When to Make Limitation on Liability Decisions

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.)