services.
For situations where the contractor determines that the provider, practitioner, or supplier
knew or should have known that the services were not reasonable and necessary, and the
beneficiary did not know and could not have been expected to know that the services
were not reasonable and necessary, the beneficiary qualifies for indemnification and is
not responsible for paying deductible and coinsurance charges related to the denied
claim. Additionally, where such indemnification is made, the contractor does not charge
the beneficiary’s Medicare utilization record days, visits, deductibles, or coinsurance (nor
does it apply statutory limits, e.g., the psychiatric services Limit) for the denied items and
services furnished.
The contractor follows the no-payment procedures in the relevant bill processing
instructions in the following cases:
• Either the beneficiary or the provider/practitioner/supplier, or both knew or
should have known that services were not covered.
• The provider, practitioner, or supplier knew or should have known that the
services were not covered even though the beneficiary did not know. In these
cases, the notice to the beneficiary will have informed the beneficiary that, even
though no Medicare payment is being made, the beneficiary is not liable for the
cost of the services and that the beneficiary may be indemnified for any improper
payments the beneficiary made to the provider, practitioner, or supplier.
Where no Medicare payment is made because limitation on liability does not apply, or
where payment ceases because of notice in a noncovered case, the normal provisions for
no-payment situations apply.
For ancillary and outpatient services billed by institutional providers, the provider follows
the instructions in Chapter 4 for hospitals, Chapter 7 for SNFs, and Chapter 10 for HHAs
to process bills for these types of claims. Further, where ancillary services may not be
paid under Part A because they were rendered in connection with a noncovered inpatient
stay, the provider may still bill under Part B for ancillary services that may be covered
under §1861(s)(3)-(9) of the Act.
110.5 - Contractor Review of ABNs
(Rev. 1, 10-01-03)
110.5.1 - General Rules
(Rev. 1, 10-01-03)
A. Generally, notifiers (physicians, practitioners, suppliers, providers) are not required to
routinely submit copies of ABNs (CMS-R-131) to their Medicare contractor along with
their claims (see §50.6.3). This is based on a rebuttable administrative presumption that a
certain modifier (GA) or occurrence code (32) on the claims signify that notifiers are
using the proper standard form CMS-R-131 and are preparing and delivering ABNs in
compliance with the instructions in this Chapter.
B. Contractors may and should request CMS-R-131 ABNs (or any other ABN if the
circumstances demand) be submitted to them for review in any circumstance in which the
contractor is not confident that the administrative presumption is correct or in which the
contractor has good reason to examine the ABNs of either particular notifiers or any class
of notifiers. In the case where a contractor requests submission of copies of ABNs, the
notifiers must submit such copies (see §50.6.3).
C. All Hospital ABNs (HINNs) will be reviewed by QIOs (see §80.5) and all HHABNs
and SNFABNs will be reviewed when the contractor performs complex medical review
of the demand bills.
110.5.2 - Situations in Which Contractor Review of ABNs is Indicated
(Rev. 1, 10-01-03)
Circumstances involving ABNs (viz., with respect to claims on which there is any
payment denial, that include either or both the GA modifier and occurrence code 32, and
that do not include a copy of the ABN) in which the contractor should not be confident
that the administrative presumption, viz., that notifiers are using the proper form and are
properly preparing and delivering ABNs, is correct and should request submission of
ABNs include, but are not limited to, the following:
A. Any claim where the contractor has any indication that the notifier may not have
given proper notice, either no notice at all or defective notice, whether based on the
contractor’s experience (with the notifier or class of notifiers, or with the class of items or
services), on beneficiary complaint, on any other plausible allegation, or on any other
reasonable basis. (Contractors, of course, may not make baseless or capricious requests
for routine submission of ABNs.)
B. Any claim for payment for more than one item or service. (In such cases, the
contractor must ascertain which item(s) and/or service(s) the ABN specified and,
therefore, to which claimed item(s) and/or service(s) the ABN applies with respect to
assigning liability to the beneficiary. Liability is shifted to the beneficiary only if the
ABN accurately specifies the items or services and if the specified expected reason for
denial turns out to be the actual reason for denial.)
C. Any claim for an item or service for which there is a coverage frequency limit, and
which includes one or more other items or services which are not frequency-limited.
(Since ABNs may be given routinely for frequency-limited items and services, it is
predictable that virtually all claims which include any frequency-limited item or service
will include the GA modifier and/or occurrence code 32. When other, non-frequency-
limited items or services are included on such a claim, any ABN specifying a frequency-
limit as the expected reason for denial would not be applicable to the liability
determination with respect to any item or service on such a claim that is not frequency-
limited, nor with respect to any different frequency-limited item or service.)
D. Any claim for an item or service for which there is a coverage frequency limit and on
which there is a payment denial on any basis other than exceeding the frequency limit.
(Since the notifier can be reasonably expected to have given routine notice on the basis of
the frequency limit, and since an ABN specifying a frequency-limit as the expected
reason for denial would not be applicable to the liability determination with respect to
any item or service on such a claim that is denied on any basis other than that particular
frequency limit, such ABNs need to be reviewed for their correct application to any
denial.)
E. Any claim about which there is any suspicion of fraud or abuse, whether with respect
to the notifier, the category of notifiers, or the class of items or services involved.
110.5.3 - Other Reasons for Contractor Request for Copies of ABNs
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
Other good reasons for contractors to request submission of copies of ABNs include, but
are not limited to, the following:
A - Any need that arises from the appeals processes for documentation.
B - Any practical need to identify the particular items and/or services, dates of
service, reasons for predicting Medicare denial of payment, or other pertinent
facts about the beneficiary notification.
C - Any plausible allegation or dispute as to the form, content, or delivery of a
particular ABN or a particular group of ABNs, e.g., all ABNs furnished by a
particular notifier, all ABNs for a particular item, etc.
D - For the purposes of a data analysis, utilization study, or other investigation or
study.
120 - Contractor Specific Instructions for Application of Limitation on
Liability
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
120.1 - Documentation of Notices Regarding Coverage
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
A critical step in the implementation of the limitation on liability provision is the
distribution by contractors of notices regarding coverage issues to the medical
community, or to specific segments of it, such as laboratories or certain physician
specialty groups. An ongoing program of communication by contractors is essential.
Timely communication of existing general notices to physicians and suppliers new to a
contractor’s service area is essential. The existence of written general notices will often
determine the extent of program liability. As a minimum, the contractor should have a
program for dissemination of the coverage guidelines published in the National Coverage
Determinations Manual and the Medicare Benefit Policy Manual, as well as other
guidelines contained in this manual for determining medical necessity and others issued
from time to time in other CMS issuances.
120.2 - Availability of Coverage Notices to Operating Personnel
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
All review personnel should have ready access to a file of general notices regarding
coverage for processing review cases involving the issue of limitation on liability.
In addition to general notices, the contractor must have a mechanism for identifying and
locating correspondence with individual physician/suppliers regarding coverage of
particular services or items. This mechanism should meet at least the following minimum
requirements:
• The contractor must be able to determine if a practitioner or supplier has been sent
an explanation, in lieu of, or in addition, to, a routine MSN denial notice, that a
type of service or item is not reasonable and necessary. Such explanation may
consist of a general notice or may be individual correspondence with the
physician/supplier such as is usually found in contractor correspondence units or
comparable units. Claims history files can also be checked, but these are generally
useful only when the identical item or service in question has been previously
denied as not meeting the requirements of §1862(a)(1);
• A copy of such an explanation must be readily available to appeal personnel; and
• Procedures must be established requiring that a check of all files be made to
determine if such an explanation was ever sent before the physician/supplier’s
liability is limited.
Once a physician/supplier receives an explanation of denial for an item or service after an
appeal determination, that determination would be considered a notice that should be
readily accessible for future use for a similar claim(s).
120.3 - Applicability of Limitation on Liability Provision to Claims for
Outpatient Physical Therapy Services Furnished by Clinics
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
A – General
The limitation on liability provision is applicable to claims for items or services furnished
by a physician-directed outpatient physical therapy (OPT) clinic that are denied on the
basis of §1862(a)(1).
The limitation on liability determination for OPT clinic claims will be made by
contractors at the initial determination level, in accordance with §120.4. The procedures
discussed in §120.2, second bullet , for determining a physician’s/supplier’s liability will
be followed when processing this category of claims.
120.4 - Limitation on Liability Notices to Beneficiaries From
Contractors
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
The contractor adds MSN Limitation of Liability Message 50.36.2 to the MSN sent to the
beneficiary (who is presumed not to have knowledge of nonpayment by Medicare) at the
time of the initial determination.
To message 50.36.2, it also adds the following language:
Do not apply if your (doctor/supplier) told you in writing, before
furnishing the service, that Medicare would not pay.
The contractor adds MSN Limitation of Liability Message 50.36.1 to the MSN
sent to the beneficiary (who is held to have had knowledge of nonpayment by
Medicare) at the time of the initial determination.
The contractor adds, from the Remittance Advice Remarks Codes, the Justification for
Services Remark M25 to the RA sent to the physician/supplier (who is presumed to have
knowledge of nonpayment by Medicare) at the time of the initial determination.
The contractor adds, from the Remittance Advice Remarks Codes, the Justification for
Services Remark M38 to the RA sent to the physician/supplier who is held to be not
liable because the beneficiary is held liable at the time of the initial determination.
In addition to the above, as appropriate, the contractor notifies both the beneficiary and
the physician/supplier at the time of the initial determination of their appeal rights (this is
contained on the back of the MSN and the RA).
120.5 - Contractor Redeterminations or Reconsiderations in Assignment
Cases Conducted at the Request of Either the Beneficiary or the
Assignee
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
In every appeal where the limitation on liability provision is applicable, the
redetermination consists of two stages. The first stage is a new, independent and critical
reexamination of the facts regarding the coverage issue. If the original decision regarding
coverage was appropriate, the second stage is the decision whether to limit the liability of
the beneficiary and, if so, whether to also limit the liability of the provider, practitioner,
or supplier.
Redeterminations in assignment cases are conducted at the request of either the
beneficiary or the assignee. Frequently, the redetermination request is received from only
one of the parties, either the provider/physician/supplier or the beneficiary, and the only
notice to the other party that a redetermination has been requested is a copy of the
determination, i.e., after the fact. In a limitation on liability case, the parties may have
adverse interests in the limitation on liability decision, since a provider, practitioner, or
supplier may seek to show reason why the beneficiary’s liability should not be limited in
order to be able to collect his/her fee from the beneficiary. Therefore, when the contractor
receives a request for a redetermination, it sends a notice that a request has been filed to
the other party to the redetermination indicating that that party may submit additional
evidence. This is necessary to satisfy the statutory requirement that both parties be
informed of their rights and privileges in the appeal process.
120.5.1 - Guide Paragraphs for Contractors to Use Where §1879 Is
Applicable at the Redetermination Level
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
The contractor uses the following paragraphs (in addition to other required appeal
decision paragraphs) where the limitation on liability provision applies at the appeal level
in the various situations shown below:
Situation I - To the provider, practitioner, or supplier when neither the provider,
practitioner, or supplier nor the beneficiary is determined liable (program payment made
under §1879 of the Act)
Paragraph(s):
Section 1879 of the Social Security Act permits Medicare payment to be made on behalf
of a beneficiary to a physician/supplier who has accepted assignment for certain services
for which payment would otherwise not be made under Medicare, if neither the
beneficiary nor the physician/supplier knew, or could reasonably have been expected to
know, that the services were excluded. The services affected by this provision are those
that are not reasonable and necessary for the diagnosis or treatment of illness or injury or
to improve the functioning of a malformed body member. After reviewing (beneficiary’s
name’s) claim for (description of services), we have concluded that these services are
excluded under Medicare. However, since we find that neither (beneficiary’s name) nor
you knew, or could reasonably have been expected to know, that the services were
excluded from coverage, the Medicare program will reimburse you under this provision
of the law for the reasonable charge for the services, less any deductible and coinsurance.
(Beneficiary’s name) is responsible for any deductible and coinsurance amounts. Upon
receipt of this notice, it will be considered that you now have knowledge of the exclusion
of (description of service) for similar conditions, and this limitation of liability will not
apply to future claims for the same or substantially similar services.
cc: Beneficiary
Situation II - To provider, practitioner, or supplier when the provider or practitioner or
supplier is held liable
Paragraph(s);
Section 1879 of the Social Security Act permits Medicare payment to be made on behalf
of a beneficiary to a provider or practitioner or supplier who has accepted assignment for
certain services for which payment would otherwise not be made under Medicare.
Medicare may make payment under this situation if neither the beneficiary nor the
provider, practitioner, or supplier knew, or could reasonably have been expected to know,
that the services were excluded. The services affected by this provision are those that are
not reasonable and necessary for the diagnosis or treatment of illness or injury or to
improve the functioning of a malformed body member. After reviewing (beneficiary’s
name’s) claim for (description of services), we have determined that (beneficiary’s name)
did not know and could not have been expected to know, that these services were
excluded from coverage. However, we find that (select applicable phraseology from the
following): (l) based upon the claim of (date) which was a similar claim in which
payment was denied; (2) (our notification to you of (date) that such services are
excluded); (3) (or any other basis used to determine the provider, practitioner, or supplier
to be liable)), you knew, or could have been expected to know, that these services were
excluded. We also find that you did not notify the beneficiary in writing, before the
services were furnished, that Medicare likely would not pay for the services. Because of
this, you are held liable for the full charges for the services.
We have also reviewed the claim with regard to the issue of whether the services were
not reasonable and necessary. We found that the services were not reasonable and
necessary.
If you disagree with this determination regarding your liability, on the basis that the
services were necessary, or on the basis that you did not know, and could not reasonably
have been expected to know, that Medicare would not pay for the services, or on the basis
that you notified the beneficiary in writing, before the services were furnished, that
Medicare likely would not pay for the services, you may request a reconsideration within
180 days of receipt of this notice, at which time you may present any new evidence that
would have a material effect on this determination. Our office, or your social security
office, will assist you if you need help in requesting a reconsideration.
cc: Beneficiary
Situation III - To the beneficiary when the beneficiary is held liable
Paragraph(s):
We have reviewed your claim for (description of the services). When we reviewed your
claim, we considered two things. First, we considered whether the service you received
was reasonable and necessary. Medicare will only pay for reasonable and necessary
services. We found that the service was not reasonable and necessary.
Second, we considered whether you knew, or were told, that Medicare would not pay.
Medicare would not hold you liable if you did not know and your (doctor/supplier) did
not tell you in advance, in writing, that Medicare would not pay. In that case, we would
pay you any amount you pay or paid your (doctor/supplier) for the service. Our review
shows that (choose one of the following to complete the sentence: (the (doctor/ supplier)
told you in writing, before giving the service, that Medicare would not pay); (this service
had been denied on other claims for you); OR (we told you in a letter dated (DATE) that
Medicare would not pay for this service)). Since we believe you knew Medicare would
not pay for this service, Medicare cannot pay. You are liable for the charges.
If you do not agree with our decision, ask for a reconsideration from a Qualified
Independent Contractor (QIC). The QIC will decide whether the service was reasonable
and necessary. The QIC will also decide whether you knew, or were told, Medicare
would not pay. You must ask for a reconsideration within 180 days of the date you
receive this notice. At the reconsideration, you may present any new evidence which
would affect our decision. If you need help, your social security office will help you
request a reconsideration.
cc: Physician/Supplier
Situation IV - Rider paragraph to be included in the copy of the notice to the beneficiary
when the physician/supplier is held liable
If you paid any amounts to (physician’s/supplier’s name) for this service, Medicare will
pay you back the amount you paid. To get this payment, bring or send to this office three
things. (1) A copy of this notice. (2) Your (doctor’s/supplier’s) bill. (3) A receipt or other
proof you have paid the bill.
(See §§120.4 for handling requests for indemnification where payment has been made to
a liable practitioner or supplier.)
130 - A/B MAC (A) and (HHH) Specific Instructions for Application of
Limitation on Liability
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
See §120.5.1 for guide language.
130.1 - Applicability of the Limitation on Liability Provision to Claims
for Ancillary, Outpatient Provider and Rural Health Clinic Services
Payable Under Part B
(Rev. 3187, Issued: 02-06-15, Effective: 03-06-15, Implementation: 03-06-15)
The following sections discuss how the limitation on liability provision is applied to
claims involving ancillary, outpatient and rural health clinic services billed to the A/B
MAC (A), where reimbursement is sought under Part B. The A/B MAC (A) determines
whether limitation on liability applies to these categories of claims when the basis for the
denial is that the services were not reasonable and necessary (under §1862(a)(l) of the
Act).
130.1.1 - Determining Beneficiary Liability in Claims for Ancillary and
Outpatient Services
(Rev. 594, Issued: 06-24-05, Effective: 07-01-05, Implementation: 07-01-05)
A presumption will be made that the beneficiary did not know that items or services are
not covered unless there is evidence to the contrary. Indication on the claim that the
beneficiary received proper advance beneficiary notice before receiving the noncovered
ancillary, outpatient, or rural health clinic services is evidence to the contrary which
rebuts the presumption in the beneficiary’s favor. The definitions of proper “advance
beneficiary notice” to the beneficiary are set forth in §40.3. Note that if the reason
liability is at issue coincides with the end of coverage for a period of care in specific
settings-- inpatient hospital, skilled nursing, home health, hospice or comprehensive
outpatient rehabilitation facilities-- notification under the expedited determination process
will be required as of July 1, 2005. See CR#3903 for preliminary information on the
expedited process, including its interaction with liability notice policy (i.e., ABNs).
130.1.2 - Determining Provider Liability in Claims for Ancillary and
Outpatient Services
(Rev. 1, 10-01-03)
The procedures in §30.2 apply for determining liability for providers. A provider may
have its liability waived in an individual claim if it can establish that it did not know and
could not have been expected to know that Medicare would not make payment for the
items or services.
130.2 - Prior Hospitalization and Transfer Requirements for SNF
Coverage as Related to Limitation on Liability
(Rev. 1, 10-01-03)
In order to qualify for post-hospital extended care services, the individual must meet the
prior hospitalization and transfer requirements discussed in “Coverage of Extended Care
Services Under Hospital Insurance,” Chapter 8 of the Medicare Benefit Policy Manual.
The following sections discuss the relationship of these requirements to the limitation on
liability provision.
A. Three-Day Prior Hospitalization
Before Medicare can pay for post-hospital extended care services, it must determine
whether the beneficiary had a prior qualifying hospital stay of at least three consecutive
calendar days. When a beneficiary’s liability for a hospital stay is waived, the hospital
days to which the limitation on liability applies cannot be used to satisfy the 3-day prior
hospitalization requirement, since the services rendered during the days in question were
found noncovered because they were not considered reasonable and necessary or because
they constituted custodial care. (See “Coverage of Extended Care (SNF) Services Under
Hospital Insurance,” Chapter 8, of the Medicare Benefit Policy Manual for determining
whether the 3-day prior hospitalization requirement is met.) If a beneficiary’s hospital
stay was partially covered, the A/B MAC (A) considers the covered portion of the stay in
determining whether the SNF prior hospitalization requirement is met.
B. Transfer Requirements
1. Transfer Period
The A/B MAC (A) applies the limitation on liability provision where it determines
that all the SNF care received during the period serving to satisfy the transfer
requirements described in “Coverage of Extended Care Services Under Hospital
Insurance,” Chapter 8 of the Medicare Benefit Policy Manual, either constituted
custodial care or was not reasonable and necessary.
Where the A/B MAC (A) determines that only the beneficiary’s liability can be
waived, the limitation on liability applies through the date of the notice to the
beneficiary including any inpatient days beyond the transfer period. If the provider is
also entitled to limitation on liability and program payment is possible under the
limitation on liability provision, such payment is appropriate through the date of the
notice and, if the A/B MAC (A) determines that additional time is needed to arrange
for post-discharge care, for up to 24 hours after the date of notice to the provider or
the beneficiary, whichever is earlier. If the A/B MAC (A) determines that even more
time is needed to arrange post-discharge care, up to 24 additional hours may be paid
for. (See §50.)
Where a beneficiary who is entitled to limitation on liability starts to require and
receives reasonable and necessary or noncustodial services only after the expiration
of the SNF transfer period, the beneficiary nevertheless may have his/her liability
waived for days where such services were rendered, in addition to those days waived
during the noncovered transfer period but only through the date of notice to the
beneficiary. If the provider is also entitled to limitation on liability, program payment
may be made under the limitation on liability provision through the date of notice of
noncoverage and, if the A/B MAC (A) determines that additional time is needed to
arrange for post-discharge care, for a “grace period” of l day thereafter. If the A/B
MAC (A) determines that even more time is needed to arrange post-discharge care, 1
additional “grace period” day may be paid for. (See §50.) This payment is made
because it is inequitable to waive liability for noncovered services rendered during the
transfer period but not for a period thereafter (prior to notice) during which the
beneficiary needed and received an otherwise covered level of care.
2. Delayed Transfer Due to Medical Appropriateness
The law also provides for an extension of the usual 30-day time limit for transfer
where the patient’s condition makes it medically appropriate. (“Coverage of Extended
Care Services Under Hospital Insurance,” in the Medicare Benefit Policy Manual,
Chapter 8.) However, if the A/B MAC (A) determines that such an extension is not
allowable because an interval of more than 30 days for transfer to a SNF was not
medically appropriate, it denies the SNF services because the transfer requirement
was not met. The limitation on liability provision is not applicable in such a case.
130.3 - Application of Limitation on Liability to SNF and Hospital
Claims for Services Furnished in Noncertified or Inappropriately
Certified Beds
(Rev. 4001, Issued: 03-16-18, Effective: 06-19-18, Implementation: 06-19-18)
A. General
Payment for SNF and hospital claims may not be denied solely on the basis of a
beneficiary’s placement in a non-certified portion of the same institution that also
includes a participating SNF or hospital. When requested by the beneficiary or his/her
authorized representative, a provider must submit a claim to the A/B MAC (A) for
services rendered in a non-certified bed. When the A/B MAC (A) reviews a claim for
services rendered in a non-certified bed, it first determines whether the beneficiary
consented to the placement. (See subsection C.) If the A/B MAC (A) finds that the
beneficiary consented, it denies the claim. If it finds that the beneficiary did not consent,
it determines whether there are any other reasons for denying the claim. (See subsection
D.) If there is another reason for denying the claim, the A/B MAC (A) denies it.
However, if none of the reasons for denial exist, beneficiary liability must be waived as
provided under §1879(e) of the Act and a further determination must be made as to
whether the provider, rather than the Medicare program, must accept liability for the
services in question. (See “Coverage of Extended Care Services Under Hospital
Insurance” in the Medicare Benefit Policy Manual, Chapter 8.)
B. Provider Notice Requirements
When a SNF or hospital places a patient in a noncertified or inappropriately certified
portion of the institution because it believes the patient does not require a covered level
of care, or for any other reason, it must notify the patient (or authorized representative) in
writing that services in a noncertified or inappropriately certified bed are not covered.
The provider uses the appropriate notice specified in §70 for SNFs or swing beds, §80 for
inpatient hospitals, to advise the beneficiary of its decision to place him/her in a
noncertified bed, using language such as:
We are placing you in a part of the institution that is not appropriately certified by
Medicare because (you do not require a level of care that will qualify as skilled
nursing care/or covered hospital services under Medicare)/(or state any other
reasons for the noncertified bed placement). Nonqualifying services furnished a
patient in a noncertified or inappropriately certified bed are not payable by
Medicare. However, you may request us to file a claim for Medicare benefits.
Based on this claim, Medicare will make a formal determination and advise
whether any benefits are payable to you.
(For related general billing requirements, see Chapter 1, §60 of this manual, or other
chapters specific to the benefit being billed: Chapter 3 for inpatient hospitals and swing
beds, Chapter 6 for swing bed PPS and inpatient SNFs, and Chapter 7 for outpatient
SNFs.)
C. Determining Beneficiary Consent
The CMS presumes that the beneficiary did not consent to being placed in a noncertified
bed. In order to rebut the presumption of lack of consent, the provider must indicate on
the bill the date it provided the beneficiary with an ABN notifying the beneficiary that the
accommodations would no longer be covered; and requested the beneficiary’s signed
acknowledgement (on the ABN) of having received such a statement. Moreover, in any
case in which a Medicare beneficiary gives his/her consent to placement in a noncertified
bed, the provider must, if requested by the A/B MAC (A) (contemplated only at an
appeal level of claim processing), submit a copy of the ABN signed by the beneficiary to
the A/B MAC (A), for a determination of the ABN’s validity. The ABN must be signed
by the beneficiary (provided he/she is competent to give such consent) or by the
beneficiary’s authorized representative. If the beneficiary or his/her authorized
representative refuses to sign the form, the provider may annotate the file to indicate it
presented the ABN to the beneficiary (or his/her authorized representative), but the
beneficiary refused to sign. As long as the provider’s ABN notifies the beneficiary of the
likely Medicare noncoverage, the beneficiary’s refusal to sign the ABN does not render it
invalid. (See §40.3.4.6.) If any of the above requirements is not met, the A/B MAC (A)
automatically determines the ABN is defective.
When the A/B MAC (A) receives a claim with an indication that the provider has
provided the beneficiary or his/her authorized representative, with an ABN, the A/B
MAC (A) denies the claim and notifies the beneficiary that §1879 limitation on liability
cannot be applied because of the beneficiary’s valid consent to be cared for in a
noncertified or inappropriately certified bed. If the A/B MAC (A) determines that the
ABN is not valid, the A/B MAC (A) processes the claim in accordance with §130.4.
If the beneficiary appeals the initial denial, the A/B MAC (A) obtains the ABN from the
provider and determines whether it is valid. If the A/B MAC (A) determines that the
ABN is invalid, it notifies the provider and the beneficiary that payment may be made to
the extent that all other requirements are met.
D. Determining Whether Other Requirements for Payment are Met
Denials still are appropriate for any of the following reasons. The A/B MAC (A) must
undertake the development needed to permit a determination as to whether:
• The patient did not receive or require otherwise covered hospital services or a
covered level of SNF care;
• The benefits are exhausted;
• The physician’s certification requirement is not met;
• There was no qualifying 3-day hospital stay (applicable to SNFs only); or
• Transfer from the hospital to the SNF was not made on a timely basis. (However,
if transfer to an institution which contains a participating SNF is made on a timely
basis, a claim cannot be denied solely on the grounds that the transfer requirement
is not met because the bed in which the beneficiary is placed is not a certified
SNF bed.)
The A/B MAC (A) denies cases falling within these categories under existing procedures.
Also, if the beneficiary receives care in a totally nonparticipating institution, denial on the
grounds that the beneficiary was not in a participating SNF or hospital is still appropriate.
130.4 - Determining Liability for Services Furnished in a Noncertified
SNF or Hospital Bed
(Rev .4001, Issued: 03-16-18, Effective: 06-19-18, Implementation: 06-19-18)
The A/B MAC (A) presumes that the provider properly notified the beneficiary of
noncoverage, and that the beneficiary assented, if the claim includes the proper indicators
of liability notification.
The following development occurs only if the beneficiary appeals the A/B MAC (A)’s
decision that the beneficiary may not have liability waived because the provider gave
him/her timely notice that Medicare would not cover the accommodation; and that he/she
consented to being placed in a noncertified bed.
A. Beneficiary Liability
If the A/B MAC (A) determines that the beneficiary did not consent to placement in a
noncertified portion of the same institution that also includes the participating facility
(see §130.3.C), and that no other basis for denial of the claim exists (see §130.3.D), it
finds the beneficiary not liable under §1879 of the Act.
B. Provider Liability
If the beneficiary is found not liable under §1879, liability may rest with the provider, or
with the program. Liability rests with the Medicare program, unless any of the following
conditions exist, in which case the provider is liable for the services.
The provider did not give timely written notice to the beneficiary of the implications
of receiving care in a noncertified or inappropriately certified bed as discussed in
§130.3.B;
The provider failed to provide the beneficiary with an appropriate ABN and/or did
not attempt to obtain a valid consent statement from the beneficiary. (See §130.3.C.);
or
The A/B MAC (A) determined from medical records in its claims files that it is clear
that the beneficiary required and received services equivalent to a covered level of
SNF care, or that constituted covered hospital services, and the provider had no
reasonable basis for placing the beneficiary in a noncertified bed. Following are
examples of situations in which it would be found that the provider did in fact have a
reasonable basis to place a beneficiary in a noncertified bed:
EXAMPLES:
• The A/B MAC (A), a QIO, or Utilization Review Committee had advised the
provider that the beneficiary did not require a covered level of SNF care or
covered hospital services preadmission/admission;
• The beneficiary’s attending physician specifically advised the provider (verified
by documentation in the medical record) that the beneficiary no longer required a
covered level of care or services; note that if covered care had previously existed,
effective July 1, 2005, notification under the expedited determination process
would be required (see §20);
• A beneficiary not requiring covered services had a change in his/her condition
that later required a covered level of care or services and the provider had no
certified bed available (of course, the SNF transfer requirement must be met, see
the Medicare Benefit Policy Manual, Chapter 8.); or
• The A/B MAC (A) has other sufficient evidence to determine that the provider
acted in good faith but inadvertently placed the beneficiary in a noncertified bed.
140 - Physician Refund Requirements (RR) Provision for Nonassigned
Claims for Physicians Services Under §1842(l) - Instructions for
Contractors and Physicians
(Rev. 1587, Issued: 09-05-08, Effective: 03-03-08, Implementation: 03-01-09)
Following are the procedures for implementing §1842(l) of the Act. Under §9332(c) of
OBRA 1986 (P.L. 99-509), which added §1842(l) to the Act, new liability protections for
Medicare beneficiaries affect nonparticipating physicians.
140.1 - Services Furnished Before October 1, 1987
(Rev. 1, 10-01-03)
Before October 1, 1987, a physician who did not accept Medicare assignment was
permitted to collect from a Medicare beneficiary his/her full charge for services which
were subsequently denied because they were not reasonable and necessary under
§1862(a)(1) of the Act, even though the beneficiary may not have known that Medicare
would not pay for the services. This was in contrast to the rules applicable to assigned
claims. Where a physician agrees to accept assignment (either on an individual claims
basis or by entering into a Medicare participation agreement), the physician is effectively
precluded by the indemnification procedures under the limitation of liability provision
from receiving payment for services that are not reasonable and necessary if it is
established that the physician knew or should have known that Medicare would not pay
for the services and the beneficiary did not. However, under the limitation of liability
provision, program payment may be made to the physician if neither the physician nor
the patient knew, nor could reasonably have been expected to know, that Medicare would
not pay for the items and services.
140.2 - Services Furnished Beginning October 1, 1987
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
Under §1842(l) of the Act, effective for services furnished on or after October 1, 1987,
nonparticipating physicians who
1. Do not accept assignment,
2. Do not claim payment after the death of the beneficiary, and
3. Do not bill under the indirect payment procedure must refund to beneficiaries any
amounts collected for physicians’ services which are denied because they are not
reasonable and necessary under §1862(a)(1).
This provision is applicable in any case in which the contractor denies payment or
reduces the level of payment on the basis of §1862(a)(1). In the latter situation, there is,
in effect, a denial of the more extensive service or procedure on the basis that it is not
reasonable and necessary under §1862(a)(1), even though Medicare payment is made for
the less extensive service or procedure (e.g., an intermediate office visit is allowed as a
brief office visit). Where a reduction in the level of payment occurs, the physician must
refund to the beneficiary any amounts he/she collects which exceed his/her maximum
allowable actual charge (MAAC) for the less extensive procedure. Of course, in the
unusual case where the physician’s MAAC for the less extensive service equals or
exceeds his/her actual charge for the more extensive service, no refund is required.
Section 1842(l) of the Act applies only to physicians’ services subject to the Medicare
Economic Index (MEI). Certain services, such as those involving injections that can be
given by a paramedical person other than a physician (e.g., pneumococcal and hepatitis
vaccine injections) which may be denied under §1862(a)(1) are not physicians’ services
for purposes of the MEI. Therefore, denials of payment on the basis of §1862(a)(1)(B) of
the Act for those services are not subject to §1842(l) refund requirements. Additionally,
services of physician extenders (e.g., physician’s assistants, nurse practitioners,
MEDEXes, etc.) are not physicians’ services and are not subject to §1842(l) refund
requirements. The application of §1842(1) refund requirements on the correct statutory
basis, i.e., only on the basis of §1862(a)(1), and only to physicians’ services subject to the
MEI, is essential. Incorrect application improperly takes away physicians’ rights to bill
beneficiaries for denied services and incurs unnecessary expenses for review,
development, and appeals.
140.3 - Time Limits for Making Refunds
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
A required refund must be made within specified time limits. Physicians who knowingly
and willfully fail to make refund within these time limits may be subject to civil money
penalties and/or exclusion from the Medicare program. Under §1842(1) , a refund of any
amounts collected must be made to the beneficiary within the following time limits:
• If the physician does not request an appeal of the initial denial or reduction in
payment within that time, the refund must be made to the beneficiary within 30
days after the date the physician receives notice of the initial determination. (See
§140.6 for notice requirements.); or
• If the physician requests an appeal within 30 days of receipt of the notice of the
initial determination, the refund must be made to the beneficiary within 15 days after
the date the physician receives the notice of the appeal determination.
140.4 - Situations Where a Refund Is Not Required
(Rev. 1, 10-01-03)
Under §1842(1), a refund is not required of the physician if either of the following
conditions is met:
1. The physician did not know and could not reasonably have been expected to
know that Medicare would not pay for the services because they were not
reasonable and necessary. To determine whether the physician knew, or could
reasonably have been expected to know, use the rules for determining physician
liability under §1879. (See §30.2.); or
2. Before the service was furnished, the physician notified the beneficiary in writing
of the likelihood that Medicare would not pay for the specific service and, after
being so informed, the beneficiary signed a statement agreeing to pay the
physician for the service.
To qualify for waiver of the refund requirements of §1842(1), the advance notice to the
beneficiary must be in writing, must clearly identify the particular service, must state that
the physician believes Medicare is likely to deny payment for the particular service, and
must give the physician’s reason(s) for his/her belief that Medicare is likely to deny
payment for the service. The Advance Beneficiary Notice (ABN, Form CMS-R-131),
given in compliance with §40.3 and §50, satisfies the statutory requirements for the
physician’s advance notice and the beneficiary’s agreement to pay.
140.5 - Appeal Rights
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
Nonparticipating physicians have the same rights to appeal the contractor’s
redetermination in an unassigned claim for physicians’ services if the contractor denies or
reduces payment on the basis of §1862 (a)(1) as they or participating physicians have in
assigned claims. These rights of appeal also extend to determinations that a refund is
required either because the physician knew or should have known that Medicare would
not pay for the service, or because the beneficiary was not properly informed in writing in
advance that Medicare would not pay or was unlikely to pay for the service or, if so
informed, did not sign a statement agreeing to pay. In addition to the beneficiary’s right
to appeal the contractor’s decision to deny or reduce payment on the basis of §1862
(a)(1), the beneficiary becomes a party to any request for appeal filed by the physician.
Since the beneficiary and the physician may have adverse interests in a decision
regarding refund, it is essential to notify the beneficiary in any case in which the
physician requests an appeal of the denial or reduction in payment or asserts that a refund
is not required because one of the conditions in §140.4 is met. (See Chapter 29, “Appeals
for detailed appeals instructions.”)
140.6 - Processing Initial Denials
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
In any unassigned claim for physician’s services furnished on or after October 1, 1987, in
which the contractor denies or reduces payment on the basis of §1862(a)(1), the
contractor will send separate notices to both the beneficiary and the physician. In some
cases, the beneficiary (or physician) may submit a copy of an ABN which satisfies the
requirements in §140.4. The contractor should not make an automatic finding that the
service is not reasonable and necessary merely because the beneficiary has submitted an
ABN. The fact that there is an acceptable ABN must in no way prejudice the contractor’s
determination as to whether there is or is not sufficient evidence to justify a denial under
§1862(a)(1). In the case where there is an acceptable ABN, the contractor will mail a
standard denial MSN notice to the beneficiary. In the absence of an acceptable ABN, and
depending on whether there is a full denial or a partial reduction in payment, the
contractor will include, in addition to one of the “medical necessity” denial notices, one
of the following notices in the MSN sent to the beneficiary.
140.6.1 - Initial Beneficiary Notices
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
Notice 1 - Full Denial
If the doctor should have known that Medicare would not pay for the
denied services and did not tell you in writing before providing the
services, you may be entitled to a refund of any amounts you paid.
However, if the doctor requests an appeal of this claim within 30 days, a
refund is not required until we complete our appeal. If you paid for this
service and do not hear anything about a refund within the next 30 days,
contact your doctor’s office.
Notice 2 - Reduction in Payment
If the doctor should have known that Medicare would not pay for the more
extensive service and did not tell you this in writing before providing the
service, you may be entitled to a refund of any amount you paid which is
more than the doctor is allowed by law to charge under Medicare for the
less extensive service. However, if the doctor requests an appeal of this
claim within 30 days, a refund is not required until we complete our
appeal. If you paid for the more extensive service and do not hear anything
about a refund within the next 30 days, contact your doctor’s office.
In addition, add the following paragraph:
You could have avoided paying $_______, the difference between the maximum
amount the doctor or supplier is allowed to charge and the amount Medicare
approved for the lesser service, if the claim had been assigned.
140.6.2 - Initial Physician Notices
(Rev. 4250; Issued: 03-08-10; Effective: 04-08-19; Implementation: 04-08-19)
The term Medicare beneficiary identifier (Mbi) is a general term describing a
beneficiary's Medicare identification number. For purposes of this manual, Medicare
beneficiary identifier references both the Health Insurance Claim Number (HICN) and
the Medicare Beneficiary Identifier (MBI) during the new Medicare card transition
period and after for certain business areas that will continue to use the HICN as part of
their processes.
Include in the notice to the physician the following:
• The patient’s name and Medicare beneficiary identifier;
• A description of the service by procedure code, date and place of service, and
amount of the charge;
• The same denial notice included on the beneficiary’s MSN; and
• Depending on whether the beneficiary submitted a copy of an acceptable ABN
with his/her claim, include in the notice to the physician one of the following:
Notice 1 - Advance Beneficiary Notice Received Prior to Initial Determination
(The service identified above has been denied because/although payment
has been made to the patient for a less extensive service,) the information
furnished did not substantiate the need for the (more extensive) service.
Since you informed the beneficiary in writing prior to furnishing the
service that Medicare was likely to deny payment for the (more extensive)
service and the beneficiary signed a statement agreeing to pay, the
beneficiary is liable for (this/the more extensive) service.
Or
Notice 2 - Advance Beneficiary Notice Not Submitted
(The service identified above has been denied because/Although payment
has been made to the patient for a less extensive service,) the information
furnished did not substantiate the need for the (more extensive) service).
If you have collected (any amount from the patient/any amount that
exceeds your maximum allowable actual charge (MAAC) for the less
extensive service), the law requires you to refund that amount to the
patient within 30 days of receiving this notice. The law permits exceptions
to this refund requirement in two cases:
• If you did not know, and could not have reasonably been
expected to know, that Medicare would not pay for this
service; or
• If you notified the beneficiary in writing before providing
the service that you believed that Medicare was likely to
deny the service, and the beneficiary signed a statement
agreeing to pay for the service.
If you come within either exception, or if you believe the contractor was
wrong in its determination that Medicare does not pay for this service, you
should request an appeal of this determination by the contractor within 30
days of receiving this notice. Your request for appeal should include any
additional information necessary to support your position.
If you request an appeal within this 30 day period, you may delay
refunding the amount to the beneficiary until you receive the results of the
appeal. If the appeal determination is favorable to you, you do not have to
make any refund. If, however, the appeal is unfavorable, the law specifies
that you must make the refund within 15 days of receiving the unfavorable
appeal decision.
The law also permits you to request an appeal of the determination at any
time within six months of receiving this notice. An appeal requested after
the 30 day period does not permit you to delay making the refund.
Regardless of when an appeal is requested, the patient will be notified that
you have requested one, and will receive a copy of the determination.
The patient has received a separate notice of this denial decision. The
notice advises that he or she may be entitled to a refund of any amounts
paid, if you should have known that Medicare would not pay and did not
tell him or her. It also instructs the patient to contact your office if he or
she does not hear anything about a refund within 30 days.
The requirements for refund are in §1842(1) of the Social Security Act.
Section 1842(1) specifies that physicians who knowingly and willfully fail
to make appropriate refunds may be subject to civil money penalties
and/or exclusion from the Medicare program.
If you have any questions about this notice, please contact (Contractor
contact, telephone number).
The contractor will ensure that the telephone number puts the physician in touch with a
knowledgeable professional who can discuss the basis for the denial or reduction in
payment.
NOTE: These procedures do not apply to claims the contractor automatically denies
under the A/B link procedures. In those cases, the QIO is responsible for notifying the
beneficiary and physician of the refund requirements of §1842(1) and making the refund
determination where appropriate.
140.7 - Processing Beneficiary Requests for Appeal
(Rev. 4250; Issued: 03-08-10; Effective: 04-08-19; Implementation: 04-08-19)
The term Medicare beneficiary identifier (Mbi) is a general term describing a
beneficiary's Medicare identification number. For purposes of this manual, Medicare
beneficiary identifier references both the Health Insurance Claim Number (HICN) and
the Medicare Beneficiary Identifier (MBI) during the new Medicare card transition
period and after for certain business areas that will continue to use the HICN as part of
their processes.
Where a beneficiary requests an appeal of the initial denial or reduction in payment, the
contractor will process the appeal in the normal fashion except that, where the appeal
results in a reversal to full or partial payment, the contractor will include the following
special paragraph in the appeal notice sent to the beneficiary:
The doctor who furnished this service has been informed of this decision
and advised that he/she may collect (his/her full charge for the service/up
to the maximum amount he/she is allowed by law to charge under
Medicare for the less extensive service for which payment has been
made).
If the reversal is for the less extensive service, the contractor will incorporate in the
notice the following:
You could have avoided paying $_______, the difference between the
maximum amount the doctor is allowed to charge and the amount
Medicare approved for the lesser service, if the claim had been assigned.
The contractor will send the physician who furnished the service a separate notice which
clearly identifies the service for which full or partial payment is being made (i.e.,
includes the patient’s name, Medicare beneficiary identifier, a description of the service
billed by procedure code, date and place of service, and amount of the charge. Where
only partial payment is being made, the contractor will clearly indicate the less extensive
service for which payment has been made). The contractor will include the following
language:
You were previously advised that Medicare payment could not be made for this
service. However, after reviewing this claim, we have determined that payment
may be made (for a less extensive service). Therefore, if you have already
refunded the amounts you collected from the beneficiary for this service, you may
recollect (these amounts/any amounts which do not exceed your maximum
allowable actual charge (MAAC) for the less extensive service for which payment
has been made).
140.8 - Processing Physician Requests for Appeal
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
Where a physician requests an appeal, the contractor will notify the beneficiary as
discussed in §140.5. The appeal process consists of three stages, even though the
physician may be contesting only one issue (e.g., the physician may assert that he/she did
not know, and could not have reasonably have been expected to know, that Medicare
would not pay for the services).
140.8.1 - Appeal of the Denial or Reduction in Payment
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
The first part of the appeal is a new, independent, and critical reexamination of the facts
regarding the denial or reduction in payment. If the contractor finds that the initial denial
or reduction in payment was appropriate, the contractor will go on to §140.8.2.
140.8.2 - Beneficiary Given ABN and Agreed to Pay
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
A physician who has given the beneficiary an ABN and has obtained the beneficiary’s
signed statement agreeing to pay, is not required to make a refund. If the physician claims
to have given an ABN to the beneficiary, the contractor will ask the physician to furnish a
copy of the signed ABN. The contractor will examine the ABN to determine whether it
meets the guidelines in §140.4. In the absence of acceptable evidence of advance notice,
the contractor will go on to §140.8.3.
140.8.3 - Physician Knowledge
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
In determining whether the physician knew, or could reasonably have been expected to
know, that Medicare would not pay for the services, the contractor will apply the same
rules that are applicable in determining physician liability under §1879 of the Act. (See
§30.2.)
140.9 - Guide Paragraphs for Inclusion in Appeal Determination
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
The contractor, upon completion of its appeal, will send the physician an appeal notice
and send a copy to the beneficiary. If the initial payment determination is reversed to full
or partial payment, the contractor will include in the appeal notice the physician notice
language required in §140.7. Otherwise, the contractor will include one of the following
paragraphs concerning refund.
Paragraph 1. Refund Not Required - Beneficiary Was Given Advance Beneficiary Notice
and Agreed to Pay
Under §1842(l) of the Social Security Act, a physician who does not accept assignment
and collects any amounts from a Medicare beneficiary for services for which Medicare
does not pay on the basis of §1862(a)(1) of the Social Security Act, must refund these
amounts to the beneficiary. However, a refund is not required if, prior to furnishing the
services, the physician notified the beneficiary in writing that Medicare would not pay for
the services and the beneficiary signed a statement agreeing to pay for them. After
reviewing this claim, we have determined that you informed the beneficiary in advance
that Medicare does not pay for the above services and the beneficiary agreed to pay for
them. Therefore, you are not required to make a refund in this case. The beneficiary has
been sent a copy of this notice.
Paragraph 2. Refund Not Required - Physician Did Not Know That Medicare Would Not
Pay For the Services
Under §1842(1) of the Social Security Act, a physician who does not accept assignment
and collects any amounts from a Medicare beneficiary for services for which Medicare
does not pay on the basis of §1862(a)(1) of the Social Security Act, must refund these
amounts to the beneficiary. However, a refund is not necessary if the physician did not
know, and could not reasonably have been expected to know, that Medicare does not pay
for the services. After reviewing this claim, we find that you did not know, and could not
reasonably have been expected to know, that Medicare would not pay for the above
services. Therefore, you are not required to make a refund in this case. Upon your receipt
of this notice, it is considered that you now have knowledge of the fact that Medicare
does not pay for (description of services) for similar conditions. The beneficiary has been
sent a copy of this notice.
Paragraph 3. Adverse Action on Denial - Refund Required
Under §1842(1) of the Social Security Act, a physician who does not accept assignment
and collects any amounts from a Medicare beneficiary for services for which Medicare
does not pay on the basis of §1862(a)(1) of the Social Security Act, must refund these
amounts to the beneficiary. A refund is not required if (1) the physician did not know,
and could not reasonably have been expected to know, that Medicare would not pay for
the services; or (2) the physician notified the beneficiary in writing before furnishing the
services that Medicare would not pay for the services and the beneficiary signed a
statement agreeing to pay for them. After reviewing this claim, we have determined that
neither of these conditions is met in this case. You must therefore refund any amount you
collected for these services within 15 days from the date you receive this notice. A refund
must be made within 15 days from receipt of this notice for you to be in compliance with
the law. If we paid for a less extensive procedure, you need refund only the amount
which exceeds your maximum allowable actual charge (MAAC) for the less extensive
procedure. The beneficiary has been sent a copy of this notice. Physicians who
knowingly and willfully fail to make appropriate refunds may be subject to assessments
of double the violative charges, civil money penalties (up to $2000 per violation), and/or
exclusion from the Medicare program for a period of up to 5 years.
140.10 - Physician Fails to Make Refund
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
Under §1842(1) of the Act, a physician who knowingly and willfully fails to make refund
within the time limits in §140.3 may be subject to sanctions (i.e., civil money penalties
and/or exclusion from the Medicare program). Generally, the failure of a physician to
make a refund comes to the contractor’s attention as a result of a beneficiary complaint to
the contractor, Social Security Administration (SSA), or CMS. If necessary, the
contractor will contact the beneficiary to clarify the information in the complaint and to
determine the amount the beneficiary paid the physician for the denied services. If the
contractor determines that a physician failed to make a refund, it will contact the
physician in person or by telephone to discuss the facts of the case. The contractor will
attempt to determine why the amounts collected have not been refunded and will explain
that the law requires that the physician make refund to the beneficiary and that if he/she
fails to do so, the OIG may impose civil money penalties and assessments, and sanctions.
The contractor will make a dated report of contact and include the information relayed to
the physician and the physician’s response. The contractor will recontact the beneficiary
in 15 days to determine whether the refund has been made. When the amount in question
is $300 or more or where there are at least three outstanding violations by the physician,
the contractor will contact the Sanctions Coordinator in the appropriate field office of the
OIG by telephone to discuss whether referral to OIG is appropriate. If the case should be
referred, the contractor will make the referral to the regional OIG Sanctions Coordinator
in accordance with the procedures following. The contractor should not make a referral
until the physician’s appeal rights have been exhausted, or until the time limit for an
appeal has passed.
140.11 - OIG Referral Procedures
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
The contractor will include in the sanction recommendation to the OIG/FO (to the extent
appropriate) the following:
• Identification of the Subject - The subject’s name, address and a brief description
of the subject’s special field of medicine.
• Origin of the Case - A brief description of how the violations were discovered.
• Statement of Facts - A statement of facts in chronological order describing each
failure to comply with the refund requirements in §1842(1).
• Documentation - Copies of written correspondence and written summaries of any
meetings or telephone contacts with the beneficiary and the physician regarding
the physician’s failure to make refund.
• Other Significant Issues - Any information that may be of value in the event of a
hearing to bar a physician from receiving Medicare payment.
140.12 - Imposition of Sanctions
(Rev. 1, 10-01-03)
Section 1842(1)(3) of the Act provides that if a physician knowingly and willfully fails to
make a required refund, the Secretary may impose the sanctions provided in §§1842(j)(2)
of the Act. These include assessments of double the violative charges, civil money
penalties (up to $2000 per violation), and/or exclusion from the Medicare program for a
period of up to five years. However, sole community physicians and physicians who are
the sole source of an essential specialty are not excluded from the program. The OIG
makes determinations to levy a monetary penalty or program exclusion based upon a
failure to make a refund.
150 - DMEPOS Refund Requirements (RR) Provision for Claims for
Medical Equipment and Supplies under §§1834(a)(18), 1834(j)(4), and
1879(h) - Instructions for Contractors and Suppliers
(Rev. 1587, Issued: 09-05-08, Effective: 03-03-08, Implementation: 03-01-09)
Following are the procedures for implementing §§1834(a)(18), 1834(j)(4) and 1879(h) of
the Act. Under §132 of SSAA-1994 (Social Security Act Amendments of 1994, P.L. 103-
432) which adds §1834(a)(18) to the Act, and under §133 of SSAA-1994 which adds
§1834(j)(4) and §1879(h) to the Act, new liability protections for Medicare beneficiaries
affect suppliers of medical equipment and supplies. All suppliers who sell or rent medical
equipment and supplies to Medicare beneficiaries are subject to the refund provisions of
§§1834(a)(18), 1834(j)(4) and 1879(h) of the Act. Beneficiaries’ liability for payment for
certain items and services, that is, for otherwise covered medical equipment and supplies
as defined in §150.10 , which are furnished on or after January 1, 1995, and for which
Medicare payment is denied for one of several reasons specified below, may be limited as
follows. For both assigned and unassigned claims, for which the supplier knew or should
have known of the likelihood that payment would be denied (that is, the supplier is held
to be liable) and for which the beneficiary did not know, the beneficiary has no financial
responsibility and the refund provisions of the Act apply in virtually all cases. The single
exception to this rule of applicability is that, with respect to medical equipment and
supplies for which the supplier accepted assignment and for which payment is denied
because the item or service is not medically reasonable and necessary under §1862(a)(1)
of the Act, the §1879 Limitation on Liability provisions which applied to such denials
prior to January 1, 1995, still apply. The refund provisions do not apply to these denials.
In claims for medical equipment and supplies, payment reductions may be based on
partial denials of coverage for additional expenses not attributable to medical necessity.
A medical necessity “partial denial” is the denial of coverage for the unnecessary
component of a covered item or service, when that component is in excess of the
beneficiary’s medical needs. Any such excess component is not medically reasonable and
necessary and therefore, under §1862(a)(1) of the Act, it is not covered. A partial denial
may be used to base payment on the least costly, medically appropriate, alternative. The
beneficiary liability protections of §1879 and of §1834(j)(4) of the Act apply to any
payment reductions due to partial denials of coverage for medical equipment or supplies
on the basis of medical necessity under §1862(a)(1) of the Act. (See §140 for its similar
provision for the applicability of the refund requirements under §1842(l) of the Act to
partial denials of coverage for physicians’ services.)
When the refund provisions of §§1834(a)(18), 1834(j)(4) and 1879(h) of the Act apply
and the supplier is held to be liable, a required refund must be made on a timely basis.
Suppliers which knowingly and willfully fail to make refund within specified time limits
may be subject to civil money penalties and/or exclusion from the Medicare program.
Refund is not required if the supplier is held not to be liable, that is, if it is held that the
supplier did not know and could not reasonably have been expected to know that
Medicare would not pay on the basis of §1834(a)(17)(B), §1834(j)(1), §1834(a)(15), or
§1862(a)(1) of the Act, or if it is held that, before the item or service was furnished, the
beneficiary was informed by the supplier that Medicare would not pay and the
beneficiary agreed to pay for the item or service. In any case where the supplier is held
not to be liable, the beneficiary is liable for payment.
150.1 - Definition of Medical Equipment and Supplies
(Rev. 1, 10-01-03)
The following definitions of medical equipment and supplies control the application of
the provisions of this section.
150.1.1 - Unassigned Claims Denied on the Basis of the Prohibition on
Unsolicited Telephone Contacts
(Rev. 1, 10-01-03)
For unassigned claims denied on the basis of the prohibition on unsolicited telephone
contacts under §1834(a)(17)(B) of the Act, the term “medical equipment and supplies”
means:
• Durable medical equipment, as defined in §1861(n) of the Act; and
• Medical supplies, as described in §1861(m)(5) of the Act, including catheters,
catheter supplies, ostomy bags, and supplies related to ostomy care.
150.1.2 - Unassigned Claims Denied on the Basis of Not Being
Reasonable and Necessary
(Rev. 1, 10-01-03)
For unassigned claims denied on the basis of not being reasonable and necessary under
§1862(a)(1) of the Act; or Medicare payment being denied in advance under
§1834(a)(15) of the Act; the term “medical equipment and supplies” means:
• Durable medical equipment, as defined in §1861(n) of the Act;
• Prosthetic devices, as described in §1861(s)(8) of the Act;
• Orthotics and prosthetics, as described in §1861(s)(9) of the Act;
• Surgical dressings, as described in §1861(s)(5) of the Act; and
• Such other items as the Secretary may determine.
150.1.3 - Unassigned Claims Denied on the Basis of Failure of the
Supplier to Meet Supplier Number Requirements
(Rev. 1, 10-01-03)
For unassigned claims denied on the basis of failure of the supplier to meet supplier
number requirements under §1834(j)(1) of the Act, the term “medical equipment and
supplies” means:
• Durable medical equipment, as defined in §1861(n) of the Act;
• Prosthetic devices, as described in §1861(s)(8) of the Act;
• Orthotics and prosthetics, as described in §1861(s)(9) of the Act;
• Surgical dressings, as described in §1861(s)(5) of the Act;
• Home dialysis supplies and equipment, as described in 1861(s)(2)(F) of the
Act;
• Immunosuppressive drugs, as described in 1861(s)(2)(J) of the Act;
• Therapeutic shoes for diabetics, as described in 1861(s)(12) of the Act;
• Oral drugs prescribed for use as an anticancer therapeutic agent, as described
in 1861(s)(2)(Q) of the Act;
• Self-administered erythropoietin, as described in 1861(s)(2)(P) of the Act; and
• Such other items as the Secretary may determine.
150.1.4 - Assigned Claims Denied on the Basis of the Prohibition on
Unsolicited Telephone Contacts
(Rev. 1, 10-01-03)
For assigned claims denied on the basis of the prohibition on unsolicited telephone
contacts under §1834(a)(17)(B) of the Act; or Medicare payment being denied in advance
under §1834(a)(15) of the Act; the term “medical equipment and supplies” means:
• Durable medical equipment, as defined in §1861(n) of the Act;
• Prosthetic devices, as described in §1861(s)(8) of the Act;
• Orthotics and prosthetics, as described in §1861(s)(9) of the Act;
• Surgical dressings, as described in §1861(s)(5) of the Act; and
• Such other items as the Secretary may determine.
150.1.5 - Assigned Claims Denied on the Basis of Failure of the Supplier
to Meet Supplier Number Requirements
(Rev. 1, 10-01-03)
For assigned claims denied on the basis of failure of the supplier to meet supplier number
requirements under §1834(j)(1) of the Act, the term “medical equipment and supplies”
means:
• Durable medical equipment, as defined in §1861(n) of the Act;
• Prosthetic devices, as described in §1861(s)(8) of the Act;
• Orthotics and prosthetics, as described in §1861(s)(9) of the Act;
• Surgical dressings, as described in §1861(s)(5) of the Act;
• Home dialysis supplies and equipment, as described in 1861(s)(2)(F) of the Act;
• Immunosuppressive drugs, as described in 1861(s)(2)(J) of the Act;
• Therapeutic shoes for diabetics, as described in 1861(s)(12) of the Act;
• Oral drugs prescribed for use as an anticancer therapeutic agent, as described in
1861(s)(2)(Q) of the Act;
• Self-administered erythropoietin, as described in 1861(s)(2)(P) of the Act; and
• Such other items as the Secretary may determine.
150.1.6 - Assigned Claims Denied on the Basis of Not Being Reasonable
and Necessary
(Rev. 1, 10-01-03)
For assigned claims denied on the basis of not being reasonable and necessary under
§1862(a)(1) of the Act, the term “medical equipment and supplies” means:
• Durable medical equipment, as defined in §1861(n) of the Act;
• Medical supplies, as described in §1861(m)(5) of the Act;
• Prosthetic devices, as described in §1861(s)(8) of the Act;
• Orthotics and prosthetics, as described in §1861(s)(9) of the Act;
• Surgical dressings, as described in §1861(s)(5) of the Act; or
• Such other items as the Secretary may determine.
150.2 - Items and Services Furnished on an Unassigned Basis on or
After January 1, 1995
(Rev. 1, 10-01-03)
Nonparticipating suppliers which (1) Do not accept assignment, (2) Do not claim
payment after the death of the beneficiary, and (3) Do not bill under the indirect payment
procedure, if held to be liable, must refund to beneficiaries any amounts collected for
medical equipment and supplies for which Medicare payment is denied for one of the
following reasons:
• Under §1834(a)(18)(A) of the Act, the supplier violated the prohibition on
unsolicited telephone contacts under §1834(a)(17)(B) of the Act; or
• Under §1834(j)(4) of the Act, the supplier did not meet supplier number
requirements under §1834(j)(1); or the item is denied in advance under
§1834(a)(15) of the Act; or payment is denied as not reasonable and necessary
under §1862(a)(1) of the Act.
In any such payment denial under §1834(a)(17)(B), §1834(j)(1), §1834(a)(15), or
§1862(a)(1) of the Act, the beneficiary has no financial responsibility and the refund
provisions of §§1834(a)(18), 1834(j)(4) or 1879(h) of the Act, as appropriate, apply, if it
is held that the supplier knew or should have known of the likelihood that payment would
be denied and that the beneficiary did not know.
For medical equipment and supplies furnished prior to January 1, 1995, Federal law does
not limit beneficiaries’ liability with respect to unassigned claims for which payment was
denied.
150.3 - Items and Services Furnished On an Assigned Basis On or After
January 1, 1995
(Rev. 1, 10-01-03)
Under §1879(h) of the Act, suppliers, whether nonparticipating or participating, which
accept assignment, if held to be liable, must refund to beneficiaries any amounts collected
for medical equipment and supplies for which Medicare payment is denied for one of the
following reasons:
• Under §1879(h)(1) of the Act, payment is denied because the supplier did not
meet the supplier number requirements under §1834(j)(1) of the Act;
• Under §1879(h)(2) of the Act, payment is denied in advance under §1834(a)(15)
of the Act; and
• Under §1879(h)(3) of the Act, payment is denied based on §1834(a)(17)(B) of the
Act, the prohibition on unsolicited telephone contacts.
In any such payment denial under §1834(j)(1), §1834(a)(15), or §1834(a)(17)(B) of the
Act, the beneficiary has no financial responsibility and the refund provisions apply, if it is
held that the supplier knew or should have known of the likelihood that payment would
be denied and that the beneficiary did not know. However, in a denial of an assigned
claim under §1862(a)(1) of the Act (i.e., payment is denied because the item or service is
not reasonable and necessary), the §1879 Limitation on Liability provisions which
applied to such denials prior to January 1, 1995, still apply.
150.4 - Time Limits for Making Refunds
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
A refund of any amounts collected must be made to the beneficiary on a timely basis.
Refund is considered to be on a timely basis only if made within the following time
limits:
• If the supplier does not request an appeal of the initial denial or reduction in
payment within that time, the refund must be made to the beneficiary within 30
days after the date the supplier receives the remittance advice (RA).
• If the supplier requests an appeal within 30 days of receipt of the notice of the
initial determination, the refund must be made to the beneficiary within 15 days
after the date the supplier receives the notice of the contractor’s determination of
the supplier’s appeal.
150.5 - Supplier Knowledge Standards for Waiver of Refund
Requirement
(Rev. 1, 10-01-03)
A refund is not required of the supplier if the supplier did not know and could not
reasonably have been expected to know that Medicare would not pay for the medical
equipment or supplies. Following are the knowledge standards applicable to the different
types of denials.
150.5.1 - Knowledge Standards for §1862(a)(1) Denials
(Rev. 1, 10-01-03)
In determining whether the supplier knew, or could reasonably have been expected to
know, that Medicare would not pay on the basis of medical necessity, apply the same
rules that are applicable in determining supplier liability under §1879 of the Act.
150.5.2 - Knowledge Standards for §1834(a)(15) Denials
(Rev. 1, 10-01-03)
150.5.2.1 - Denial of Payment in Advance
(Rev. 1587, Issued: 09-05-08, Effective: 03-03-08, Implementation: 03-01-09)
Denial of payment in advance under §1834(a)(15) of the Act refers both to cases in which
the supplier requested an advance determination and the contractor determined that the
item would not be covered, and to cases in which the supplier failed to request an
advance determination when such a request is mandatory.
150.5.2.2 - When a Request for an Advance Determination of Coverage
Is Mandatory
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
A request for an advance determination of coverage of medical equipment and supplies is
mandatory under §1834(a)(15)(C)(i) & (ii) of the Act, respectively, when:
• The item is on the list developed by the Secretary under §1834(a)(15)(A) of items
which are frequently subject to unnecessary utilization in your contractor service
area; or
• The supplier is on the list developed by the Secretary under §1834(a)(15)(B) of
the Act of suppliers for which a substantial number of claims have been denied as
not medically reasonable and necessary under §1862(a)(1) of the Act or the
Secretary has identified a pattern of overutilization resulting from the business
practice of the supplier.
150.5.2.3 - When a Request for an Advance Determination of Coverage
Is Optional
(Rev. 1, 10-01-03)
A request for an advance determination of coverage of medical equipment and supplies is
optional under §1834(a)(15)(C)(iii) of the Act when the item is a customized item (other
than inexpensive items specified by the Secretary) and the patient to whom the item is to
be furnished or the supplier requests an advance determination.
150.5.2.4 - Presumption for Constructive Notice
(Rev. 1587, Issued: 09-05-08, Effective: 03-03-08, Implementation: 03-01-09)
In determining whether the supplier knew, or could reasonably have been expected to
know, that Medicare would deny payment in advance under §1834(a)(15) of the Act,
presume that the supplier knew that Medicare would not pay in all cases in which the
supplier failed to request a mandatory advance determination, on the basis of constructive
notice of the lists of items and of suppliers to the supplier through the contractor’s regular
newsletter/bulletin publication. The supplier would have to submit convincing evidence
to the contrary to rebut this presumption.
150.5.2.5 - Presumption When Advance Determination was Requested
(Rev. 1587, Issued: 09-05-08, Effective: 03-03-08, Implementation: 03-01-09)
In determining whether the supplier knew, or could reasonably have been expected to
know, before furnishing the item, that Medicare would deny payment in advance under
§1834(a)(15) of the Act, presume that the supplier knew that Medicare would not pay in
all those cases in which a request for advance determination was made, and the contractor
denied payment in advance on the basis that the item is not reasonable and necessary
under §1862(a)(1) of the Act or that the item is not covered. This is a nonrebuttable
presumption.
150.5.2.6 - Presumption for Listed Overutilized Items
(Rev. 1, 10-01-03)
Any denial of a claim for a particular item furnished by a particular supplier because the
item is on the §1834(a)(15)(A) list of potentially overutilized items is actual notice to that
supplier that an advance determination must be requested for all future claims for that
item, and for any other items which are identified in the same notification of denial as
being on the list of potentially overutilized items. Presume, on that basis, that that
supplier has knowledge that an advance determination must be requested for all future
claims for any and all items which are identified in the notification of denial as being on
the list of potentially overutilized items. This is a nonrebuttable presumption.
150.5.2.7 - Presumption for Listed Suppliers
(Rev. 1, 10-01-03)
Any denial of a claim for an item furnished by a particular supplier because the supplier
is on the §1834(a)(15)(B) list of suppliers, is actual notice to that supplier that an advance
determination must be requested for all future claims for any item of medical equipment
and supplies which that supplier furnishes. Presume, on that basis, that that supplier has
knowledge that an advance determination must be requested for all future claims for any
and all items of medical equipment and supplies which it furnishes. This is a
nonrebuttable presumption.
150.5.2.8 - Presumption for Medical Necessity
(Rev. 1, 10-01-03)
In the case of an optional request for an advance determination of coverage of a
customized item of medical equipment and supplies under §1834(a)(15)(C)(iii) of the Act
by the patient to whom the item is to be furnished or the supplier, in determining whether
the supplier knew, or could reasonably have been expected to know, that Medicare would
deny payment in advance under §1834(a)(15) of the Act, presume that the supplier knew
that Medicare would not pay in all cases in which you denied payment in advance on the
basis that the item is not reasonable and necessary under §1862(a)(1) of the Act or that
the item is not covered. This is a nonrebuttable presumption.
150.5.2.9 - Presumption About Beneficiary Knowledge
(Rev. 1587, Issued: 09-05-08, Effective: 03-03-08, Implementation: 03-01-09)
Presume that a Medicare beneficiary does not know, and cannot reasonably be expected
to know, that Medicare will deny, or has denied, payment in advance under §1834(a)(15)
of the Act unless and until the beneficiary has received a proper advance beneficiary
notice (ABN) to that effect from the supplier before the item is furnished to them.
150.5.3 - Knowledge Standards for §1834(a)(17)(B) Denials
(Rev. 1587, Issued: 09-05-08, Effective: 03-03-08, Implementation: 03-01-09)
In determining whether the supplier knew, or could reasonably have been expected to
know, that Medicare would not pay because of the prohibition on unsolicited telephone
contacts under §1834(a)(17)(B) of the Act, presume that the supplier knew that Medicare
would not pay on the basis of constructive notice to the supplier through publication of
the prohibition on such contacts through the contractor’s professional relations function,
as well as publicity through trade organizations’ own publications, professional training,
conventions, etc. The supplier would have to submit convincing evidence to the contrary,
showing ignorance of the prohibition on the supplier’s part, to rebut this presumption. A
single denial of a claim for any item furnished by a particular supplier on the basis of the
prohibition on unsolicited telephone contacts shall be held to be actual notice of the
prohibition to that supplier; and that supplier shall be considered, on that basis, to have
had knowledge that payment would be denied for all such future claims, even those for
different items of medical equipment and supplies. That is, after a single denial under
§1834(a)(17)(B) of a claim by a particular supplier, the presumption of that supplier’s
knowledge becomes nonrebuttable.
150.5.4 - Knowledge Standards for §1834(j)(1) Denials
(Rev. 1587, Issued: 09-05-08, Effective: 03-03-08, Implementation: 03-01-09)
In determining whether the supplier knew, or could reasonably have been expected to
know, that Medicare would not pay due to failure to meet supplier number requirements
under §1834(j)(1) of the Act, presume that the supplier knew that Medicare would not
pay. Every supplier is expected to know whether or not it has a supplier number, and to
know that Medicare will not make payment for medical equipment and supplies furnished
a Medicare beneficiary by a supplier which does not have a supplier number. All
suppliers should have this knowledge on the basis of the contractor’s professional
relations function, as well as publicity through trade organizations’ own publications,
professional training, conventions, etc. The supplier would have to submit extraordinary
evidence to the contrary to rebut this presumption. If a supplier submits evidence the
contractor finds credible, consult your regional office before rebutting the presumption of
supplier knowledge. After a single denial under §1834(j)(1) of a claim by a particular
supplier, the presumption of that supplier’s knowledge becomes nonrebuttable.
150.5.5 - Additional Knowledge Standards for All Medical Equipment
and Supplies Denials
(Rev. 1587, Issued: 09-05-08, Effective: 03-03-08, Implementation: 03-01-09)
The contractor may make a determination, as provided for in Section I.2.D.2.b. imputing
a lack of knowledge to a supplier, on the basis that the supplier did not know and could
not reasonably have been expected to know that Medicare would not pay, if the supplier
did not know and could not reasonably have been expected to know that a purchase (or
rental) of medical equipment or supplies involved a Medicare beneficiary.
150.6 - Advance Beneficiary Notice Standards for Waiver of Refund
Requirement
(Rev. 1, 10-01-03)
A refund is not required of the supplier if, before the medical equipment or supplies were
furnished, the beneficiary was informed by the supplier that Medicare would not pay for
the specific item or service and, after receiving such an advance beneficiary notice, the
beneficiary agreed to pay for the item or service. This requirement for advance notice
may be satisfied by a properly executed Advance Beneficiary Notice (ABN) Form
CMS-R-131 used in accordance with the instructions at §50.
150.7 - Appeal Rights
(Rev. 1587, Issued: 09-05-08, Effective: 03-03-08, Implementation: 03-01-09)
Nonparticipating suppliers have the same rights to appeal the contractor’s determination
in an unassigned claim for medical equipment and supplies if the contractor denies
payment on the basis of §1862(a)(1) , §1834(a)(17)(B) , §1834(j)(1), or §1834(a)(15) of
the Act as they or participating suppliers have in assigned claims. These rights of appeal
also extend to determinations that a refund is required either because the supplier knew or
should have known that Medicare would not pay for the item or service, or because the
beneficiary was not properly informed in writing in advance that Medicare would not pay
or was unlikely to pay for the item or service. In addition to the beneficiary’s right to
appeal the contractor’s decision to deny payment on the basis of §1862(a)(1),
§1834(a)(17)(B), §1834(j)(1), or §1834(a)(15) of the Act, the beneficiary becomes a
party to any appeal request filed by the supplier. Since the beneficiary and the supplier
may have adverse interests in a decision regarding refund, it is essential to notify the
beneficiary in any case in which the supplier requests an appeal of the denial or asserts
that a refund is not required because one of the conditions in §150.5 is met. (See Chapter
29, “Appeals of this Claims Decision,” for detailed appeals instructions.)
150.8 - Processing Initial Denials
(Rev. 4250; Issued: 03-08-10; Effective: 04-08-19; Implementation: 04-08-19)
The term Medicare beneficiary identifier (Mbi) is a general term describing a
beneficiary's Medicare identification number. For purposes of this manual, Medicare
beneficiary identifier references both the Health Insurance Claim Number (HICN) and
the Medicare Beneficiary Identifier (MBI) during the new Medicare card transition
period and after for certain business areas that will continue to use the HICN as part of
their processes.
In any unassigned claim for medical equipment and supplies furnished on or after
January 1, 1995, in which the contractor denies payment on the basis of §1862(a)(1),
§1834(a)(17)(B), §1834(j)(1), or §1834(a)(15) of the Act, send separate notices to both
the beneficiary (a Medicare Summary Notice (MSN)) and the supplier (a remittance
advice (RA)).
NOTE: This instruction to send a remittance advice to the supplier in the case of denial
of an unassigned claim is a specific requirement of §1834(a)(18)(C) of the Act,
incorporated by reference into §1834(j)(4) and §1879(h) of the Act, applicable to denials
of claims for medical equipment and supplies furnished on or after January 1, 1995.
If the beneficiary signed an ABN which satisfies the requirements in subsection II.6 and
the supplier included a GA modifier on the claim to that effect, do not make an automatic
finding that the claim should be denied on the basis of §1862(a)(1), §1834(a)(17)(B),
§1834(j)(1), or §1834(a)(15) of the Act, merely because the supplier submitted a GA
modifier. The fact that an ABN was given to the beneficiary will in no way prejudice the
contractor’s determination as to whether there is or is not sufficient evidence to justify a
denial. In the case where there is an ABN, mail a standard denial MSN notice to the
beneficiary. If the beneficiary did not sign an ABN and the supplier included a GZ
modifier on the claim to that effect, include, in addition to one of the denial notices in
Chapter 21, “Medicare Summary Notices,” the following initial beneficiary notice in the
MSN sent to the beneficiary.
A. Initial Beneficiary Notice
(MSN 8.54)
If the supplier knew that Medicare wouldn’t pay and you paid, you might
get a refund unless you signed a notice in advance. Refunds may be
delayed if the provider appeals. Call your supplier if you don’t hear
anything within 30 days.
(MSN 8.54) - In Spanish
Si pagó por un servicio que su proveedor sabía Medicare no iba a pagar,
usted tiene derecho a un reembolso, a menos de que haya firmado un aviso
por adelantado. Los reembolsos se pueden demorar si el proveedor apela
la decisión. Llame a su proveedor si no escucha nada en 30 días.
B. Initial Supplier Notice
Include in the notice to the supplier the following;
• The patient’s name Medicare beneficiary identifier;
• A description of the item or service by procedure code, date and place
of service, and amount of the charge;
• The same denial notice included on the beneficiary’s MSN, (see
Chapter 21, “Medicare Summary Notices”); and
• If the supplier submitted a GA modifier (signed ABN obtained),
include in the notice to the supplier the following Notice 1. However,
if the supplier submitted a “-GZ” modifier (a signed ABN was not
obtained), include in the notice to the supplier the following Notice 2.
Notice 1. – Signed Advance Beneficiary Notice Obtained
(Remittance Advice Remark Code N124)
Payment has been (denied for the/made only for a less extensive)
service/item because the information furnished does not substantiate the
need for the (more extensive) service/item. The patient is liable for the
charges for this service/item as you informed the patient in writing before
the service/item was furnished that we would not pay for it, and the patient
agreed to pay.
Remittance Advice Remark Codes cannot be reported without a Claim
Adjustment Reason Code and a Group Code. For Notice 1 where ABN
has been obtained, use CARC 96 - Non-covered charge(s), and Group
Code – PR (Patient Responsibility).
Or
Notice 2. – Signed Advance Beneficiary Notice Not Obtained
(Remittance Advice Remark Code N125)
Payment has been (denied for the/made only for a less extensive)
service/item because the information furnished does not substantiate the
need for the (more extensive) service/item. If you have collected any
amount from the patient, you must refund that amount to the patient within
30 days of receiving this notice. The law permits exceptions to this refund
requirement in two cases: if you did not know, and could not have
reasonably been expected to know, that Medicare would not pay for this
service/item; or if you notified the beneficiary in writing before providing
it that Medicare likely would deny the service/item, and the beneficiary
signed a statement agreeing to pay.
Remittance Advice Remark Codes cannot be reported without a Claim
Adjustment Reason Code and a Group Code. For Notice 2 where ABN
has NOT been obtained, use CARC 96 - Non-covered charge(s), and
Group Code – CO (Contractual obligation).
If an exception applies to you, or you believe the contractor was wrong in
denying payment, you should request an appeal of this determination by
the contractor within 30 days of receiving this notice. Your request for
appeal should include any additional information necessary to support
your position. If you request an appeal within 30-days, you may delay
refunding to the beneficiary until you receive the results of the appeal. If
the appeal determination is favorable to you, you do not have to make any
refund. If the appeal is unfavorable, you must make the refund within 15
days of receiving the unfavorable appeal decision.
You may request an appeal of the determination at any time within 120
days of receiving this notice. An appeal requested after the 30-day period
does not permit you to delay making the refund. Regardless of when an
appeal is requested, the patient will be notified that you have requested
one, and will receive a copy of the determination.
The patient has received a separate notice of this denial decision. The
notice advises that he or she may be entitled to a refund of any amounts
paid, if you should have known that Medicare would not pay and did not
tell him or her. It also instructs the patient to contact your office if he or
she does not hear anything about a refund within 30 days.
The requirements for refund are in §1834(a)(18) of the Act (and in
§§1834(j)(4) and 1879(h) by cross-reference to §1834(a)(18)). Section
1834(a)(18)(B) specifies that suppliers which knowingly and willfully fail
to make appropriate refunds may be subject to civil money penalties
and/or exclusion from the Medicare program. If you have any questions
about this notice, please contact (contractor contact, telephone number).
Ensure that the telephone number puts the supplier in touch with a knowledgeable
professional who can discuss the basis for the denial or reduction in payment.
NOTE: These procedures do not apply where the contractor automatically denies Part B
services related to hospital inpatient services denied by the Quality Improvement
Organization (QIO). In those cases, the QIO is responsible for notifying the beneficiary
and supplier of the refund requirements of §§1834(a)(18), 1834(j)(4), and 1879(h) of the
Act and making the refund determination where appropriate.
150.9 - Processing Beneficiary Requests for Appeal
(Rev. 4250; Issued: 03-08-10; Effective: 04-08-19; Implementation: 04-08-19)
The term Medicare beneficiary identifier (Mbi) is a general term describing a
beneficiary's Medicare identification number. For purposes of this manual, Medicare
beneficiary identifier references both the Health Insurance Claim Number (HICN) and
the Medicare Beneficiary Identifier (MBI) during the new Medicare card transition
period and after for certain business areas that will continue to use the HICN as part of
their processes.
Where a beneficiary requests an appeal of the initial denial, process the appeal in the
normal fashion except that, where the appeal results in a reversal, include the following
special paragraph in the appeal notice sent to the beneficiary:
The supplier which furnished this item or service has been informed of
this decision and advised that it may collect its full charge for the item or
service.
Send the supplier which furnished the item or service a separate notice which clearly
identifies the item or service for which payment is being made (i.e., include the patient’s
name, Medicare beneficiary identifier, a description of the item or service billed by
procedure code, date and place of service, and amount of the charge. Include the
following language:
You were previously advised that Medicare payment could not be made for this
item or service. However, after reviewing this claim, we have determined that
payment may be made. Therefore, if you have already refunded the amounts you
collected from the beneficiary for this item or service, you may recollect these
amounts.
150.10 - Processing Supplier Requests for Appeal
(Rev. 1186, Issued: 02-23-07; Effective: 01-01-06; Implementation: 05-23-07)
Where a supplier requests an appeal, notify the beneficiary as discussed in §150.7 . The
appeal process consists of three stages, even though the supplier may be contesting only
one issue (e.g., the supplier may assert that it did not know, and could not have
reasonably have been expected to know, that Medicare would not pay for the items or
services).
150.10.1 - Appeal of the Denial of Payment
(Rev. 1587, Issued: 09-05-08, Effective: 03-03-08, Implementation: 03-01-09)
The first stage of the appeal is a new, independent, and critical reexamination of the facts
regarding the denial of payment. If the contractor finds that the initial denial of payment
was appropriate, go on to §150.10.2.
150.10.2 - Beneficiary Given Advance Beneficiary Notice and Agreed to
Pay
(Rev. 1587, Issued: 09-05-08, Effective: 03-03-08, Implementation: 03-01-09)
A supplier which has given the beneficiary an ABN and has obtained the beneficiary’s
signed statement agreeing to pay, is not required to make a refund. If the supplier claims
to have given an ABN to the beneficiary, the contractor will ask the supplier to furnish a
copy of the ABN. Examine the ABN to determine whether it meets the standards in §40.3
and §50. In the absence of acceptable evidence of advance beneficiary notice, go on to
§150.10.3.
150.10.3 - Supplier Knowledge
(Rev. 1587, Issued: 09-05-08, Effective: 03-03-08, Implementation: 03-01-09)
A supplier which did not know and could not reasonably have been expected to know
that Medicare would not pay for the medical equipment or supplies is not required to
make a refund. If the supplier claims not to have had any such knowledge, the contractor
will determine whether the supplier knew, or could reasonably have been expected to
know, that Medicare would not pay by applying the knowledge standards provided in
§150.5.
150.11 - Guide Paragraphs for Inclusion in Appeal Determination
(Rev. 1587, Issued: 09-05-08, Effective: 03-03-08, Implementation: 03-01-09)
Upon completion of the appeal, the contractor will send the supplier an appeal notice.
Send a copy to the beneficiary. If the initial payment determination is reversed to
payment, include in the appeal notice the supplier notice language required in §150.9.
Otherwise, include one of the following paragraphs concerning refund.
Paragraph 1. Refund Not Required - Beneficiary Was Given Advance Beneficiary Notice
and Agreed to Pay
Under §1834(a)(18) and under §1834(j)(4) of the Social Security Act, a
supplier which does not accept assignment and collects any amounts from
a Medicare beneficiary for medical equipment and supplies for which
Medicare does not pay on the basis of §1834(a)(17)(B), §1862(a)(1),
§1834(j)(1), or §1834(a)(15) of the Social Security Act, must refund these
amounts to the beneficiary. However, a refund is not required if, prior to
furnishing the items or services, the supplier notified the beneficiary in
writing that Medicare would not pay for the items or services and the
beneficiary signed a statement agreeing to pay for them. After reviewing
this claim, we have determined that you informed the beneficiary in
advance that Medicare does not pay for the above items or services and
the beneficiary agreed to pay for them. Therefore, you are not required to
make a refund in this case. The beneficiary has been sent a copy of this
notice.
Paragraph 2. Refund Not Required - Supplier Did Not Know That Medicare Would Not
Pay For the Services
Under §1834(a)(18) and §1834(j)(4) of the Social Security Act, a supplier
which does not accept assignment and collects any amounts from a
Medicare beneficiary for medical equipment and supplies for which
Medicare does not pay on the basis of §1834(a)(17)(B), §1862(a)(1),
§1834(j)(1), or §1834(a)(15) of the Social Security Act, must refund these
amounts to the beneficiary. However, a refund is not necessary if the
supplier did not know, and could not reasonably have been expected to
know, that Medicare does not pay for the items or services. After
reviewing this claim, we find that you did not know, and could not
reasonably have been expected to know, that Medicare would not pay for
the above items or services. Therefore, you are not required to make a
refund in this case. Upon your receipt of this notice, it is considered that
you now have knowledge of the fact that Medicare does not pay for
(description of item or service) similar conditions. The beneficiary has
been sent a copy of this notice.
Paragraph 3. Adverse Action on Denial - Refund Required
Under §1834(a)(18) and §1834(j)(4) of the Social Security Act, a supplier
which does not accept assignment and collects any amounts from a
Medicare beneficiary for medical equipment and supplies for which
Medicare does not pay on the basis of §1834(a)(17)(B), §1862(a)(1),
§1834(j)(1), or §1834(a)(15) of the Social Security Act, must refund these
amounts to the beneficiary. A refund is not required if (1) The supplier did
not know, and could not reasonably have been expected to know, that
Medicare would not pay for the items or services; or (2) The supplier
notified the beneficiary in writing before furnishing the items or services
that Medicare would not pay for the items or services and the beneficiary
signed a statement agreeing to pay for them. After reviewing this claim,
we have determined that neither of these conditions is met in this case.
You must therefore refund any amount you collected for these items or
services within 15 days from the date you receive this notice. A refund
must be made within 15 days from receipt of this notice for you to be in
compliance with the law. The beneficiary has been sent a copy of this
notice.
Suppliers which knowingly and willfully fail to make appropriate refunds may be subject
to civil money penalties (up to $10,000 per item or service), assessments (three times the
amount of the claim), and exclusion from the Medicare program.
NOTE: For claims presented to the contractor prior to January 1, 1997, the amount of
the civil money penalty is up to $2,000 per item or service and the assessment is not more
than twice the amount claimed.
150.12 - Supplier Fails to Make Refund
(Rev. 1587, Issued: 09-05-08, Effective: 03-03-08, Implementation: 03-01-09)
Under §1834(a)(18)(B) of the Act, a supplier which knowingly and willfully fails to
make refund within the time limits in §150.4 may be subject to sanctions under §1128A
the Act (i.e., civil money penalties (up to $10,000 per item or service), assessments (three
times the amount of the claim), and exclusion from the Medicare program).
NOTE: For claims presented to the contractor prior to January 1, 1997, the amount of
the civil money penalty is up to $2,000 per item or service and the assessment is not more
than twice the amount claimed.
Generally, the failure of a supplier to make a refund to a beneficiary comes to the
contractor’s attention as a result of a beneficiary complaint or a referral from the Social
Security Administration (SSA) or the CMS. Document beneficiary complaints and, if
necessary, contact the beneficiary to clarify the information in the complaint and
determine the amount the beneficiary paid the supplier for the denied items or services. If
the contractor determines that a supplier failed to make a refund, the contractor will
contact the supplier in person or by telephone (if that is not feasible, contact the supplier
by letter) to discuss the facts of the case. The contractor will attempt to determine why
the amounts collected have not been refunded. Explain that the law requires that the
supplier make a refund to the beneficiary and that if it fails to do so, the Secretary may
impose civil money penalties, assessments, and exclusion from the Medicare program.
Make a dated report of contact. Include the information relayed to the supplier and the
supplier’s response. Re-contact the beneficiary in 15 days to determine whether the
refund has been made. Do not make any referral to the CMS regional office until the
supplier has been formally notified to refund the money and the supplier’s appeal rights
have been exhausted, or until the time limit for an appeal has passed.
150.13 - CMS Regional Office (RO) Referral Procedures
(Rev. 4250; Issued: 03-08-10; Effective: 04-08-19; Implementation: 04-08-19)
The term Medicare beneficiary identifier (Mbi) is a general term describing a
beneficiary's Medicare identification number. For purposes of this manual, Medicare
beneficiary identifier references both the Health Insurance Claim Number (HICN) and
the Medicare Beneficiary Identifier (MBI) during the new Medicare card transition
period and after for certain business areas that will continue to use the HICN as part of
their processes.
Prior to submitting any materials to the RO, the contractor will contact the RO to
determine how to proceed in referring a potential sanction case. When referring a
sanction case to the region, include in the sanction recommendation (to the extent
appropriate) the following:
Background of the Subject
The subject’s business name, address, Medicare beneficiary identifier, owner’s full name
and Social Security Number, Tax Identification Number (if different), and a brief
description of the subject’s special field of medical equipment and supplies business.
Origin of the Case
A brief description of how the violations were discovered.
Statement of Facts
A statement of facts in chronological order describing each failure to comply with the
refund requirements.
Documentation
Include copies of written correspondence and written summaries of any meetings or
telephone contacts with the beneficiaries and the supplier regarding the supplier’s failure
to make refunds. Include a listing of the following for each item or service not refunded
to the beneficiary by the supplier (grouped by beneficiary):
• Beneficiary Name and Medicare beneficiary identifier;
• Claim Control Number;
• Procedure Code (CPT-4 or HCPCS) of nonrefunded item or service;
• Procedure Code modifier;
• Date of Service;
• Place of Service Code;
• Submitted Charge;
• Units (quantity) of Item or Service; and
• Amount Requested to be Refunded.
Other Significant Issues
Include any information that may be of value to the RO while they review and possibly
develop a case to impose sanctions.
150.14 - Imposition of Sanctions
(Rev. 1, 10-01-03)
Section 1834(a)(18)(B) of the Act provides that if a supplier knowingly and willfully fails
to make required refunds, the Secretary may impose the sanctions provided in
§1842(j)(2) of the Act in the same manner as such sanctions are authorized under §1128A
of the Act. These include civil money penalties, assessments, and exclusion from the
Medicare program for a period of up to five years. The CMS RO will make the
determination on whether to proceed in developing a monetary penalty or program
exclusion case based upon a failure to make refunds.
150.15 - Supplier’s Right to Recover Resaleable Items for Which
Refund Has Been Made
(Rev. 1587, Issued: 09-05-08, Effective: 03-03-08, Implementation: 03-01-09)
If the contractor denies Part B payment for an item of medical equipment or supplies on
the basis of §1862(a)(1), §1834(a)(17)(B), §1834(j)(1), or §1834(a)(15) of the Act, and
the beneficiary is relieved of liability for payment for that item under §1834(a)(18) of the
Act, the effect of the denial, subject to State law, cancels the contract for the sale or rental
of the item and, if the item is resaleable or re-rentable, permits the supplier to repossess
that item for resale or re-rental. In the case of consumable items or any other items which
are not fit for resale or re-rental and which cannot be made fit for resale or re-rental,
suppliers are strongly discouraged from recovering these items since such actions
reasonably could be viewed as purely punitive in nature. If a supplier makes proper
refund under §1834(a)(18) of the Act, Medicare rules do not prohibit the supplier from
recovering from the beneficiary items which are resalable or re-rentable.
Alternatively, when the contract of sale or rental is cancelled on the basis described
above, whether or not the supplier physically repossesses the resaleable or re-rentable
item, the supplier may enter into a new sale or rental transaction with the beneficiary with
respect to that item as long as the beneficiary has been informed of their liability. If the
circumstances which preclude payment for the item have been removed, e.g., the supplier
has now obtained a supplier number, the supplier may submit to the contractor a new Part
B claim based on the resale or re-rental of the item to the beneficiary. If Part B payment
is still precluded, the supplier can establish the beneficiary’s liability for payment for the
denied resold or re-rented item by giving the beneficiary an ABN notifying the
beneficiary of the likelihood that Medicare will not pay for the item and obtaining the
beneficiary’s signed agreement to pay for the item. The resale or re-rental of the item to
the beneficiary does not change the fact that the beneficiary is relieved of liability in
connection with the original transaction.
Under the capped-rental method, if the contractor determines that the supplier is
obligated to make a refund, the supplier must repay Medicare those rental payments that
the supplier has received for the item. However, the Medicare beneficiary must return
the item to the supplier.
200 - Expedited Review Process for Hospital Inpatients in Original
Medicare
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
Medicare beneficiaries who are hospital inpatients have a statutory right to appeal to a
QIO for an expedited review when a hospital, with physician concurrence, determines
that inpatient care is no longer necessary. The instructions that follow stem directly from
regulations at 42 CFR 405.1205 and 405.1206 and are effective July 1, 2007. These
regulations are also referenced at 42 CFR 489.27 and 412.42 (c)(3). The authority for
these instructions stems from Sections 1866(a)(1)(M), 1869(c)(3)(C)(iii)(III), and 1154(e)
of the Social Security Act. Instructions for managed care will be located in Chapter 13 of
the Medicare Managed Care Manual.
Hospitals must notify Medicare beneficiaries who are hospital inpatients about their
hospital discharge appeal rights. Hospitals will use a revised version of the Important
Message from Medicare (IM) a statutorily required notice, to explain the beneficiary’s
rights as a hospital patient, including discharge appeal rights. Hospitals must issue the
IM within 2 calendar days of admission, must obtain the signature of the beneficiary or
his or her representative and provide a copy at that time. Hospitals will also deliver a
copy of the signed notice as far in advance of discharge as possible, but not more than 2
calendar days before discharge.
For those beneficiaries who request a QIO review, hospitals must deliver a Detailed
Notice of Discharge as soon as possible, but no later than noon of the day after the QIO’s
notification. Both the IM and the Detailed Notice must be the standardized notices
provided by CMS.
200.1 - Scope of the Instructions
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
These instructions implement 42 CFR 405.1205 and 405.1206 which require hospitals to
inform Medicare beneficiaries who are hospital inpatients of their right to a QIO review.
These instructions delineate the expectations of beneficiaries (or their representative, if
applicable), responsibilities of hospitals, and the role of the QIOs when the beneficiary
requests an expedited review by a QIO of the discharge decision. For purposes of this
instruction, the term “beneficiary” means either beneficiary or representative, when a
representative is acting for a beneficiary.
Hospitals Affected by these Instructions. The term hospital is defined in the regulation
as any facility providing care at the inpatient hospital level, whether that care is short
term or long term, acute or non acute, paid through a prospective payment system or
other reimbursement basis, limited to specialty care or providing a broader spectrum of
services. This definition includes critical access hospitals. This means all hospitals paid
under the Inpatient Acute Prospective Payment System (IPPS), sole community
hospitals/regional referrals centers or any other type of hospital receiving special
consideration under IPPS (for example, Medicare dependent hospitals, Indian Health
Service hospitals); hospitals not under IPPS, including, but not limited to: hospitals paid
under State or United States territory waiver programs, hospitals paid under certain
demonstration projects cited in regulation (§489.34), rehabilitation hospitals, long-term
care hospitals, psychiatric hospitals, critical access hospitals, children's hospitals, and
cancer hospitals. Swing beds in hospitals are excluded, because they are considered a
lower level of care. Religious nonmedical health care institutions are also excluded.
Hospital Inpatients who are Medicare Beneficiaries. These instructions apply to
beneficiaries in original Medicare who are hospital inpatients. Hospital outpatients who
are receiving Part B services, such as those in observation stays or in the emergency
department, do not receive these notices, unless they subsequently require inpatient care.
Medicare beneficiaries in hospital swing beds or custodial care beds do not receive these
notices when they are receiving services at a lower level of care.
Definition of Discharge. The term “discharge” is defined as a formal release of a
beneficiary from an inpatient hospital. This includes when the beneficiary is physically
discharged from the hospital as well as when the beneficiary is discharged “on paper” –
meaning that the beneficiary remains in the hospital, but at a lower level of care (for
example, the beneficiary is moved to a swing bed or to custodial care).
200.2 - Special Considerations
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
Other Insurers. Section 1866(a)(1)(M), delivery of the Important Message from
Medicare, applies to each individual who is entitled to benefits under Medicare Part A.
Therefore, these requirements apply if a beneficiary is eligible for both Original Medicare
and Medicaid (a dual eligible), is eligible for Original Medicare and another insurance
program or payer, or has Medicare as a secondary payer. No matter where in the
sequence of payers Medicare falls, these requirements still apply.
Inpatient to Inpatient Transfers. Beneficiaries who are being transferred from one
inpatient hospital setting to another inpatient hospital setting, do not need to be provided
with the follow-up copy of the notice prior to leaving the original hospital, since this is
considered to be the same level of care. Beneficiaries always have the right to refuse care
and may contact the QIO if they have a quality of care issue. The receiving hospital must
deliver the Important Message from Medicare again according to the procedures in these
instructions.
Preadmission/Admissions for Services that are Not Reasonable and Necessary.
When a Medicare beneficiary is planning to be hospitalized for services that Medicare
usually pays for, but are not considered to be reasonable and necessary in this particular
situation, hospitals must deliver a Preadmission/Admission Hospital Issued Notice of
Noncoverage (HINN). (See Section 240 of this Chapter.) The Important Message from
Medicare would be delivered only if the stay became a covered stay.
Admissions for Services that Medicare Never Covers. When a Medicare beneficiary
is admitted for hospital services that are never covered by Medicare, hospitals may
deliver the Preadmission/Admission HINN. The IM would be delivered only if the stay
became a covered stay.
Change of Status from Inpatient to Outpatient. When a hospital utilization review
committee determines that an inpatient admission does not meet the hospital’s inpatient
criteria, the hospital may change the beneficiary’s status from inpatient to outpatient. See
CR 3444 (Use of Condition Code 44) and MedLearn Matters article, SE0622, published
on March 22, 2006, for notification requirements in this situation.
End of Part A days. For purposes of this instruction, the term discharge does not
include exhaustion of Part A days, therefore, when a beneficiary exhausts Part A days,
these requirements do not apply.
Hospital Requests QIO Review when the Physician does not Concur. There are
separate existing requirements under 405.1208 for notifying a beneficiary when the
hospital requests a QIO review. Hospitals should deliver the Notice of a Hospital
Requested Review (HRR). (See Section 220 of this chapter.)
200.3 - Notifying Beneficiaries of their Right to an Expedited Review
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
Hospitals must notify Medicare beneficiaries who are hospital inpatients about their
hospital discharge appeal rights. Hospitals will use a revised version of the Important
Message from Medicare (IM) a statutorily-required notice, to explain the beneficiary’s
rights as a hospital patient, including discharge appeal rights. Hospitals must issue the
IM within 2 calendar days of admission, must obtain the signature of the beneficiary or
his or her representative and provide a copy at that time. Hospitals will also deliver a
copy of the signed notice as far in advance of discharge as possible, but not more than 2
calendar days before discharge.
200.3.1 - Delivery of the Important Message from Medicare
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
Hospitals must follow the procedures listed below in delivering the Important Message
from Medicare (IM). Valid Notice consists of:
Use of Standardized Notice. Hospitals must use the standardized form (CMS-R-193), see
Section 200.6.2. The notices are also available on www.cms.hhs.gov/bni at the Link for
Hospital Discharge Appeal Notices. Hospitals may not deviate from the content of the
form except where indicated (see Section 200.6 on Completing the Notice). The OMB
control number must be displayed on the notice.
Delivery Timeframe. Hospitals must deliver the original copy of the IM at or near
admission, but no later than 2 calendar days following the date of the beneficiary’s
admission to the hospital.
Hospitals may deliver the initial copy of the notice if the beneficiary is seen during a
preadmission visit, but not more than 7 calendar days in advance of admission. If a
beneficiary receives and signs the initial copy of the IM as part of the preadmission
process, the follow-up copy of the notice must be delivered if delivery of the initial copy
occurred more than 2 calendar days prior.
In-Person Delivery. The IM must be delivered to the beneficiary in person. However, if
the beneficiary is not able to comprehend the notice, it must be delivered to and signed by
the beneficiary’s representative.
Notice Delivery to Representatives. CMS requires that notification of a beneficiary
who is not competent be made to a representative of the beneficiary. A representative is
an individual who, under State or other applicable law, may make health care decisions
on a beneficiary’s behalf (e.g., the beneficiary’s legal guardian ,or someone appointed in
accordance with a properly executed “durable medical power of attorney”).
Otherwise, a person (typically, a family member or close friend) whom the beneficiary
has indicated may act for him or her, but who has not been named in any legally binding
document may be a representative for purpose of receiving the notices described in this
section. Such representatives should have the beneficiary’s best interests at heart and
must act in a manner that is protective of the beneficiary and the beneficiary’s rights.
Therefore, a representative should have no relevant conflict of interest with the
beneficiary. A notifier (including the notifier’s employees) that has a conflicting interest
(such as shifting financial liability to the beneficiary) is not qualified to be a
representative. (Note: If the beneficiary wishes to appoint a representative to file an
appeal on his/her behalf, a valid Form 1696 or a conforming written instrument must be
signed by both the beneficiary and the prospective representative and filed with the
appeal request. See Medicare Claims Processing Manual, Publication 100-4, Ch. 29,
Section 270 for specific instructions related to the use of Form 1696 and the appointment
of representatives).
Notification to the representative may be problematic because that person may not be
available in person to acknowledge receipt of the required notification. Hospitals are
required to develop procedures to use when the beneficiary is incapable of receiving or
incompetent to receive the notice, and the hospital cannot obtain the signature of the
beneficiary’s representative through direct personal contact.
Regardless of the competency of a beneficiary, if the hospital is unable to personally
deliver a notice to a representative, then the hospital should telephone the representative
to advise him or her of the beneficiary’s rights as a hospital patient, including the right to
appeal a discharge decision.
The information provided should include the following at a minimum:
• The name and telephone number of a contact at the hospital;
• The beneficiary’s planned discharge date, and the date when the beneficiary’s
liability begins;
• The beneficiary’s rights as a hospital patient, including the right to appeal a
discharge decision;
• How to get a copy of a detailed notice describing why the hospital and
physician believe the beneficiary is ready to be discharged;
• A description of the steps for filing an appeal;
• When (by what time/date) the appeal must be filed to take advantage of the
liability protections;
• The entity required to receive the appeal, including any applicable name,
address, telephone number, fax number or other method of communication the
entity requires in order to receive the appeal in a timely fashion;
• Direction to the 1-800-MEDICARE number for additional assistance to the
representative in further explaining and filing the appeal; and
The date the hospital conveys this information to the representative, whether in writing or
by telephone, is the date of receipt of the notice. Confirm the telephone contact by
written notice mailed on that same date. Place a dated copy of the notice in the
beneficiary’s medical file, and document the telephone contact with the beneficiary’s
representative (as listed above) on either the notice itself, or in a separate entry in the
beneficiary’s file or attachment to the notice. The documentation should indicate that the
staff person told the representative the planned discharge date, the date the beneficiary’s
financial liability begins, the beneficiary’s appeal rights, and how and when to initiate an
appeal. The documentation should also include the name of the staff person initiating the
contact, the name of the representative contacted by phone, the date and time of the
telephone contact, and the telephone number called.
When direct phone contact cannot be made, send the notice to the representative by
certified mail, return receipt requested, or other delivery method that requires signed
verification of delivery. The date that someone at the representative’s address signs (or
refuses to sign) the receipt is the date received. Place a copy of the notice in the
beneficiary’s medical file, and document the attempted telephone contact to the
members’ representative. The documentation should include: the name of the staff person
initiating the contact, the name of the representative you attempted to contact, the date
and time of the attempted call, and the telephone number called.
If both the hospital and the representative agree, hospitals may send the notice by fax or
email, however, hospitals must meet the HIPAA privacy and security requirements.
Ensuring Beneficiary Comprehension. Hospitals must make every effort to ensure the
beneficiary comprehends the contents of the notice before obtaining the beneficiary’s
signature. This includes explaining the notice to the beneficiary if necessary and
providing an opportunity for the beneficiary to ask questions. The hospital should answer
all the beneficiary’s questions orally to the best of its ability. The beneficiary should be
able to understand that he or she may appeal a discharge decision without financial risk,
but may have to pay for any services received after the discharge date if he or she stays in
the hospital and does not appeal. Notices should not be delivered during an emergency,
but should be delivered once the beneficiary is stable.
These instructions do not preclude the use of assistive devices, witnesses, or interpreters
for notice delivery. Thus, if a beneficiary is able to comprehend the notice, but either is
physically unable to sign it or needs the assistance of an interpreter to translate it or an
assistive device to read or sign it, valid delivery may be achieved by documenting use of
such assistance.
Beneficiary Signature and Date. The IM must be signed and dated by the beneficiary
to indicate that he or she has received the notice and can comprehend its contents, unless
an appropriate reason for the lack of signature is recorded on the IM, such as a properly
annotated signature refusal (see below).
Refusal to Sign and Annotation. If a beneficiary refuses to sign the notice, hospitals
may annotate the notice to indicate the refusal, and the date of refusal is considered the
date of receipt of the notice. The annotation may be placed in the unused patient
signature line, in the “Additional Information” section on page 2 of the notice or another
sheet of paper may be attached to the notice, if necessary. Any insertions on the notice
must be easy for the beneficiary to read in order for the notice to be considered valid.
See also Section 200.5.6 - Insertions in Blanks.
Notice Delivery and Retention. Hospitals must give the original copy of the signed or
annotated notice to the patient. Hospitals must retain a copy of the signed notice and may
determine the method of storage that works within their existing processes, for example,
storing a copy in the medical record or electronically.
200.3.2 - The Follow-Up Copy of the Signed Important Message from
Medicare
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
A “follow-up” copy of the signed IM must be delivered to the beneficiary using the
following guidelines:
Delivery Timeframe. The follow-up copy must be delivered as far in advance of
discharge as possible, but no more than 2 calendar days before the planned date of
discharge. Thus, when discharge seems likely within 1- 2 calendar days, hospitals should
make arrangements to deliver the follow-up copy of the notice, so that the beneficiary has
a meaningful opportunity to act on it. However, when discharge cannot be predicted in
advance, the follow-up copy may be delivered as late as the day of discharge, if
necessary. If the follow-up copy of the notice must be delivered on the day of discharge,
hospitals must give beneficiaries who need it at least 4 hours to consider their right to
request a QIO review. Beneficiaries may choose to leave prior to that time, however,
hospitals must not pressure a beneficiary to leave during that time period. If the hospital
delivers the follow-up copy, and the beneficiary status subsequently changes, so that the
discharge is beyond the 2-day timeframe, hospitals must deliver another copy of the
signed notice again within 2 calendar days of the new planned discharge date. Hospitals
may not develop procedures for delivery of the follow up copy routinely on the day of
discharge.
Alternative to Delivery of the Signed Copy. A hospital may choose to deliver a new
copy of the IM (not a copy of the signed IM) during the required timeframes; however,
the hospital must obtain the beneficiary’s or representative’s signature and date on the
notice again at that time.
Exception to Delivery of the Follow-Up Copy. If delivery of the original IM is within 2
calendar days of the date of discharge, no follow-up notice is required. For example, if a
beneficiary is admitted on Monday, the IM is delivered on Wednesday and the
beneficiary is discharged on Friday, no follow-up notice is required.
If a beneficiary receives and signs the initial copy of the IM as part of the preadmission
process, the follow-up copy of the notice must be delivered if delivery of the initial copy
occurred more than 2 calendar days prior.
Documentation. Hospitals must document timely delivery of the follow-up copy of the
IM in the patient records, when applicable. Hospitals are responsible for demonstrating
compliance with this requirement. If hospitals have processes in place to document
delivery of other information related to discharge that includes a beneficiary signature
and date, hospitals may include the follow-up copy of the notice in those documents. If
there are no other existing processes in place, hospitals may use the “Additional
Information” section of the IM to document delivery of the follow-up copy, for example,
by adding a line for the beneficiary’s or representative’s initials and date.
200.4 - Rules and Responsibilities when a Beneficiary Requests an
Expedited Review
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
A beneficiary has a right to request an expedited review by the QIO when a hospital
(acting directly or through its utilization review committee), with physician concurrence,
determines that inpatient care is no longer necessary.
200.4.1 - The Role of the Beneficiary and Liability
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
Submitting a Request: A beneficiary who chooses to exercise the right to an expedited
review must submit a request to the QIO that has an agreement with the hospital where
the beneficiary is an inpatient. In order to be considered timely, the request must be
made no later than midnight of the day of discharge, may be in writing or by telephone,
and must be before the beneficiary leaves the hospital. The beneficiary, upon request of
the QIO, should be available to discuss the case. The beneficiary may, but is not required
to, submit written evidence to be considered by the QIO.
Timely Requests: When the beneficiary makes a timely request for a QIO review – that
is, requests a review no later than midnight of the day of discharge – the beneficiary is
not financially responsible for inpatient hospital services (except applicable coinsurance
and deductibles) furnished before noon of the calendar day after the date the beneficiary
receives notification of the expedited determination from the QIO. Liability for further
inpatient hospital services depends on the QIO decision:
• Unfavorable determination: If the QIO notifies the beneficiary that the QIO
did not agree with the beneficiary, liability for continued services begins at
noon of the day after the QIO notifies the beneficiary that the QIO agreed with
the hospital’s discharge determination, or as otherwise determined by the
QIO.
• Favorable determination: If the QIO notifies the beneficiary that the QIO
agreed with the beneficiary, the beneficiary is not financially responsible for
continued care (other than applicable coinsurance and deductibles) until the
hospital once again determines that the beneficiary no longer requires
inpatient care, secures the concurrence of the physician responsible for the
beneficiary’s care or the QIO, and notifies the beneficiary with a follow-up
copy of the IM.
Untimely Requests: When the beneficiary fails to make a timely request for an
expedited review, and remains in the hospital, he or she still may request an expedited
review at any time, but the beneficiary may be held responsible for charges incurred after
the day of discharge, or as otherwise stated by the QIO. If the QIO finds that the patient
should have remained an inpatient, the hospital will refund the beneficiary any funds that
were collected. When the beneficiary fails to make a timely request for an expedited
review and is no longer an inpatient at the hospital, he or she may still request a QIO
review within 30 calendar days of the date of discharge, or at any time for good cause.
200.4.2 - The Responsibilities of the Hospital
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
Provide the Detailed Notice of Discharge: When a QIO notifies the hospital that a
beneficiary has requested an expedited review, the hospital must deliver a Detailed
Notice of Discharge (the Detailed Notice) to the beneficiary as soon as possible but not
later than noon of the day after the QIO’s notification. If a beneficiary requests more
detailed information prior to requesting a review, hospitals may deliver the detailed
notice in advance of the beneficiary requesting a review.
Use of Standardized Notice. Hospitals must use the standardized form (CMS-10066),
see Section 200.6.2. This notice is also available on www.cms.hhs.gov/bni at the Link
for Hospital Discharge Appeal Notices. Hospitals may not deviate from the content of
the form except where indicated (see Section 200.6.2 on Completing the Notice). The
OMB control number must be displayed on the notice.
The Detailed Notice must be the standardized notice provided by CMS and contain the
following:
• A detailed explanation why services are either no longer reasonable and
necessary or are otherwise no longer covered.
• A description of any applicable Medicare coverage rule, instruction, or other
Medicare policy, including information about how the beneficiary may obtain
a copy of the Medicare policy. (See instructions for the Detailed Notice of
Discharge at Section 200.6.3, Exhibit 2)
• Facts specific to the beneficiary and relevant to the coverage determination
that are sufficient to advise the beneficiary of the applicability of the coverage
rule or policy to the beneficiary’s case.
• Any other information required by CMS.
Hospitals must follow requirements in Section 200.5.6 on Insertions in Blanks and
Section 200.6. on Completing the Notices.
Provide Information to the QIO. Upon notification by the QIO of the beneficiary’s
request for an expedited review, the hospital must supply any and all information that the
QIO needs to make the expedited determination, including copies of both the IM and the
Detailed Notices. The hospital must furnish this information as soon as possible, but no
later than noon of the day after the QIO notifies the hospital of the request. At the
discretion of the QIO, the hospital may make the information available by telephone or in
writing. A written record of any information not transmitted in writing should be sent as
soon as possible. If the hospital fails to provide the needed information, the QIO may
make a decision based on evidence at hand or defer the decision until it receives the
necessary information. If this delay results in extended coverage of an individual’s
hospital services, the hospital may be held financially liable for those services, as
determined by the QIO.
Burden of Proof. The burden of proof lies with the hospital to demonstrate that
discharge is the correct decision, either on the basis of medical necessity or based on
other Medicare coverage policies.
Provide the Beneficiary with Documentation if Requested. At the request of the
beneficiary, the hospital must furnish the beneficiary with a copy of, or access to, any
documentation that it sends to the QIO, including written records of any information
provided by telephone. The hospital may charge the beneficiary a reasonable amount to
cover the costs of duplicating the documentation and/or delivering it to the beneficiary.
The hospital must accommodate the request by no later than the first day after the
material is requested.
200.4.3 - The Role of the QIOs
QIO Availability. The QIO should have methods in place to accept requests for reviews
outside of normal business hours, such as an answering machine message. QIOs will
issue decisions within one calendar day after it receives all pertinent information.
Notify the hospital of the beneficiary’s request for an expedited review. When the
QIO receives the request from the beneficiary, the QIO must notify the hospital of the
request immediately, or immediately in the morning if the request is received after the
QIO’s business hours.
Receive and Examine records. The QIO will examine medical and other records that
pertain to the services in dispute.
Determine if the hospital delivered valid notice. The QIO will determine whether the
hospital delivered valid notice, meaning that the notice is the standardized notice
published by CMS, meets the notice delivery timeframes, and has been signed and dated
by the beneficiary. If the QIO determines that the hospital did not deliver valid notice,
the QIO will instruct the hospital to reissue the notice if necessary, proceed with the
review, and educate the hospital retrospectively. If the beneficiary or representative
makes an untimely request for a review, and the QIO determines that the beneficiary did
not receive valid notice, the QIO will determine the date the beneficiary becomes fully
liable for the services.
Solicit the views of the beneficiary. The QIO must solicit views of the beneficiary who
requested the expedited review.
Solicit the views of the hospital. The QIO must provide an opportunity for the hospital
to explain why the hospital and physician believe discharge is appropriate. The QIO may
develop guidelines as to the form and extent of this opportunity.
If needed information is not received. If the QIO does not receive the information from
the hospital needed to sustain the discharge decision, it may make its determination based
on the evidence at hand or it may defer a decision until it receives the necessary
information. If this delay results in extended Medicare coverage of an individual’s
hospital services, the hospital may be held financially responsible for these services as
determined by the QIO.
QIO Determination. QIOs make their determinations based on criteria in §1154(a) of
the Act, which specifies that QIOs will determine whether:
• the services are reasonable and medically necessary,
• the services meet professionally recognized standards of care, and
• the services could be safely be delivered in another setting.
Notification following a timely request. When the beneficiary makes a timely request
for an expedited review, the QIO must make its determination and notify the beneficiary,
the hospital, and the physician of its determination within one calendar day after it
receives all requested pertinent information. When the QIO issues an expedited
determination, the QIO must notify the beneficiary, the hospital and the physician of its
decision by telephone, followed by a written notice that must include the following
information:
• The basis for the determination.
• A detailed rationale for the determination.
• An explanation of the Medicare payment consequences of the
determination and the date a beneficiary becomes fully liable for
services.
• Information about the beneficiary’s right to an reconsideration of the
QIO’s determination, including how to request the reconsideration and
the timeframe for doing so.
Notification following an untimely request. When the beneficiary makes an untimely
request for an expedited review, and remains in the hospital, the QIO will make its
determination and notify the beneficiary, the hospital, and the physician of its
determination within 2 calendar days after it receives all requested pertinent information.
When the beneficiary makes an untimely request for an expedited review, and is no
longer an inpatient in the hospital, the QIO will make its determination and notify the
beneficiary, the hospital, and the physician of its determination within 30 calendar days
after it receives all requested pertinent information.
200.4.4 - Effect of a QIO Expedited Determination
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
The QIO determination is binding on the beneficiary, the physician, and hospital except
in the following circumstances:
Right to pursue a reconsideration. If the beneficiary is still an inpatient in the hospital
and is dissatisfied with the determination, he or she may request a reconsideration
according to the procedures described in 405.1204.
Right to pursue the general claims appeal process. If the beneficiary is no longer an
inpatient in the hospital and is dissatisfied with this determination, the determination is
subject to the general claims appeal process (See Chapter 29 of this manual.).
200.5 - General Notice Requirements
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
Since the Important Message from Medicare and the Detailed Notice of Discharge are
OMB approved, standardized notices, hospitals must comply with the following General
Notice Requirements:
200.5.1 - Number of Copies
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
The Important Message from Medicare: In most cases, a minimum of three copies of
the Important Message from Medicare, including the original, will be needed. The
beneficiary keeps the original signed notice and will receive a follow-up copy of the
signed notice, except when delivery of the original notice falls within two days of
discharge. The hospital must retain a copy of the signed IM and may do so
electronically.
The Detailed Notice: A minimum of two copies of the Detailed Notice, including the
original, will be needed. The beneficiary keeps the original notice. The hospital must
retain a copy of the signed document and may do so electronically.
Providing Copies to the QIO: In addition to the above, if a beneficiary requests a
review, hospitals are required to provide copies of both notice described in this section to
the QIO.
200.5.2 - Reproduction
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
Hospitals may reproduce the notices by using self-carbonizing paper, photocopying the
IM, or using another appropriate method. All reproductions must conform to applicable
instructions.
200.5.3 - Length and Page Size
(Rev. 1587, Issued: 09-05-08, Effective: 03-03-08, Implementation: 03-01-09)
The Important Message from Medicare: The IM must NOT exceed two sides of a
page in length. The IM is designed as a letter-sized form. If necessary, it may be
expanded to a legal-sized page to accommodate information hospitals insert in the notice.
The Detailed Notice: The Detailed Notice must NOT exceed one side of a page in
length. The Detailed Notice is designed as a letter-sized form. If necessary, it may be
expanded to a legal-sized page to accommodate information hospitals may insert in the
notice. Hospitals may attach applicable Medicare policies to the notice.
200.5.4 - Contrast of Paper and Print
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
A visually high-contrast combination of dark ink on a pale background must be used. Do
not use reversed print (e.g., white on black), or block-shade (highlight) notice text.
200.5.5 - Modification
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
The notices described in this section may not be modified, except as specifically allowed
by these instructions. In no case may either notice be condensed.
200.5.6 - Font
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
The IM and the Detailed Notice must meet the following font requirements in order to
facilitate beneficiary understanding:
• Font Type: To the greatest extent practicable, the fonts as they appear in the
notices on the CMS Web site should be used. Any changes in the font type should
be based solely on software and/or hardware limitations of the notices. Examples
of easily readable alternative fonts include: Arial, Arial Narrow, Times New
Roman, and Courier.
• Font Effect/Style: Any changes to the font, such as italics, embossing, bold, etc.,
should not be used since they can make the notices more difficult to read.
• Font Size: The font size generally should be 12 point. Titles should be 18 point,
but handwritten insertions in blanks of the IM can be as small as 10 point if
needed.
• Insertions in Blanks: Information inserted by hospitals in the blank spaces on the
IM and the Detailed Notice may be typed or legibly hand-written using the
guidelines above.
200.5.7 - Customization
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
Hospitals are permitted to do some customization of IM or the Detailed Notice such as
pre-printing agency-related information to promote efficiency and to ensure clarity for
beneficiaries. Guidelines for customization are:
• Maintaining underlines in the blank spaces is not required.
• Information in blanks that is constant can be pre-printed, such as the hospital’s
name, QIO name and telephone number. Note the TTY phone number also needs
to be entered.
200.5.8 - Retention of the Notices
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
Hospitals are required to retain copies of the signed notices and may do so either in
hardcopy or electronically.
200.6 - Completing the Notices
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
When completing the Important Message from Medicare and the Detailed Notice of
Discharge, hospitals must utilize the following instructions:
200.6.1 - Translated Notices
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
Both the “Important Message from Medicare” and the “Detailed Notice of Discharge” are
available at http://www.cms.hhs.gov/BNI/. The notices will be available in English and
Spanish, and in PDF and Word formats, under a dedicated link on the left hand margin:
“Hospital Discharge Appeal Notices”. Hospitals should choose the appropriate version
of the Important Message from Medicare and the Detailed Notice of Discharge based on
the language the beneficiary best understands. When Spanish-language notices are used,
the hospital should make insertions on the notice in Spanish. If this is impossible,
additional steps need to be taken to ensure that the beneficiary comprehends the content
of the notice.
200.6.2 - Exhibit 1 - Important Message from Medicare (CMS-R-193)
and Form Instructions
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
Patient Name: DEPARTMENT OF HEALTH & HUMAN SERVICES
Patient ID Number: Centers for Medicare & Medicaid Services
Physician: OMB Approval No. 0938-0692
AN IMPORTANT MESSAGE FROM MEDICARE
ABOUT YOUR RIGHTS
AS A HOSPITAL INPATIENT, YOU HAVE THE RIGHT TO:
• Receive Medicare covered services. This includes medically necessary
hospital services and services you may need after you are discharged, if
ordered by your doctor. You have a right to know about these services, who
will pay for them, and where you can get them.
• Be involved in any decisions about your hospital stay, and know who will pay
for it.
• Report any concerns you have about the quality of care you receive to the
Quality Improvement Organization (QIO) listed here__________{Insert Name
and Telephone Number of the QIO}________.
YOUR MEDICARE DISCHARGE RIGHTS
Planning For Your Discharge: During your hospital stay, the hospital staff will
be working with you to prepare for your safe discharge and arrange for services
you may need after you leave the hospital. When you no longer need inpatient
hospital care, your doctor or the hospital staff will inform you of your planned
discharge date.
If you think you are being discharged too soon:
• You can talk to the hospital staff, your doctor and your managed care plan
(if you belong to one) about your concerns.
• You also have the right to an appeal, that is, a review of your case by a
Quality Improvement Organization (QIO). The QIO is an outside reviewer
hired by Medicare to look at your case to decide whether you are ready to
leave the hospital.
o If you want to appeal, you must contact the QIO no later than
your planned discharge date and before you leave the
hospital.
o If you do this, you will not have to pay for the services you receive
during the appeal (except for charges like copays and deductibles).
• If you do not appeal, but decide to stay in the hospital past your planned
discharge date, you may have to pay for any services you receive after
that date.
• Step by step instructions for calling the QIO and filing an appeal are
on page 2.
To speak with someone at the hospital about this notice, call
__________________________.
Please sign and date here to show you received this notice and understand
your rights.
_______________________________________________________________ ______________________
Signature of Patient or Representative Date
CMS-R-193 (approved 05/2007)
STEPS TO APPEAL YOUR DISCHARGE
• STEP 1: You must contact the QIO no later than your planned discharge date
and before you leave the hospital. If you do this, you will not have to pay for
the services you receive during the appeal (except for charges like copays
and deductibles).
o Here is the contact information for the QIO:
_____ {insert name of QIO in bold}_______________
_____{insert telephone number of QIO}___________
o You can file a request for an appeal any day of the week. Once you
speak to someone or leave a message, your appeal has begun.
o Ask the hospital if you need help contacting the QIO.
o The name of this hospital is______{insert the name of the hospital and
the provider ID number}__.
• STEP 2: You will receive a detailed notice from the hospital or your Medicare
Advantage or other Medicare managed care plan (if you belong to one) that
explains the reasons they think you are ready to be discharged.
• STEP 3: The QIO will ask for your opinion. You or your representative need
to be available to speak with the QIO, if requested. You or your
representative may give the QIO a written statement, but you are not required
to do so.
• STEP 4: The QIO will review your medical records and other important
information about your case.
• STEP 5: The QIO will notify you of its decision within 1 day after it receives
all necessary information.
o If the QIO finds that you are not ready to be discharged, Medicare will
continue to cover your hospital services.
o If the QIO finds you are ready to be discharged, Medicare will continue
to cover your services until noon of the day after the QIO notifies you
of its decision.
IF YOU MISS THE DEADLINE TO APPEAL, YOU HAVE OTHER APPEAL
RIGHTS:
• You can still ask the QIO or your plan (if you belong to one) for a review of
your case:
o If you have Original Medicare: Call the QIO listed above.
o If you belong to a Medicare Advantage Plan or other Medicare
managed care plan: Call your plan.
• If you stay in the hospital, the hospital may charge you for any services you
receive after your planned discharge date.
For more information, call 1-800-MEDICARE (1-800-633-4227), or TTY: 1-877-
486-2048.
________________________________________________________________
Additional Information:
________________________________________________________________
According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of
information unless it displays a valid OMB control number. The valid OMB control number for this
information collection is 0938- 0692. The time required to complete this information collection is
estimated to average 15 minutes per response, including the time to review instructions, search existing
data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please
write to: CMS, 7500 Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05,
Baltimore, Maryland 21244-1850.
Notice Instructions
The Important Message from Medicare (OMB #0938-0692) (CMS-R-193)
Completing the Notice
PAGE 1 of the Important Message from Medicare
A. Header
Hospitals must display “DEPARTMENT OF HEALTH & HUMAN SERVICES,
Centers for Medicare & Medicaid Services” and the OMB number.
The following blanks must be completed by the hospital. Information inserted by
hospitals in the blank spaces on the IM may be typed or legibly hand-written in 12-point
font or the equivalent. Hospitals may also use a patient label that includes the following
information:
Patient Name: Fill in the patient’s full name.
Patient ID number: Fill in an ID number that identifies this patient. This number should
not be, nor should it contain, the social security number.
Physician: Fill in the name of the patient’s physician.
B. Body of the Notice
Bullet # 3 Report any concerns you have about the quality of care you receive to the
Quality Improvement Organization (QIO) listed here _________________________.
Hospitals may preprint or otherwise insert the name and telephone number (including
TTY) of the QIO.
To speak with someone at the hospital about this notice call: Fill in a telephone
number at the hospital for the patient or representative to call with questions about the
notice. Preferably, a contact name should also be included.
Patient or Representative Signature: Have the patient or representative sign the notice
to indicate that he or she has received it and understands its contents.
Date: Have the patient or representative place the date he or she signed the notice.
PAGE 2 of the Important Message from Medicare
First sub-bullet - Insert name and telephone number of QIO in BOLD: Insert name
and telephone number (including TTY), in bold, of the Quality Improvement
Organization that performs reviews for the hospital.
Second sub-bullet – The name of this hospital is: Insert/preprint the name of the
hospital, including the Medicare provider ID number (not the telephone number).
Additional Information: Hospitals may use this section for additional documentation,
including, for example, obtaining beneficiary initials to document delivery of the follow-
up copy of the IM, or documentation of refusals.
200.6.3 - Exhibit 2 – The Detailed Notice of Discharge (CMS 10066) and
Form Instructions
(Rev. 4250; Issued: 03-08-10; Effective: 04-08-19; Implementation: 04-08-19)
The term Medicare beneficiary identifier (Mbi) is a general term describing a
beneficiary's Medicare identification number. For purposes of this manual, Medicare
beneficiary identifier references both the Health Insurance Claim Number (HICN) and
the Medicare Beneficiary Identifier (MBI) during the new Medicare card transition
period and after for certain business areas that will continue to use the HICN as part of
their processes.
Patient Name: OMB Approval No. 0938-1019
Patient ID Number: Date Issued:
Physician:
{Insert Hospital or Plan Logo here}
DETAILED NOTICE OF DISCHARGE
You have asked for a review by the Quality Improvement Organization (QIO), an
independent reviewer hired by Medicare to review your case. This notice gives
you a detailed explanation about why your hospital and your managed care plan
(if you belong to one), in agreement with your doctor, believe that your inpatient
hospital services should end on ____________________________. This is
based on Medicare coverage policies listed below and your medical condition.
This is not an official Medicare decision. The decision on your appeal will
come from your Quality Improvement Organization (QIO).
• Medicare Coverage Policies:
____Medicare does not cover inpatient hospital services that are not medically
necessary or could be safely furnished in another setting. (Refer to 42 Code of
Federal Regulations, 411.15 (g) and (k)).
____Medicare Managed Care policies, if applicable: (insert specific managed
care policies)
____ Other __________{insert other applicable policies}____________________
• Specific information about your current medical condition:
• If you would like a copy of the documents sent to the QIO, or copies of the specific
policies or criteria used to make this decision, please call {insert hospital and/or plan
telephone number}.
According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of
information unless it displays a valid OMB control number. The valid OMB control number for this
information collection is 0938-1019. The time required to complete this information collection is estimated
to average 60 minutes per response, including the time to review instructions, search existing data
resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please
write to: CMS, 7500 Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05,
Baltimore, Maryland 21244-1850.
CMS 10066 (approved 5/2007)
Instructions for Completing the Detailed Notice of Discharge
(CMS 10066)
This is a standardized notice. Hospitals may not deviate from the content of the form
except where indicated. Please note that the OMB control number must be displayed on
the notice. Insertions must be typed or legibly hand-written in 12-point font or the
equivalent.
Hospitals or plans may modify the following sections to incorporate use of a sticker or
label that includes this information:
Patient Name: Fill in the patient’s full name.
Patient ID number: Fill in the patient’s ID number. This should not be, nor should it
contain, the patient’s social security or Medicare beneficiary identifier.
Physician: Fill in the name of the patient’s physician.
Date Issued: Fill in the date the notice is delivered to the patient by the hospital/plan.
Insert logo here: Hospitals/plans may elect to place their logo in this space. However,
the name, address, and telephone number of the hospital/plan must be immediately under
the logo, if not incorporated into the logo. If no logo is used, the name and address and
telephone number (including TTY) of the hospital/plan must appear above the title of the
form.
BLANK 1: “This notice gives you a detailed explanation of why your hospital and
your managed care plan (if you belong to one), in agreement with your doctor,
believe that your inpatient hospital services should end on
_________________________. In the space provided, fill in planned date of discharge.
Bullet # 1: “Medicare Coverage Policies:” Place a check next to the applicable
Medicare and/or managed care policies. If necessary, hospitals may also use the
selection “Other” to list other applicable policies, guidelines or instructions. Hospitals or
plans may also preprint frequently used coverage policies or add more space below this
line, if necessary. Policies should be written in full sentences and in plain language. In
addition, the hospital or plan may attach additional pages or specific policies or discharge
criteria to the notice. Any attachments must be included with the copy sent to the QIO as
well.
Bullet # 2: “Specific information about your current medical condition” Fill in
detailed and specific information about the patient’s current medical condition and the
reasons why services are no longer reasonable or necessary for this patient or are no
longer covered according to Medicare or Medicare managed care coverage guidelines.
Use full sentences and plain language.
Bullet # 3: “If you would like a copy of the documents sent to the QIO, or copies of
the specific policies or criteria used to make this decision, please call
_______________________________________________.” The hospital/plan should
also supply a telephone number for patients to call to get a copy of the relevant
documents sent to the QIO. If the hospital/plan has not attached the Medicare policies
and/or the Medicare managed care plan policies used to decide the discharge date, the
hospital should supply a telephone number for patients to call to obtain copies of this
information.
Hospitals or plans may add space below this section to insert a signature line and date, if
they so choose.
220 - Hospital Requested Expedited Review
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
When a hospital determines that a beneficiary no longer needs inpatient care, but is
unable to obtain the agreement of the physician, the hospital may request a QIO review.
Hospitals must notify the beneficiary that the review has been requested. These
instructions stem directly from Section 1154(e) of the Act and 42 CFR Part 405.1208.
220.1 - Responsibilities of the Hospital
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
The hospital must comply with the following procedures when requesting a QIO review:
Notify the Beneficiary. Hospitals must notify the beneficiary that the hospital has
requested a review using a model language notice called the Hospital Requested Review
(HRR) described in this section. See Section 220.4 for General Notice Requirements.
Supply information to the QIO. Hospitals must supply any pertinent information the
QIO needs to conduct its review and must make it available by phone or in writing, by
close of business on the first full day immediately following the day the hospital submits
the request for review.
220.2 - Responsibilities of the QIO
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
The QIO’s responsibilities are as follows:
Receive request and examine records. The QIO must notify the hospital that it has
received the request for review and must notify the hospital if it has not received
pertinent records, examine the pertinent records pertaining to the services, and solicit the
views of the beneficiary.
Issue a determination. QIOs make their determinations based on criteria in §1154(a) of
the Act, which specifies that QIOs will determine whether:
• the services are reasonable and medically necessary,
• the services meet professionally recognized standards of care, and
• the services could be safely be delivered in another setting.
The QIO will make a determination and notify the beneficiary, the hospital, and the
physician of its decision within 2 days of the hospital’s request and receipt of any
pertinent information submitted by the hospital.
Notification. When the QIO issues the determination, it must notify the beneficiary, the
hospital, and the physician of its decision by telephone and subsequently in writing. The
written notice of the expedited initial determination must contain the following:
• The basis for the determination;
• A detailed rationale for the determination;
• A statement explaining the Medicare payment consequences of the expedited
determination and the date of liability if any; and
• A statement informing the beneficiary of his or her appeal rights and the
timeframe for requesting an appeal.
220.3 - Effect of the Hospital Requested Expedited Determination
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
The expedited determination is binding on the beneficiary, physician, and hospital, except
in the following circumstances:
When the beneficiary remains in the hospital. When the beneficiary is still an
inpatient in the hospital and is dissatisfied with this determination, he or she may request
a reconsideration according to the procedures described in Section 300 of this Chapter.
When the beneficiary is no longer an inpatient in the hospital. If the beneficiary is no
longer an inpatient in the hospital and is dissatisfied with this determination, this
determination is subject to the general claims appeal process (See Chapter 29 of this
manual).
220.4 - General Notice Requirements
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
Providers should use the HRR to notify a beneficiary that it has requested a QIO review.
This notice can be found at http://www.cms.gov/Medicare/Medicare-General-
Information/BNI/ Since the HRR uses model language, providers have some flexibility
in the preparation of this notice. However, it is highly recommended that hospitals use
the model language provided in this instruction, or by their QIO, in order to avoid
questions of invalid notice. Providers should utilize the General Notice Requirements in
Section 200.5 and the Translation requirements in Section 200.6.1 when preparing the
notice.
220.5 - Exhibit 3 – Model Language for Notice of Hospital Requested
Review
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
Hospital Identifier
Model Notice of Hospital Requested Review (HRR)
Name of Patient: ____________________Name of Physician:____________________
Patient ID Number: __________________Date Issued:_________________________
______________________________________________________________________
We believe that Medicare will not continue to cover your hospital care because these
services are no longer considered medically necessary in your case. Because your
doctor disagreed with our finding, the hospital is asking the quality improvement
organization (QIO) to review your case. The QIO is an outside reviewer hired by
Medicare to look at your case to decide if you are ready to leave the hospital. The name
of the QIO is ____ (insert the name of the QIO)_________________.
• The QIO will contact you to solicit your views about your case and the care you
need.
• You do not need to take any action until you hear from the QIO.
For more information about this notice, call 1-800-MEDICARE (1-800-633-4227), or
TTY: 1-877-486-2048.
Please sign your name, the date and time. Your signature does not mean that you
agree with this notice, just that you received the notice and understand it.
__________________________________ __________ ________
Signature of Patient or Representative Date Time
240 - Preadmission/Admission Hospital Issued Notice of Noncoverage
(HINN)
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
Regulations found at 42 CFR Part 476.71 require QIOs to review the medical necessity of
hospital discharges and admissions, in addition to other requirements specified in that
section of the regulation. Therefore, a beneficiary has a right to request an expedited
review by the QIO when a hospital (acting directly or through its utilization review
committee) has determined at the time of preadmission or admission, that the beneficiary
is facing a non-covered hospital stay because the services are not considered to be
reasonable and necessary in this case, the services could be safely provided in another
setting, or the care is considered custodial in nature.
The utilization review committee or the hospital may issue a preadmission/admission
HINN. QIOs may also issue such notices after having been contacted by a hospital
regarding care believed to be medically unnecessary, inappropriate, or custodial. The
hospital need not obtain the attending physician's concurrence, or the QIO's, prior to
issuing the preadmission/admission HINN. This also applies to direct admissions to
swing beds (i.e., the beneficiary is admitted to the swing bed when the hospital
determines that the beneficiary does not need hospital-level care, but instead needs only
skilled nursing (SNF) or custodial nursing (NF) level services).
240.1 - Delivery of the Preadmission/Admission HINN
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
When delivering the Preadmission/Admission HINN, hospitals must follow the notice
delivery requirements in Section 200.3.1 regarding:
• In-Person Delivery,
• Notice Delivery to Representatives,
• Ensuring Beneficiary Comprehension.
• Beneficiary Signature and Date.
• Refusal to Sign.
• Notice Delivery and Retention.
240.2 - Notice Delivery Timeframes and Liability
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
Preadmission: In preadmission situations, the beneficiary is liable, if admitted, for
customary charges for all services furnished during the stay, except for those services for
which he or she is eligible to receive payment under Part B.
Admission: If the admission notice is issued at 3 p.m. or earlier on the day of admission,
the beneficiary is liable for customary charges for all services furnished after receipt of
the notice, except for those services for which the beneficiary is eligible to receive
payment under Part B.
If the admission notice is issued after 3 p.m. on the day of admission, the beneficiary is
liable for customary charges for all services furnished on the day following the day of
receipt of the notice, except for those services for which the beneficiary is eligible to
receive payment under Part B.
240.3 - Timeframes for Submitting a Request for a QIO Review
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
Preadmission: In preadmission situations, a beneficiary who chooses to exercise the
right to a QIO review should request immediately, but no later than 3 calendar days after
receipt of the notice, or if admitted, at any point during the stay, an immediate review of
the facts related to the admission.
Admission: In admission situations, a beneficiary who chooses to exercise the right to a
QIO review should request immediately, or at any point in the stay, an immediate review
of the facts related to the admission.
240.4 - Results of the QIO Review
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
If the QIO disagrees with the hospital’s determination and says the stay is reasonable
and necessary, the beneficiary will be refunded any amount collected except applicable
coinsurance and deductibles, and convenience items or services not covered by Medicare.
If the QIO agrees with the hospital determination and says the stay is not reasonable
and necessary, the beneficiary will be responsible for all services on the date specified by
the QIO.
240.5 - Effect of the QIO Review
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
The QIO will send the beneficiary a formal determination of the medical necessity and
appropriateness of the hospitalization determination is binding on the beneficiary, the
physician, and hospital except in the following circumstances:
Right to pursue a reconsideration. If the beneficiary is still an inpatient in the hospital
and is dissatisfied with the determination, he or she may request a reconsideration
according to the procedures described in §405.1204 (See Section 300 of this chapter.)
Right to pursue the general claims appeal process. If the beneficiary is no longer an
inpatient in the hospital, the determination is subject to the general claims appeal process
(See Chapter 29 of this manual.)
240.6 - Exhibit 4 – Model Language for Preadmission/Admission
Hospital Issued Notice of Noncoveage
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
Hospital Identifier
Preadmission or Admission Hospital-Issued Notice of Noncoverage (HINN)
Model Language
Name of Patient: ____________________Name of Physician:____________________
Patient ID Number: __________________Date Issued: _________________________
We believe that Medicare is not likely to pay for your admission for
_____________________(specify service or condition)__________________ because:
____it is not considered to be medically necessary
____it could be furnished safely in another setting
____other________________________________________________.
However, this notice is not an official Medicare decision.
If you disagree with our finding:
• You should talk to your doctor about this notice and any further health care you
may need.
• You also have the right to an appeal, that is, an immediate review of your case
by a Quality Improvement Organization (QIO). The QIO is an outside reviewer
hired by Medicare to make a formal decision about whether your admission is
covered by Medicare. See page 2 for instructions on how to request a
review and contact the QIO.
• If you decide to go ahead with the hospitalization, you will have to pay for:
________________________________________________________________
1
•
CONTINUED ON PAGE 2
1
For preadmission notices, insert: "customary charges for all services furnished during the stay, except
for those services for which you are eligible under Part B."
For admission notices issued not later than 3:00 P.M. on the date of admission, insert: "customary
charges for all services furnished after receipt of this hospital notice, except for those services for which
you are eligible under Part B." (If these requirements are not met, insert the liability phrase below.)
For admission notices issued after 3:00 P.M. on the day of admission, insert: "customary charges for all
services furnished on the day following the day of receipt of this notice, except for those services for
which you are eligible to receive payment under Part B."
If you want an immediate review of your case:
________________(insert one of the following as appropriate)_____________
Preadmission:
• Call the QIO immediately at the number listed below, but no later than 3 calendar
days after you receive this notice. If you are admitted, you may call the QIO at any
point in the stay.
Admission:
• Call the QIO immediately at the number listed below or you may call the
QIO at any point during your stay.
• You may also call the QIO for quality of care issues.
QIO Contact Information: _______(insert name of QIO in bold)________________
_______(insert telephone number of QIO)_____________
If you do not want an immediate review:
• You may still request a review within 30 calendar days from the date of
receipt of this notice by calling the QIO at the number below.
Results of the QIO Review:
• The QIO will send you a formal decision about whether your hospitalization is
appropriate according to Medicare’s rules, and will tell you about your
reconsideration and appeal rights.
° IF THE QIO FINDS YOUR HOSPITAL CARE IS COVERED, you will be
refunded any money you may have paid the hospital except for any
applicable copays, deductibles, and convenience items or services
normally not covered by Medicare.
° IF THE QIO FINDS THAT YOUR HOSPITAL CARE IS NOT COVERED,
you are responsible for payment for all services beginning on
______(specify date)____. (see footnote
1
on page 1).
For more information, call 1-800-MEDICARE (1-800-633-4227), or TTY: 1-877-486-
2048.
_____________________________________________________________________
Please sign your name, the date and time. Your signature does not mean that you
agree with this notice, just that you received the notice and understand it.
______________________________________ __________ ________
Signature of Patient or Representative Date
Time
260 - Expedited Determinations of Provider Service Terminations
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
260.1 - Statutory Authority
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
Section 1869(b)(1)(F) of the Social Security Act (the Act), as amended by section 521 of
the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000
(BIPA) (Pub. L. 106-554) granted beneficiaries in Original Medicare the right to an
expedited determination process to dispute the end of their Medicare covered care in
certain provider settings.
This process was implemented though a final rule with comment period, CMS-4004-FC
(69 FR 69252, November 26, 2004), effective July 1, 2005. The resulting regulations are
located at 42 CFR Part 405, §§405.1200 - 405.1204. There is a parallel process for
beneficiaries enrolled in Medicare health plans. (See §§90.2-90.8 in Chapter 13 of the
Medicare Managed Care Manual (CMS Pub. 100-16.)
260.2 - Scope
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
The expedited determination process is available to beneficiaries in Original Medicare
whose Medicare covered services are being terminated in the following settings. All
beneficiaries receiving services in these settings must receive a Notice of Medicare Non-
Coverage (NOMNC) before their services end: For purposes of this instruction, the term
“beneficiary” means either beneficiary or representative, when a representative is acting
for a beneficiary.
• Home Health Agencies (HHAs)
• Comprehensive Outpatient Rehabilitation Services (CORFs)
• Hospice
• Skilled Nursing Facilities (SNFs)-- Includes services covered under a Part A stay,
as well as Part B services provided under consolidated billing (i.e. physical
therapy, occupational therapy, and speech therapy). A NOMNC must be
delivered by the SNF at the end of a Part A stay or when all of Part B therapies
are ending. For example, a beneficiary exhausts the SNF Part A 100-day benefit,
but remains in the facility under a private pay stay and receives physical and
occupational therapy covered under Medicare Part B. A NOMNC must be
delivered by the SNF when both Part B therapies are ending.
Skilled Nursing Facilities includes beneficiaries receiving Part A and B services in Swing
Beds.
260.2.1 - Exceptions
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
The following service terminations, reductions, or changes in care are not eligible for an
expedited review. Providers should not deliver a NOMNC in these instances.
When beneficiaries never received Medicare covered care in one of the covered settings
(e.g., an admission to a SNF will not be covered due to the lack of a qualifying hospital
stay or a face-to-face visit was not conducted for the initial episode of home health care).
When services are being reduced (e.g., an HHA providing physical therapy and
occupational therapy discontinues the occupational therapy).
When beneficiaries are moving to a higher level of care (e.g., home health care ends
because a beneficiary is admitted to a SNF).
When beneficiaries exhaust their benefits (e.g., a beneficiary reaches 100 days of
coverage in a SNF, thus exhausting their Medicare Part A SNF benefit).
When beneficiaries end care on their own initiative (e.g., a beneficiary decides to revoke
the hospice benefit and return to standard Medicare coverage).
When a beneficiary transfers to another provider at the same level of care (e.g., a
beneficiary transfers from one SNF to another while remaining in a Medicare-covered
SNF stay).
When a provider discontinues care for business reasons (e.g., an HHA refuses to continue
care at a home with a dangerous animal or because the beneficiary was receiving physical
therapy and the provider’s physical therapist leaves the HHA for another job).
260.3 - Notice of Medicare Non-Coverage
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
The notice is subject to the Paperwork Reduction Act Process and approval by the Office
of Management and Budget. OMB-approved notices may only be modified as per their
accompanying instructions. Unapproved modifications may invalidate the NOMNC. The
notice and accompanying instructions may be found online at
http://www.cms.gov/Medicare/Medicare-General-Information/BNI
260.3.1 - Alterations to the NOMNC
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
The NOMNC must remain two pages. The notice can be two sides of one page or one
side of two separate pages, but must not be condensed to one page.
Providers may include their business logo and contact information on the top of the
NOMNC. Text may not be shifted from page 1 to page 2 to accommodate large logos,
address headers, etc.
Providers may include information in the optional “Additional Information” section
relevant to the beneficiary’s situation.
Note: Including information normally included in the Detailed Explanation of Non-
Coverage (DENC) in the “Additional Information” section does not satisfy a provider’s
responsibility to deliver the DENC, if otherwise required.
260.3.2 - Completing the NOMNC
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
Providers must use the OMB-approved NOMNC (CMS-10123). Providers must type or
write the following information in the corresponding blanks of the NOMNC:
• Patient name
• Medicare patient number
• Type of coverage (SNF, Home Health, CORF, or Hospice)
• Effective date (last day of coverage)
Note: The effective date is always the last day beneficiaries will receive coverage for
their services. Beneficiaries have no liability for services received on this date, but may
face charges for services received the day following the effective date of the NOMNC for
home health, hospice, and CORF services. Because SNFs cannot bill the beneficiary for
services furnished on the day of (but before the actual moment of) discharge,
beneficiaries may leave a SNF the day after the effective date and not face liability for
such services.
260.3.3 – Provider Delivery of the NOMNC
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
Providers must deliver the NOMNC to all beneficiaries eligible for the expedited
determination process per §260.2. A NOMNC must be delivered even if the beneficiary
agrees with the termination of services.
Medicare providers are responsible for the delivery of the NOMNC. Providers may
formally delegate the delivery of the notices to a designated agent such as a courier
service; however, all of the requirements of valid notice delivery apply to designated
agents.
The provider must ensure that the beneficiary or representative signs and dates the
NOMNC to demonstrate that the beneficiary or representative received the notice and
understands that the termination decision can be disputed. Use of assistive devices may
be used to obtain a signature.
Electronic issuance of NOMNCs is not prohibited. If a provider elects to issue a NOMNC
that is viewed on an electronic screen before signing, the beneficiary must be given the
option of requesting paper issuance over electronic if that is what is preferred. Regardless
of whether a paper or electronic version is issued and regardless of whether the signature
is digitally captured or manually penned, the beneficiary must be given a paper copy of
the NOMNC, with the required beneficiary-specific information inserted, at the time of
notice delivery.
260.3.4 - Required Delivery Timeframes
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
The NOMNC should be delivered to the beneficiary at least two calendar days before
Medicare covered services end or the second to last day of service if care is not being
provided daily. For example, if the last day of covered SNF care is a Friday, the
NOMNC should be delivered no later than the preceding Wednesday.
Note: The two day advance requirement is NOT a 48 hour requirement. For example, if a
patient’s last covered home health service is at 10AM on Wednesday and the notice is
delivered at 4PM on the prior Monday, it is considered timely.
If home health services are being provided less frequently than daily, the notice must be
delivered no later than the next to last visit before Medicare covered services end. For
example, if home health care is provided on Tuesdays and Thursdays, and Tuesday is the
last day of Medicare covered services, the notice must be delivered no later than the
preceding Thursday.
The NOMNC may be delivered earlier than two days preceding the end of covered
services. However, delivery of the notice should be closely tied to the impending end of
coverage so a beneficiary will more likely understand and retain the information
regarding the right to an expedited determination.
The notice may not be routinely given at the time services begin. An exception is when
the services are expected to last fewer than two days. In these instances, the notice may
be given by the provider when services begin.
There is an accepted circumstance when the NOMNC may be delivered sooner than two
days or the next to last visit before coverage ends. This exception is limited to cases
where a beneficiary receiving home health services is found to no longer be homebound,
and thus ineligible for covered home health care. In this circumstance, the NOMNC
should be immediately delivered to the beneficiary upon discovery of the loss of
homebound status. We expect that in the vast majority of cases, in all settings, the
decision of a physician to end care will be based on medical necessity, and thus,
foreseeable by the provider within the required time frames for notice delivery.
260.3.5 - Refusal to Sign the NOMNC
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
If the beneficiary refuses to sign the NOMNC the provider should annotate the notice to
that effect, and indicate the date of refusal on the notice. The date of refusal is
considered to be the date of notice receipt. Beneficiaries who refuse to sign the NOMNC
remain entitled to an expedited determination.
260.3.6 - Financial Liability for Failure to Deliver a Valid NOMNC
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
If a Qualified Independent Contractor (QIO) determines that a provider did not deliver a
valid NOMNC to a beneficiary, the provider is financially liable for continued services
until two days after the beneficiary receives valid notice, or until the effective date of the
valid notice, whichever is later.
260.3.7 - Amending the Date of the NOMNC
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
If the initial NOMNC was delivered to a beneficiary and the effective date was changed,
the provider may amend the notice to reflect the new date. The newer effective date may
not be earlier than the effective date of the original notice except in those cases involving
the abrupt end of services, as discussed in §260.3.4.
The beneficiary must be verbally notified as soon as possible after the provider is aware
of the change. The amended NOMNC must be delivered or mailed to the beneficiary and
a copy retained in the beneficiary’s file.
If an expedited determination is already in progress, the provider must immediately
notify the QIO of the change and provide an amended notice to the QIO.
260.3.8 – NOMNC Delivery to Representatives
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
The NOMNC may be delivered to a beneficiary’s appointed or authorized representative.
Appointed representatives are individuals designated by beneficiaries to act on their
behalf during the appeal process. A beneficiary may designate an appointed
representative via the “Appointment of Representative” form, the CMS-1696.
http://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/downloads/cms1696.pdf See
Chapter 29 of the Medicare Claims Processing Manual, section 270.1, for more
information on appointed representatives.
CMS usually requires that notification to a beneficiary who has been deemed legally
incompetent be made to an authorized representative of the beneficiary. Generally, an
authorized representative is an individual who, under State or other applicable law, may
make health care decisions on a beneficiary’s behalf (e.g., the beneficiary’s legal
guardian, or someone appointed in accordance with a properly executed durable medical
power of attorney).
However, if a beneficiary is temporarily incapacitated a person (typically, a family
member or close friend) whom the provider has determined could reasonable represent
the beneficiary, but who has not been named in any legally binding document, may be a
representative for the purpose of receiving the notices described in this section. Such a
representative should have the beneficiary’s best interests at heart and must act in a
manner that is protective of the beneficiary and the beneficiary’s rights. Therefore, a
representative should have no relevant conflict of interest with the beneficiary.
In these instances of delivering a notice to an unnamed representative, the provider
should annotate the NOMNC with the name of the staff person initiating the contact, the
name of the person contacted, and the date, time, and method (in person or telephone) of
the contact. A copy of the NOMNC with this information should be retained in the
beneficiary’s record.
Note - Exceptions to in person notice delivery. If the NOMNC must be delivered to a
representative not living with the beneficiary, the provider is not required to make off-site
in- person notice delivery to the representative. The provider must complete the
NOMNC as required and telephone the representative at least two days prior to the end of
covered services. The provider should inform the representative of the beneficiary’s right
to appeal a coverage termination decision.
The information provided should include the following:
• The beneficiary’s last day of covered services, and the date when the
beneficiary’s liability is expected to begin.
• The beneficiary’s right to appeal a coverage termination decision.
• A description of how to request an appeal by a QIO.
• The deadline to request a review as well as what to do if the deadline is
missed.
• The telephone number of the QIO to request the appeal.
The date the provider communicates this information to the representative, whether by
telephone or in writing, is considered the receipt date of the NOMNC.
The NOMNC must be annotated with the following information on the day that the
provider makes telephone contact:
Reflect that all of the information indicated above was communicated to the
representative;
Note the name of the staff person initiating the contact, the name of the representative
contacted by phone, the date and time of the telephone contact, and the telephone number
called.
A copy of the annotated NOMNC should be mailed to the representative the day
telephone contact is made and a dated copy should be placed in the beneficiary’s medical
file.
If the provider chooses to communicate the information in writing, a hard copy of the
NOMNC must be sent to the representative by certified mail, return receipt requested, or
any other delivery method that can provide signed verification of delivery (e.g. FedEx,
UPS) The burden is on the provider to demonstrate that timely contact was attempted
with the representative and that the notice was delivered.
The date that someone at the representative’s address signs (or refuses to sign) the receipt
is considered the date received. Place a copy of the annotated NOMNC in the
beneficiary’s medical file.
If both the provider and the representative agree, providers may send the notice by fax or
e-mail, however, providers fax and e-mail systems must meet the The Health Insurance
Portability and Accountability Act of 1996 (HIPAA) privacy and security
requirements.
260.3.9 - Notice Retention for the NOMNC
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
The provider must retain the original signed NOMNC in the beneficiary’s file. The
beneficiary should receive a paper copy of the NOMNC that includes all of the required
information such as the effective date and covered service at issue. Electronic notice
retention is permitted if the NOMNC was delivered electronically.
260.3.10 - Hours of NOMNC Delivery
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
Notice delivery should occur within the normal operating hours of the provider.
Providers are not expected to extend their hours or days of business solely to meet the
requirements of the expedited determination process. However, it is expected that all
notices be provided as timely as possible within these constraints.
260.4 - Expedited Determination Process
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
260.4.1 - Beneficiary Responsibilities
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
260.4.1.1 - Timeframe for Requesting an Expedited Determination
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
A beneficiary who receives a NOMNC and disagrees with the termination of services
may request an expedited determination by the appropriate QIO for the state where the
services were provided. The beneficiary must contact the QIO by noon of the day before
the effective date on the NOMNC. The beneficiary may contact the QIO by telephone or
in writing. If the QIO is unable to accept the request, the beneficiary must submit the
request by noon of the next day the QIO is available.
260.4.1.2 - Provide Information to QIO
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
The beneficiary must be available to answer questions or supply information requested by
the QIO. The beneficiary may, but is not required to, supply additional information to the
QIO that he or she believes is pertinent to the case.
260.4.1.3 - Obtain Physician Certification of Risk (Home Health and
CORF services only)
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
A beneficiary must obtain a physician certification stating that failure to continue home
health or CORF services is likely to place the beneficiary’s health at significant risk.
Without such a certification statement a QIO may not make a determination for service
terminations in these settings.
The physician certification is a written statement from any licensed physician contacted
by a beneficiary. This is a special certification required only in this expedited
determination process for expedited determinations in home health and CORF settings.
A beneficiary may request an expedited determination from a QIO before obtaining this
certification of risk. Once the QIO is aware of a review request, it will instruct the
beneficiary on how to obtain the necessary certification from a physician.
260.4.2 - Beneficiary Liability During QIO Review
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
A provider may not bill a beneficiary who has timely filed an expedited determination for
disputed services until the review process, including a reconsideration by a Qualified
Independent Contractor (QIC), if applicable, is complete.
260.4.3 - Untimely Requests for Review
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
If the beneficiary makes an untimely request to the QIO, the QIO will accept the request
for review, but is not required to complete the review within its usual 72-hour deadline.
The QIO will make a determination as soon as possible upon receipt of the request.
Beneficiaries have up to 60 days from the effective date of the NOMNC to make an
untimely request to a QIO. When the beneficiary is still receiving services, the QIO must
make a determination and notify the parties within 7 days of receipt of the request. When
the beneficiary is no longer receiving services, the QIO will make a determination within
30 days of the request.
The coverage protections discussed in 260.4.2 do not apply to a beneficiary who makes
an untimely request to the QIO.
260.4.4 - Provider Responsibilities
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
When a provider is notified by a QIO of a beneficiary request for an expedited
determination, the provider must:
• Deliver the beneficiary a DENC (see §260.4.5) by close of business the day they
are notified;
• Supply the QIO with copies of the NOMNC and DENCs by close of business of
the day of the QIO notification;
• Supply all information, including medical records, requested by the QIO. The
QIO may allow this required information to be supplied via phone, writing, or
electronically. If supplied via phone, the provider must keep a written record of
the information it provides within the patient record; and
Furnish the beneficiary, at their request, with access to or copies of any documentation it
provides to the QIO. The provider may charge the beneficiary a reasonable amount to
cover the costs of duplicating and delivering the documentation. This documentation
must be provided to the beneficiary by close of business of the first day after the material
is requested.
260.4.5 - The Detailed Explanation of Non-Coverage
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
The DENC is subject to the Paperwork Reduction Act Process and approval by the Office
of Management and Budget. OMB-approved notices may only be modified as per their
accompanying instructions. Unapproved modifications may invalidate the DENC. The
notice and accompanying instructions may be found online at
http://www.cms.gov/Medicare/Medicare-General-Information/BNI. Medicare providers
are responsible for the delivery of the DENC to beneficiaries who request an expedited
determination by the QIO.
The DENC must contain the following information:
• The facts specific to the beneficiary’s discharge and provider’s determination that
coverage should end.
• A specific and detailed explanation of why services are either no longer
reasonable and necessary or no longer covered.
• A description of, and citations to, the Medicare coverage rule, instruction, or other
policies applicable to the review.
The provider should make insertions on the notice in Spanish, if necessary. If this is
impossible, additional steps should be taken to ensure that the beneficiary comprehends
the content of the notice. Providers may resource CMS multilingual services provided
through the 1-800-MEDICARE help line if needed.
The delivery must occur in person by close of business of the day the QIO notifies the
provider that the beneficiary has requested an expedited determination. A provider may
also choose to deliver the DENC with the NOMNC.
The DENC does not require a signature but should be annotated in the event of a
beneficiary’s refusal to accept the notice upon delivery.
Note: An HHA is not required to make a separate trip to the beneficiary’s residence
solely to deliver a DENC. Upon notification from the QIO of a beneficiary’s request for
an expedited determination, an HHA may telephone the beneficiary to provide the
information contained on the DENC, annotate the DENC with the date and time of
telephone contact and file with the beneficiary’s records. A hard copy of the DENC
should be sent to the beneficiary via tracked mail or other personal courier method by
close of business of the day the QIO notifies the provider that the beneficiary has
requested an expedited determination. The burden is on the provider to demonstrate that
timely contact was attempted with the beneficiary and that the notice was delivered.
DENC delivery to representatives, DENC hours of delivery, and DENC retention
requirements are the same as the NOMNC requirements outlined in §260.3.
Expedited Determination Scenario in a Skilled Nursing Facility - Example
On June 2
nd
, the SNF delivers a NOMNC to Bob Mills notifying him that his Medicare
covered stay will end on June 4
th
. Bob decides to request an expedited determination.
June 2
nd
June 3
nd
June 4
rd
June 5
th
June 6
th
NOMNC
Delivered
Bob receives a
NOMNC
indicating that
his coverage is
ending June 4
th
.
Bob must request
an expedited
determination by
noon today.
NOMNC
Effective Date
This is the last day
of coverage, as
stated on the
NOMNC.
If Bob made his
request on June
2
nd:
The QIO makes its
decision and notifies
Bob and the SNF by
COB.
If Bob made his
request on
June 3
rd:
The QIO makes its
decision and
notifies Bob and
the SNF by COB.
The QIO must
notify the SNF of
Bob’s request
for an expedited
determination.
The SNF must
deliver the
DENC to Bob by
COB today.
The SNF must
provide relevant
medical records
to the QIO by
COB today.
The beneficiary
has no liability
for this day as
this is the last day
of coverage in the
SNF.
If QIO decision is
unfavorable:
Beginning today
Bob is liable for his
stay if he does not
leave the SNF.
260.5 - QIO Responsibilities
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
260.5.1 - Receive Beneficiary Requests for Expedited Review
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
QIOs must be available to receive beneficiary requests for review 24 hours a day, 7 days
a week.
260.5.2 - Notify Providers and Allow Explanation of Why Covered
Services Should End
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
When the QIO receives a request from a beneficiary, the QIO must immediately notify
the provider of services that a request for an expedited determination was made. If the
request is received after normal working hours, the QIO should notify the provider as
soon as possible on the morning after the request was made.
260.5.3 - Validate Delivery of NOMNC
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
The QIO must validate that the NOMNC included the required elements outlined below:
• Date that coverage of services ends.
• Date that beneficiary’s financial liability begins.
• Description of right to an expedited determination (and how to request an
expedited determination) and the right to submit relevant information to the QIO.
• Right to detailed information on why the provider believes Medicare will no
longer cover services.
• Contact information for QIO in the state where services were delivered.
The QIO should determine that NOMNC delivery was valid if all of the following criteria
are met:
• All elements stated above are included.
• The beneficiary signed and dated the notice. If the NOMNC was annotated
because the beneficiary refused to sign the notice upon delivery, the QIO may still
conduct an expedited determination in these instances.
• Notice was delivered at least two days before services terminate. For a non-
residential provider, the notice may be delivered at the next to last visit before
services terminate.
Invalidating a NOMNC should be a rare occurrence. The only reasons to invalidate are
the lack of one of the criteria stated above or a pattern of minor errors as established by
the provider.
If a QIO invalidates a NOMNC, a new NOMNC must be issued to the beneficiary with
an effective date at least two days after the beneficiary receives valid notice. If the
beneficiary again disagrees with the termination of care, a new request to the QIO must
be made.
260.5.4 - Solicit the Views of the Beneficiary
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
The QIO must solicit the views of the beneficiary who requested the expedited
determination.
260.5.5 - Solicit the Views of the Provider
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
The QIO must afford the provider an opportunity to explain why the discharge is
appropriate.
260.5.6 - Make Determination and Notify Required Parties
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
No later than 72 hours after receipt of the request for an expedited determination, the QIO
must make its determination on whether the discharge is appropriate based on medical
necessity or other Medicare coverage policies.
Note: If the QIO does not receive supporting information from the provider, it may make
its determination based on the evidence at hand, or defer a decision until it receives the
necessary information. If this delay results in continued services for the beneficiary, the
provider may be held financially liable for these services as determined by the QIO.
The QIO must notify the beneficiary, the beneficiary’s physician, and the provider of
services of its determination. This notification must include the rationale for the
determination and an explanation of Medicare payment consequences and beneficiary
liability. QIOs must also inform the beneficiary of the right to an expedited
reconsideration by the Qualified Independent Contractor (QIC) and how to request a
timely expedited reconsideration. The QIO will make its initial notification via telephone
and will follow up with a written determination letter.
260.6 - Effect of a QIO Expedited Determination
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
The QIO determination is binding unless the beneficiary pursues an expedited
reconsideration per section 270 of this chapter.
260.6.1 - Right to Pursue an Expedited Reconsideration
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
If dissatisfied with the expedited determination, the beneficiary may request an expedited
reconsideration according to the procedures described in section 270 of this chapter.
260.6.2 - Effect of QIO Determination on Continuation of Care
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
If the QIO decision extends coverage to a period where a physician’s orders do not exist,
either because of the duration of the expedited determination process, or because the
physician has already concurred with the termination of care, providers cannot deliver
care. In the event of a QIO decision favorable to a beneficiary without physician orders,
the ordering physician should be made aware the QIO has ruled coverage should
continue, and be given the opportunity to reinstate orders. The beneficiary may also seek
other personal physicians to write orders for care as well as find another service provider.
The expedited determination process does not override regulatory or State requirements
that physician orders are required for a provider to deliver care.
If a QIO decision is favorable to the beneficiary and the beneficiary resumes covered
services, a new NOMNC should be delivered if that care is later terminated, per the
requirements of this section. If the beneficiary again disagrees with the termination of
care, a new request to the QIO must be made.
The QIO decision will affect the necessity of subsequent Advance Beneficiary Notice of
Noncoverage (ABN) deliveries.
Example: If covered home health care continues following a favorable QIO decision for
the beneficiary, the HHA would resume issuance of Home Health Advanced Beneficiary
Notices (HHABNs) as warranted for the remainder of this home health episode. If the
QIO decides that Medicare covered care should end and the patient wishes to continue
receiving care from the HHA, even though Medicare will not pay, an HHABN with
Option Box 1 must be issued to the beneficiary since this would be an initiation of non-
covered care.
Example: If covered Skilled Nursing Facility (SNF) care continues following a favorable
QIO decision for the beneficiary but later ends due to the end of Medicare coverage, and
the patient wishes to continue receiving uncovered care at the SNF, a SNFABN must be
issued to the beneficiary.
260.6.3 - Right to Pursue the Standard Claims Appeal Process
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
If a beneficiary receives services of the type at issue in the expedited determination after
the coverage end date, and coverage is denied, the beneficiary may appeal the denial
within the standard claims appeal process (See Chapter 29 of this manual.)
261 - Expedited Determination Notice Association with Advance
Beneficiary Notices
(Rev. 2711, Issued: 05-24-13, Effective: 08-26-13, Implementation: 08-26-13)
Delivery of the NOMNC does not replace the required delivery of other mandatory
notices, including ABNs. Notice delivery must be determined by the individual NOMNC
requirements per this section and ABN delivery requirements per §1879 of the Act and
per guidance in this chapter. Both the NOMNC and an ABN may be required in certain
instances.
Only one notice may be required when Medicare covered care is ending.
Example: A beneficiary is receiving CORF services and all covered CORF care is
ending. A NOMNC must be delivered at least two days, or two visits, prior to the end of
coverage. If the beneficiary does not continue the CORF services, an ABN should not be
issued.
Some situations may require two notices at the end of Medicare covered care.
Example: A beneficiary’s Part A stay is ending because skilled level care is no longer
medically necessary and the beneficiary wishes to remain in the SNF receiving custodial
care. The beneficiary must receive the NOMNC two days prior to the end of coverage. A
SNFABN must also be delivered before custodial care begins.
It is also possible that no notice is required when Medicare coverage is ending.
Example: A beneficiary exhausts the 100 day benefit in a SNF. In this instance, the
NOMNC should not be delivered. The SNFABN is not required in this situation.
However, it can be issued voluntarily, as a courtesy to the beneficiary.
300 - Expedited Reconsiderations
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
A beneficiary who is dissatisfied with a QIO determination can request a reconsideration
by an independent review entity (IRE). Such reconsiderations are codified in regulations
effective July 1, 2005 (42 CFR 405.1204) but are familiar to inpatient hospital providers
as the process previously available under §1155 of the Act. This reconsideration process
is the same for hospital and non-hospital providers.
300.1 - The Role of the Beneficiary and Liability
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
Submitting a Request: A beneficiary who chooses to exercise the right to an expedited
reconsideration must submit a request to the appropriate IRE in writing or by telephone
no later than noon of the calendar day following the initial notification (whether by
telephone or in writing) of the QIO’s determination. The beneficiary, upon request of the
QIO, should be available to discuss the case or supply information that the IRE may
request. The beneficiary may, but is not required to, submit written evidence to be
considered by the IRE.
Untimely Requests: When the beneficiary fails to make a timely request for an
expedited reconsideration subsequently may request a reconsideration under the standard
claims appeal process (See Chapter 29 of this Manual), but the coverage protection
described in Section 300.5 would not extend through this reconsideration, nor would the
notification timeframes or the escalation process described in Section 300.2 apply.
300.2 - The Responsibilities of the IRE
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
Receipt of the Request. On the day the IRE receives the request for an expedited
reconsideration, the IRE must immediately notify the QIO that made the expedited
determination and the provider of services of the request for the expedited
reconsideration.
Examine Records and Other Information. The IRE must offer the beneficiary and the
provider an opportunity to provide further information.
Notification. Unless the beneficiary requests an extension (see below), the IRE must
notify the QIO, the beneficiary, and the provider of services of its decision no later than
72 hours after receipt of the request for an expedited reconsideration, and any such
records needed for the reconsideration. The initial notification may be done by telephone
followed by a written notice that includes:
• The rationale for the reconsideration decision,
k
• An explanation of the Medicare payment consequences of the determination
and the beneficiary’s date of liability,
• Information about the beneficiary’s right to appeal the IRE’s reconsideration
decision to an ALJ, including how to request an appeal and the time period for
doing so.
Escalation. Unless the beneficiary requests an extension, if the IRE does not issue a
decision within 72 hours of receipt of the request, the IRE must notify the beneficiary of
his or her right to have the case escalated to the ALJ hearing level if the amount
remaining in controversy is $100 or more.
Extensions. A beneficiary who requests an expedited reconsideration may request
(either in writing or orally) that an IRE grant such additional time as the beneficiary
specifies (not to exceed 14 days) for the reconsideration. If an extension is granted, the
deadlines described above under notification, do not apply.
300.3 - The Responsibilities of the QIO
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
When an IRE notifies the QIO that a beneficiary has requested an expedited
reconsideration, the QIO must supply all information that the IRE needs to make its
expedited reconsideration as soon as possible, but no later than by close of business of the
day that the IRE notifies the QIO of the request for the reconsideration.
At the beneficiary’s request, the QIO must furnish the beneficiary with a copy of, or
access to, any documentation that it sends to the IRE. The QIO may charge the
beneficiary a reasonable amount to cover the costs of duplicating the documentation
and/or delivering it to the beneficiary. The QIO must accommodate the request by no
later than close of business of the first day after the material is requested.
300.4 - The Responsibilities of the Provider
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
The provider may, but is not required to, submit evidence to be considered by an IRE in
making its decision. If a provider fails to comply with an IRE’s request for additional
information beyond that furnished by the QIO for purposes of the expedited
determination, the IRE makes its reconsideration decision based on the information
available.
300.5 - Coverage During an Expedited Reconsideration
(Rev. 1257, Issued: 05-25-07; Effective: 07-01-07; Implementation: 07-02-07)
When a beneficiary makes a timely request for an expedited determination, the provider
may not bill the beneficiary for any disputed services until the IRE makes its
determination. Beneficiary liability for continued services is based on the QIO’s decision.
400 - Part A Medicare Outpatient Observation Notice
(Rev. 3698, Issued: 01-27-17, Effective: 02-21-17; Implementation: 02-21-17)
The MOON informs all Medicare beneficiaries when they are an outpatient receiving
observation services, and are not an inpatient of the hospital or critical access hospital
(CAH).
400.1 - Statutory Authority
(Rev. 3698, Issued: 01-27-17, Effective: 02-21-17; Implementation: 02-21-17)
On August 6, 2015, Congress enacted the Notice of Observation Treatment and
Implication for Care Eligibility Act (NOTICE Act) Public Law 114-42, amending
Section 1866(a)(1) of the Social Security Act (the Act) (42 U.S.C. 1395cc(a)(1)), by
adding a new subparagraph (Y). The NOTICE Act requires hospitals and CAHs to
provide written and oral explanation of such written notification to individuals who
receive observation services as outpatients for more than 24 hours.
The process for delivery of this notice, the Medicare Outpatient Observation Notice
(MOON), was addressed in rulemaking, including a final rule, CMS-1655-F (81 FR
56761, 57037 through 57052, August 22, 2016), effective October 1, 2016. The resulting
regulations are located at 42 CFR Part 489.20(y).
400.2 - Scope
(Rev. 3698, Issued: 01-27-17, Effective: 02-21-17; Implementation: 02-21-17)
The MOON must be delivered to beneficiaries in Original Medicare (fee-for-service) and
Medicare Advantage enrollees who receive observation services as outpatients for more
than 24 hours. The hospital or CAH must provide the MOON no later than 36 hours after
observation services as an outpatient begin. This also includes beneficiaries in the
following circumstances:
• Beneficiaries who do not have Part B coverage (as noted on the MOON,
observation stays are covered under Medicare Part B).
• Beneficiaries who are subsequently admitted as an inpatient prior to the required
delivery of the MOON.
• Beneficiaries for whom Medicare is either the primary or secondary payer.
NOTES:
• For purposes of these instructions, the term “beneficiary” means either
beneficiary or representative, when a representative is acting for a beneficiary.
• Please see Chapter 13 of the Medicare Managed Care Manual for Medicare
Advantage instructions.
The statute expressly provides that the MOON be delivered to beneficiaries who receive
observation services as an outpatient for more than 24 hours. In other words, the statute
does not require hospitals to deliver the MOON to all beneficiaries receiving outpatient
services. The MOON is intended to inform beneficiaries who receive observation
services for more than 24 hours that they are outpatients receiving observation services
and not inpatients, and the reasons for such status, and must be delivered no later than 36
hours after observation services begin. However, hospitals and CAHs may deliver the
MOON to an individual receiving observation services as an outpatient before such
individual has received more than 24 hours of observation services. Allowing delivery of
the MOON before an individual has received 24 hours of observation services affords
hospitals and CAHs the flexibility to deliver the MOON consistent with any applicable
State law that requires notice to outpatients receiving observation services within 24
hours after observation services begin. The flexibility to deliver the MOON any time up
to, but no later than, 36 hours after observation services begin also allows hospitals and
CAHs to spread out the delivery of the notice and other hospital paperwork in an effort to
avoid overwhelming and confusing beneficiaries.
Hospitals Affected by these Instructions. These instructions apply to hospitals as well as
CAHs per section 1861(e) and section 1861(mm) of the Social Security Act.
400.3 - Medicare Outpatient Observation Notice
(Rev. 3698, Issued: 01-27-17, Effective: 02-21-17; Implementation: 02-21-17)
The MOON is subject to the Paperwork Reduction Act (PRA) process and approval by
the Office of Management and Budget (OMB). The MOON may only be modified as per
their accompanying instructions, as well as per guidance in this section. Unapproved
modifications cannot be made to the OMB-approved, standardized MOON. The notice
and accompanying instructions may be found online at
http://www.cms.gov/Medicare/Medicare-General-Information/BNI
400.3.1 - Alterations to the MOON
(Rev. 3698, Issued: 01-27-17, Effective: 02-21-17; Implementation: 02-21-17)
In general, the MOON must remain two pages, unless inclusion of additional information
per section 400.3.8 or State-specific information per section 400.5 below results in
additional page(s). Hospitals and CAHs subject to State law observation notice
requirements may attach an additional page to the MOON to supplement the “Additional
Information” section in order to communicate additional content required under State
law, or may attach the notice required under State law to the MOON. The pages of the
notice can be two sides of one page or one side of separate pages, but must not be
condensed to one page.
Hospitals may include their business logo and contact information on the top of the
MOON. Text may not be shifted from page 1 to page 2 to accommodate large logos,
address headers, or any other information.
400.3.2 - Completing the MOON
(Rev. 3698, Issued: 01-27-17, Effective: 02-21-17; Implementation: 02-21-17)
Hospitals must use the OMB-approved MOON (CMS-10611). Hospitals must type or
write the following information in the corresponding blanks of the MOON:
• Patient name;
• Patient number; and
• Reason patient is an outpatient.
400.3.3 - Hospital Delivery of the MOON
(Rev. 3698, Issued: 01-27-17, Effective: 02-21-17; Implementation: 02-21-17)
Hospitals and CAHs must deliver the MOON to beneficiaries in accordance with section
400.2 above. Hospitals and CAHs must provide both the standardized written MOON, as
well as oral notification.
Oral notification must consist of an explanation of the standardized written MOON. The
format of such oral notification is at the discretion of the hospital or CAH, and may
include, but is not limited to, a video format. However, a staff person must always be
available to answer questions related to the MOON, both in its written and oral delivery
formats.
The hospital or CAH must ensure that the beneficiary or representative signs and dates
the MOON to demonstrate that the beneficiary or representative received the notice and
understands its contents. Use of assistive devices may be used to obtain a signature.
Electronic issuance of the MOON is permitted. If a hospital or CAH elects to issue a
MOON viewed on an electronic screen before signing, the beneficiary must be given the
option of requesting paper issuance over electronic issuance if that is what the beneficiary
prefers. Regardless of whether a paper or electronic version is issued and regardless of
whether the signature is digitally captured or manually penned, the beneficiary must be
given a paper copy of the MOON, as specified in 400.3.9, and the required beneficiary
specific information inserted, at the time of notice delivery.
400.3.4 - Required Delivery Timeframes
(Rev. 3698, Issued: 01-27-17, Effective: 02-21-17; Implementation: 02-21-17)
The MOON must be delivered to a beneficiary who receives observation services as an
outpatient for more than 24 hours, and must be delivered not later than 36 hours after
observation services begin. The MOON must be delivered before 36 hours following
initiation of observation services if the beneficiary is transferred, discharged, or admitted.
The MOON may be delivered before a beneficiary receives 24 hours of observation
services as an outpatient.
The start time of observation services, for purposes of determining when more than 24
hours of observation services have been received, is the clock time observation services
are initiated (furnished to the patient), as documented in the patient’s medical record, in
accordance with a physician’s order. This follows the elapsed clock time, rather than the
billed time, associated with the observation services.
400.3.5 - Refusal to Sign the MOON
(Rev. 3698, Issued: 01-27-17, Effective: 02-21-17; Implementation: 02-21-17)
If the beneficiary refuses to sign the MOON, and there is no representative to sign on
behalf of the beneficiary, the notice must be signed by the staff member of the hospital or
CAH who presented the written notification. The staff member’s signature must include
the name and title of the staff member, a certification that the notification was presented,
and the date and time the notification was presented. The staff member annotates the
“Additional Information” section of the MOON to include the staff member’s signature
and certification of delivery. The date and time of refusal is considered to be the date of
notice receipt.
400.3.6 - MOON Delivery to Representatives
(Rev. 3698, Issued: 01-27-17, Effective: 02-21-17; Implementation: 02-21-17)
The MOON may be delivered to a beneficiary’s appointed representative. Appointed
representatives are individuals designated by beneficiaries to act on their behalf. A
beneficiary may designate an appointed representative via the “Appointment of
Representative” form, the CMS-1696. http://www.cms.gov/Medicare/CMS-Forms/CMS-
Forms/downloads/cms1696.pdf. See Chapter 29 of the Medicare Claims Processing
Manual, section 270.1, for more information on appointed representatives.
The MOON may also be delivered to an authorized representative. Generally, an
authorized representative is an individual who, under State or other applicable law, may
make health care decisions on a beneficiary’s behalf (e.g., the beneficiary’s legal
guardian, or someone appointed in accordance with a properly executed durable medical
power of attorney).
Notification to a beneficiary who has been deemed legally incompetent is typically made
to an authorized representative of the beneficiary. However, if a beneficiary is
temporarily incapacitated, a person (typically, a family member or close friend) whom
the hospital or CAH has determined could reasonably represent the beneficiary, but who
has not been named in any legally binding document, may be a representative for the
purpose of receiving the MOON. Such a representative should act in the beneficiary’s
best interests and in a manner that is protective of the beneficiary and the beneficiary’s
rights. Therefore, a representative should have no relevant conflict of interest with the
beneficiary.
In instances where the notice is delivered to a representative who has not been named in a
legally binding document, the hospital or CAH annotates the MOON with the name of
the staff person initiating the contact, the name of the person contacted, and the date,
time, and method (in person or telephone) of the contact.
NOTE: There is an exception to the in-person notice delivery requirement. If the
MOON must be delivered to a representative who is not physically present to receive
delivery of the notice, the hospital or CAH is not required to make an off-site delivery to
the representative. The hospital or CAH must complete the MOON as required and
telephone the representative.
• The information provided telephonically includes all contents of the MOON;
• Note the date and time the hospital or CAH communicates (or makes a good faith
attempt to communicate) this information telephonically, per 400.2 above, to the
representative is considered the receipt date of the MOON;
• Annotate the “Additional Information” section to reflect that all of the
information indicated above was communicated to the representative; and
• Annotate the “Additional Information” section with the name of the staff person
initiating the contact, the name of the representative contacted by phone, the date
and time of the telephone contact, and the telephone number called.
Mail a copy of the annotated MOON to the representative the day telephone contact is
made.
A hard copy of the MOON must be sent to the representative by certified mail, return
receipt requested, or any other delivery method that can provide signed verification of
delivery (e.g., FedEx, UPS). The burden is on the hospital or CAH to demonstrate that
timely contact was attempted with the representative and that the notice was delivered.
If the hospital or CAH and the representative both agree, the hospital or CAH may send
the notice by fax or e-mail; however, the hospital or CAH’s fax and e-mail systems must
meet the Health Insurance Portability and Accountability Act of 1996 (HIPAA) privacy
and security requirements.
400.3.7 - Ensuring Beneficiary Comprehension
(Rev. 3698, Issued: 01-27-17, Effective: 02-21-17; Implementation: 02-21-17)
The OMB-approved standardized MOON is available in English and Spanish. If the
individual receiving the notice is unable to read its written contents and/or comprehend
the required oral explanation, hospitals and CAHs must employ their usual procedures to
ensure notice comprehension. Usual procedures may include, but are not limited to, the
use of translators, interpreters, and assistive technologies. Hospitals and CAHs are
reminded that recipients of Federal financial assistance have an independent obligation to
provide language assistance services to individuals with limited English proficiency
(LEP) consistent with section 1557 of the Affordable Care Act and Title VI of the Civil
Rights Act of 1964. In addition, recipients of Federal financial assistance have an
independent obligation to provide auxiliary aids and services to individuals with
disabilities free of charge, consistent with section 1557 of the Affordable Care Act and
section 504 of the Rehabilitation Act of 1973.
400.3.8 - Completing the Additional Information Field of the MOON
(Rev. 3698, Issued: 01-27-17, Effective: 02-21-17; Implementation: 02-21-17)
This section may be populated with any additional information a hospital wishes to
convey to a beneficiary.
Such information may include, but is not limited to:
• Contact information for specific hospital departments or staff members.
• Additional content required under applicable State law related to notice of
observation services.
• Part A cost-sharing responsibilities if a beneficiary is admitted as an inpatient
before 36 hours following initiation of observation services.
• The date and time of the inpatient admission if a patient is admitted as an
inpatient prior to delivery of the MOON.
• Medicare Accountable Care Organization information.
• Hospital waivers of the beneficiary’s responsibility for the cost of self-
administered drugs.
• Any other information pertaining to the unique circumstances regarding the
particular beneficiary.
If a hospital or CAH wishes to add information that cannot be fully included in the
“Additional Information” section, an additional page may be attached to supplement the
MOON.
400.3.9 - Notice Retention for the MOON
(Rev. 3698, Issued: 01-27-17, Effective: 02-21-17; Implementation: 02-21-17)
The hospital or CAH must retain the original signed MOON in the beneficiary’s medical
record. The beneficiary receives a paper copy of the MOON that includes all of the
required information described in section 400.3.2 and, as applicable, sections 400.3.5,
400.3.6 and 400.3.8. Electronic notice retention is permitted.
400.4 - Intersection with State Observation Notices
(Rev. 3698, Issued: 01-27-17, Effective: 02-21-17; Implementation: 02-21-17)
As noted in sections 400.3.1 and 400.3.8 above, hospitals and CAHs in States that have
State-specific observation notice requirements may add State-required information to the
“Additional Information” field, attach an additional page, or attach the notice required
under State law to the MOON.
500 - Glossary
(Rev.: 4197; Issued: 01-11-19; Effective: 04-15-19; Implementation: 04-15-19)
The following terms are defined only for purposes of this Chapter 30 of the Medicare
Claims Processing Manual.
Advance written notice of non-coverage (hereinafter referred to as “written notice”) –
42 CFR 418.408(d)(2) states that if Medicare would be likely to deny payment as not
medically reasonable and necessary, before the service was provided, the physician
informed the beneficiary, or someone acting on the beneficiary's behalf, in writing that
the physician believed Medicare was likely to deny payment for the specific service and
that the beneficiary signed a statement agreeing to pay for that service. This statement
may appear as the written notice of non-coverage ((e.g. Advance Beneficiary Notice of
Non-coverage (ABN), Form CMS-R-131, Skilled Nursing Facility Advanced Beneficiary
Notice of Non-Coverage (SNF ABN), Form CMS-10055, Home Health Change of Care
Notice (HHCCN), Form CMS-10280), as defined in 42 CFR 411.404.
Advance Beneficiary Notice of Non-coverage (ABN, Form CMS-R-131) - Issued by
healthcare providers and suppliers to Original Medicare (fee for service) beneficiaries in
situations where Medicare payment is expected to be denied.
Authorized representative – An individual authorized under State or other applicable
law, e.g., a legally appointed representative or guardian of the beneficiary (if, for
example, the beneficiary has been legally declared incompetent by a court) to act on
behalf of a beneficiary when the beneficiary is temporarily or permanently unable to act
for himself or herself. The authorized representative will have all of the rights and
responsibilities of a beneficiary or party, as applicable. In states which have health care
consent statutes providing for health care decision making by surrogates on behalf of
patients who lack advance directives and guardians, reliance upon individuals appointed
or designated under such statutes to act as authorized representatives is permissible. The
Appointment of Representative, Form CMS-1696 is available for the convenience of the
beneficiary or any other individual to use when appointing a representative.
For purposes of this chapter, when the term beneficiary is used, for legal purposes, and the
beneficiary has an authorized representative, the use of either beneficiary or authorized
representative are exchangeable of each other, unless otherwise indicated.
Beneficiary
–
Individual who is enrolled to receive benefits under Medicare Part A
and/or Part B.
Detailed Explanation of Non-Coverage (DENC, Form CMS-10124) – Medicare Fee-For-
Service (FFS) Expedited Determination Notice given only if a beneficiary requests an
expedited determination. The DENC explains the specific reasons for the end of services.
Detailed Notice of Discharge (DND, Form CMS-10066) – Hospital Discharge Appeal
Notice given to beneficiaries who choose to appeal a discharge decision from the hospital
or their Medicare Advantage plan, if applicable.
Financial Liability Protections (FLP) Provisions – The FLP provisions of the Social
Security Act protect beneficiaries, healthcare providers, and suppliers under certain
circumstances from unexpected liability for charges associated with claims that Medicare
does not pay. The FLP provisions apply after an item or service’s coverage determination
is made.
Healthcare provider
–
Healthcare provider means a “provider of services” (or provider)
(as defined under Section 1861(u) of the Social Security Act), a hospital, a critical access
hospital (CAH), a skilled nursing facility (SNF), a comprehensive outpatient
rehabilitation facility, a home health agency, or a hospice that has in effect an agreement
to participate in Medicare, or a clinic, a rehabilitation agency, or a public health agency
that has in effect a similar agreement but only to furnish outpatient physical therapy or
speech pathology services, or a community mental health center that has in effect a
similar agreement but only to furnish partial hospitalization services).
Home Health Change of Care Notice (HHCCN, Form CMS-10280) - Used by Home
Health Agencies (HHAs) to notify Original Medicare beneficiaries receiving home
health care benefits of plan of care changes. HHAs are required to provide written
notification to beneficiaries before reducing or terminating an item and/or service.
Hospital-Issued Notices of Non-coverage (HINNs) - Hospitals provide to beneficiaries
prior to admission, at admission, or at any point during an inpatient stay if the hospital
determines that the care the beneficiary is receiving, or is about to receive, is not
covered by Medicare.
Important Message from Medicare (IM, Form CMS-R-193) – Hospital Discharge
Appeal Notice delivered to all Medicare beneficiaries (Original Medicare beneficiaries
and Medicare Advantage plan enrollees) who are hospital inpatients. The IM informs
hospitalized inpatient beneficiaries of their hospital discharge appeal rights.
Limitation on Liability (LOL) Provision
–
The LOL provisions, §1879(a)-(g) of the Social
Security Act, fall under the FLP provisions and provide financial relief and protection to
beneficiaries, healthcare providers, and suppliers by permitting Medicare payment to be
made, or requiring refunds to be made, for certain items and/or services for which
Medicare payment would otherwise be denied.
Limitation on Recoupment
–
The requirement that (in certain cases) Medicare must
cease or delay recovery of an overpayment when a valid first or second level appeal
request is received from a provider on an overpayment, in accordance with Section 1893
of the Social Security Act. For more information see 100-06 Medicare Financial
Management Manual, Chapter 3, Overpayments.
Medicare Contractor - An entity that contracts with the Federal government to review
and/or adjudicate claims, determinations and/or decisions.
Medicare Outpatient Observation Notice (MOON, Form CMS-10611) - A standardized
notice to inform Medicare beneficiaries (including health plan enrollees) that they are
outpatients receiving observation services and are not inpatients of a hospital or CAH.
Notice of Medicare Non-Coverage (NOMNC, Form CMS-10123) - FFS Expedited
Determination Notices that informs beneficiaries on how to request an expedited
determination from their Quality Improvement Organization (QIO) and gives
beneficiaries the opportunity to request an expedited determination from a QIO.
Overpayment Recovery Waiver
–
An allowance providing that beneficiaries, healthcare
providers, and suppliers can keep Medicare overpayments (in certain circumstances) if
they are determined to be “without fault” for causing the overpayment, in accordance
with Section 1870 of the Social Security Act. For more information see 100-06 Medicare
Financial Management Manual, Chapter 3, Overpayments.
Refund Requirements (RR) for Non-assigned Claims for Physicians Services - Under
§9332(c) of OBRA 1986 (P.L. 99-509), which added §1842(l) to the Social Security Act,
new liability protections for Medicare beneficiaries affect nonparticipating physicians.
Refund Requirements (RR) for Assigned and Non-assigned Claims for Medical
Equipment and Supplies – Under §132 of SSAA-1994 (Social Security Act Amendments of
1994, P.L. 103-432) which adds §1834(a)(18) to the Social Security Act, and under §133 of
SSAA-1994 which adds §1834(j)(4) and §1879(h) to the Social Security Act, new liability
protections for Medicare beneficiaries affect suppliers of medical equipment and supplies.
All suppliers who sell or rent medical equipment and supplies to Medicare beneficiaries are
subject to the refund provisions of §§1834(a)(18), 1834(j)(4) and 1879(h) of the Social
Security Act.
Skilled Nursing Facility Notice of Non-coverage (SNF ABN, Form CMS-10055) –
Issued in order for a Skilled Nursing Facility (SNF) to transfer financial liability to an
Original Medicare beneficiary for items or services that Medicare is expected to deny
payment (entirely or in part).
Supplier – Unless the context otherwise requires, a physician or other practitioner, a
facility, or entity (other than a provider of services) that furnishes health services covered
by Medicare.
Transmittals Issued for this Chapter
Rev # Issue Date
Subject Impl Date CR#
R4197CP
01/11/2019
Chapter 30 Revisions in Publication (Pub.)
100-04, Medicare Claims Processing
Manual
04/15/2019
10848
R4250CP
03/08/2019
Update to Chapter 30 in Publication (Pub.)
100-04 to Provide Language-Only Changes
for the New Medicare Card Project
04/08/2019
11165
R4198CP
01/11/2019
Skilled Nursing Facility Advance
Beneficiary Notice of Non-Coverage (SNF
ABN)
04/30/2018
10567
R4001CP
03/16/2018
Internet Only Manual Updates to Pub. 100-
01, 100-02 and 100-04 to Correct Errors and
Omissions (SNF) (2018)
06/19/2018
10512
R4011CP
03/30/2018
Skilled Nursing Facility Advance
Beneficiary Notice of Non-Coverage (SNF
ABN)- Rescinded and replaced by
Transmittal 4198
04/30/2018
10567
R3698CP
01/27/2017
Medicare Outpatient Observation Notice
(MOON) Instructions
02/21/2017
9935
R3695CP
01/20/2017
Medicare Outpatient Observation Notice
(MOON) Instructions – Rescinded and
replaced by Transmittal 3698
02/10/2017
9935
R3560CP
07/15/2016
Correction of Remark Code Information 10/17/2016
9641
R3187CP
02/06/2015
Language Only Update to Pub 100-04,
Chapter 30 for ASC X12 and Claim
References
03/06/2015
8992
R2911CP
03/14/2014
Manual Updates to Clarify Skilled Nursing
Facility Advanced Beneficiary Notice (SNF
ABN) Requirements Pursuant to Jimmo vs.
Sebelius
03/25/2014
8644
Rev # Issue Date
Subject Impl Date CR#
R2878CP
02/21/2014
Correction CR - Advance Beneficiary
Notice of Noncoverage (ABN), Form CMS-
R-131
05/15/2014
8597
R2782CP
09/06/2013
Advance Beneficiary Notice of Noncoverage
(ABN), Form CMS-R-131
12/09/2013
8404
R2781CP
09/06/2013
Home Health Change of Care Notice
(HHCCN), Form CMS-10280, Manual
Instructions. This CR rescinds and fully
replaces CR 7323.
12/09/2013
8403
R2711CP
05/24/2013
Expedited Determinations for Provider
Service Terminations
08/26/2013
7903
R2480CP
06/01/2012
Advanced Beneficiary Notice of
Noncoverage (ABN), Form CMS-R-131,
Updated Manual Instructions
09/04/2012
7821
R2362CP
12/01/2011
Home Health Advance Beneficiary Notice,
(HHABN), Form CMS-R-296
02/03/2012
7323
R1983CP
06/11/2010
Clarification on Use of the SNF ABN and
Denial Letters
07/12/2010
6987
R1587CP
09/05/2008
Revised Form CMS-R-131 Advance
Beneficiary Notice of Noncoverage
03/01/2009
6136
R1257CP
05/25/2007
Important Message From Medicare (IM) and
Expedited Determination Procedures for
Hospital Discharges
07/02/2007
5622
R1186CP
02/23/2007
Changes to Chapter 30 -
Updates to Amount
in Controversy Requirement and Correction
of Appeals Terminology
05/23/2007
5348
R1035CP
08/18/2006
Updating Publication 100-04, Chapter 30
Regarding the CD ROM Initiative for the
Annual "Dear Doctor" Mailing
09/18/2006
5214
Rev # Issue Date
Subject Impl Date CR#
R1025CP
08/11/2006
Revised Home Health Advance Beneficiary
Notice
09/01/2006
5009
R994CP 06/30/2006
Special Issues Associated with the Advance
Beneficiary Notice (ABN) for Hospice
Providers and Comprehensive Outpatient
Rehabilitation Facilities (CORFs)
09/29/2006
5117
R594CP 06/24/2005
Preliminary Instructions: Expedited
Determinations/ Reviews for Original
Medicare
07/01/2005
3903
R577CP 06/03/2005
Preliminary Instructions: Expedited
Determinations/Reviews for Original
Medicare
07/01/2005
3903
R001CP 11/01/2003
Initial Publication of Manual NA NA
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