(Medicare Claims Processing Manual)

 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 physicians 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 physicians advance notice and the beneficiarys 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 contractors 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 wri ting 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 beneficiarys right to appeal the contractors decision to deny or reduce payment on the bas is 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 i n 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 physicians 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 submit ted an ABN. The fact that there is an acceptable ABN must in no way prejudice the contractors 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 contr actor 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 cl aim 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 doctors 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 doctors 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 patients 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 beneficiarys 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 l aw 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 notifi ed 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 p atient 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 progra m.  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 patients name, Medicare beneficiary identifier, a description of th e 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 c ollected 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).