of the Act Determination- Limitation of Liability - (Rev. 3,

14.1 - Section 1879 of the Act Determination- Limitation of Liability - (Rev. 3, 11-22-00) Section 1879 provides relief for a beneficiary who acted in good faith in accepting services found to be not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member, or to constitute custodial care. The provision also applies to denials of home health services beginning July 1, 1987 and ending September 30, 1989, where the beneficiary is not homebound or does not or did not need skilled nursing care on an intermittent basis. The provision applies to all carrier determinations on all assigned claims when claims are denied (prepay or postpay) under §1862(a)(1) of the Act. Contractors must make an individualized determination for each claim that is denied as not reasonable and necessary. A §1879 determination regarding knowledge is part of the framework for determining whether an actual or potential overpayment exists. If a contractor determines that program payment was proper because neither the beneficiary nor the provider knew or should have known that the service was not reasonable and necessary, no overpayment exists. However, if the contractor determines that either the beneficiary or the provider knew or should have known that a service was not medically reasonable and necessary, an overpayment exists. Contractors must consider waiver of recovery of the overpayment under §1870 of the Act. A. Documentation of §1879 of the Act Determination The contractor must document the basis for the determination (i.e., rationale), including appropriate references to contractor newsletters, prior denials, sponsored meetings attended by the provider, etc., where applicable. Any correspondence going to the beneficiary/provider (i.e., demand letters) should include all §1879 determinations as to knowledge of noncoverage, both favorable and unfavorable. Document the §1879 determination in the CMR summary report. B. Section 1879 of the Act Determinations and Overpayments An overpayment would be $0 (zero) for postpayment denials for assigned claims and claims submitted to an intermediary from a participating provider because a determination was made that neither the beneficiary nor the provider knew or should have known the services were not covered. Program payment was appropriate. However, if the beneficiary is found to be liable under §1879 of the Act, an overpayment to the beneficiary exists and the contractor must make an §1870 determination.