(Medicare Claims Processing Manual)

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 item s 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 servic es. 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 beneficiar y 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 revi ewing 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 contractors attention as a result of a beneficiary complaint or a referral from the Social Security Administration (SSA) or the CMS. Document beneficiary complaints and, i f 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 contract or 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 l aw 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 rela yed to the supplier and the suppliers 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 suppliers 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 appropr iate) the following:  Background of the Subject   The subjects business name, address, Medicare beneficiary identifier, owners full name and Social Security Number, Tax Identification Number (if different), and a brief description of the subjects 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 suppliers 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 ca se based upon a failure to make refunds.   150.15 - Suppliers 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 benef iciary 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 beneficiarys 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 beneficiarys signed agreement to pay for the item.  The resale or re -rental of the item to the beneficiary does not change the fac t 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  Determinations of Inpatient Hospital Discharges        (Rev. 11210; Issued: 01- 21-2022; Effective: 04- 21-2022; Implementation: 04- 21-2022)   Medicare beneficiaries who are hospital inpatients have a statutory right to appeal to a BFCC- QIO for an expedited review when a hospital, with physician concurrence, determines that inpatient care is no longer necessary.   200.1 - Statutory Authority  (Rev. 11210; Issued: 01- 21-2022; Effective: 04 -21-2022; Implementation: 04- 21-2022)    Sections 1866(a)(1)(M),    1869(c)(3)(C)(iii)(III), and    1154(e) of the Act.