Examples of Situations in Which Provider, Physician, or Other Supplier

90.1 - Examples of Situations in Which Provider, Physician, or Other Supplier Is Liable (Rev. 13825; Issued: 06-11-26; Effective:07-13-26; Implementation: 07-13-26) In accordance with §90 above, the following are examples of situations in which the provider, physician, or other supplier is liable for an overpayment it received. A. The Provider, Physician, or Other Supplier Furnished Erroneous Information or Failed to Disclose Facts That It Knew or Should Have Known, Were Relevant to Payment of the Benefit. This includes, among others, situations in which a provider, physician, or other supplier failed to report any additional payments he may have received from the beneficiary and situations in which a provider, physician, or other supplier failed to request applicable information from the beneficiary including, but not limited to, information needed by the Contractor to identify cases in which Medicare may be secondary payer, or if it did request such information, it failed to annotate the billing form. Providers, physicians, or other suppliers are instructed to ask beneficiaries for, and to annotate the claims form with, information needed to help the Contractor identify cases in which Medicare may be secondary payer, e.g., information about the circumstances of the illness or injury and the availability of benefits under an insurance policy or plan. (See Medicare Claims Processing, Chapter 28, Coordination With Medigap, Medicaid and Other Complementary Insurers). EXAMPLE: A provider, physician, or other supplier submitted an assigned claim showing total fees of $600. The provider, physician, or other supplier did not indicate on the CMS-1500 that any portion of the bill had been paid. After the deductible and coinsurance, the Contractor determined the amount owed to the provider, physician, or other supplier was $480 on the assumption that the provider, physician, or other supplier received no other payment. The Contractor later learned the beneficiary paid the provider, physician, or other supplier $200 before the provider, physician, or other supplier submitted the claim. Thus, the payment should have been split, i.e., $400 should have been paid to the provider, physician, or other supplier and $80 to the beneficiary. The provider, physician, or other supplier was at fault in causing the $80 overpayment since s/he failed to inform the Contractor of the amount s/he received from the beneficiary. B. Provider, Physician, or Other Supplier Receives Duplicate Payments. This includes the following situations: • Provider, physician, or other supplier is overpaid when the Contractor processed the claim more than once. If an overpayment to a provider, physician, or other supplier is caused by multiple processing of the same charge (e.g., through overlapping or duplicate bills), the provider, physician, or other supplier does not have a reasonable basis for assuming that the total payment received was correct and thus should have questioned it. The provider, physician, or other supplier is, therefore, at fault and liable for the overpayment. • Provider, physician, or other supplier received payment from Medicare based on an assignment and the beneficiary received payment on an itemized bill and turned the payment over to the provider, physician, or other supplier. • The provider, physician, or other supplier is liable for only the portion of the total amount paid in excess of the provider’s, physicians, or other supplier’s portion of the allowable amount. • The beneficiary is liable for the balance of the overpayment. However, if the beneficiary paid any portion of the coinsurance to the provider, physician, or other supplier, the provider, physician, or other supplier is also liable for that amount. If the provider, physician, or other supplier protests recovery of the overpayment on the grounds that the provider, physician, or other supplier applied all or part of the check received from the beneficiary to amounts the beneficiary owed the provider, physician, or other supplier for other services, the beneficiary, rather than the provider, physician, or other supplier, is liable for refunding such amounts. EXAMPLE: Dr. A and Mr. B each received duplicate payments of $300 based on reasonable charges of $375. Mr. B turned his $300 over to Dr. A. Thus, Dr. A received a total of $600. Mr. B did not owe money to Dr. A for other services. Dr. A is liable for $225, which is the amount he received in excess of the reasonable charge. Mr. B is liable for the remaining $75 of the duplicate payment. If Mr. B had previously paid Dr. A the $75 coinsurance, Dr. A is liable for the entire $300 overpayment. • Provider, physician, or other supplier receives duplicate payments from Medicare and another insurer or plan (directly or through the beneficiary) which is the primary payer, i.e., an automobile medical or no-fault insurer, a liability insurer, a WC insurer, or, under certain circumstances, an EGHP. (See Medicare Claims Processing Manual, Chapter 28, Coordination with Medigap, Medicaid, and Other Complementary Insurers). • The provider, physician, or other supplier is liable for the portion of the Medicare payment in excess of the amount Medicare is obligated to pay as secondary payer. (See Medicare Claims Processing Manual, Chapter 28, Coordination with Medigap, Medicaid, and Other Complementary Insurers and/or Medicare Secondary Payer Manual). However, if the provider, physician, or other supplier turns the other insurance payment over to the beneficiary, the beneficiary is liable. C. The Overpayment Resulted Through Misapplication of the Deductible or Coinsurance Requirement or Payment After Exhaustion of Benefits and the Provider, Physician, or Other Supplier Could Have Known from Its Own Records the Beneficiary's Utilization Status Part A provider, physician, or other supplier is considered liable if it received a remittance record within the 60 days preceding billing indicating deductible and benefit status. This condition is considered met where, within the 60-day period preceding the admission that gave rise to the overpayment, the beneficiary had been a patient in the same institution, or the provider, physician, or other supplier could have known the beneficiary's utilization status from its own records. The provider, physician, or other supplier is expected to ask the beneficiary, or the person acting on the beneficiary’s behalf, at the time of admission if the beneficiary received inpatient services in a hospital or SNF within the past 60 days and note the response on its records. EXAMPLE: John Doe entered University Hospital on January 10, 2024. After using all of his benefit days, including lifetime reserve days, he returned home, but reentered the same hospital in fewer than 60 days and stayed an additional 30 days. University Hospital neglected to check its records and billed the Contractor for 30 days of inpatient hospital care. The Contractor made payment. Subsequently, the overpayment was discovered. Since the hospital should have known from its own records that Mr. Doe had exhausted his benefit days, the Contractor shall seek recovery from the hospital. If the previous stay had been in a different hospital, or if more than 60 days had elapsed between the end of the first stay and the start of the second stay but the benefit period had remained unbroken because John had been in an SNF or a different hospital, the Contractor would consider University Hospital "without fault." In this latter situation, the hospital would not have been able to ascertain from its own records that benefit days had been exhausted. The Contractor would seek recovery from the beneficiary. D. The Overpayment Was Due to a Mathematical or Clerical Error. Examples: • Error in calculation by the Contractor in calculating reimbursement. • Error by the provider, physician, or other supplier in calculating charges, or • Overlapping or duplicate bills. Mathematical error does not include a failure to properly assess the coinsurance and/or deductible. The Contractor would determine the liability for coinsurance and deductible overpayments in accordance with D. above. Where payment to a provider, physician, or other supplier was based on a deductible amount, the provider, physician, or other supplier is without fault. Seek recovery from the beneficiary. E. The Provider, Physician, or Other Supplier Does Not Submit Documentation to Substantiate That Services Billed to the Program Were Covered. F. The Provider, Physician, or Other Supplier Does Not Submit Documentation to Substantiate That It Performed the Services Billed to the Program Where There Is a Question as to Whether the Services Were Performed. (See the Program Integrity Manual, which can be found at the following Internet address: https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-Only-Manuals-IOMs.html if fraud is suspected.) G. The Beneficiary Was Not Entitled to Part A Benefits and the Provider, Physician, or Other Supplier Had Reason to Believe That the Beneficiary Was Not Entitled to Such Benefits. For example, the Medicare Office verified to the the hospital that the individual was not entitled to hospital insurance benefits. H. The Provider, Physician, or Other Supplier Billed, or Medicare Paid the Provider, Physician, or Other Supplier for Services that the Provider, Physician, or Other Supplier Should Have Known Were Noncovered. 1. Services that were not Medically Unnecessary or Custodial Services, e.g., skilled physical therapy services furnished by a nonqualified physical therapist, or services rendered pursuant to an authorization from the VA. (See the Medicare Benefit Policy, Chapter 16, Exclusions In general, the provider, physician, or other supplier should have known about a policy or rule, if: • The policy or rule is in the provider, physician, or other supplier manual or in Federal regulations. • Contractors provided general notice to the medical community concerning the policy or rule. • The Contractor gave written notice of the policy or rule to the particular provider. • CMS, a CMS Contractor, or the OIG gave written notice of the policy or rule to the particular provider, physician, or other supplier. • The provider, physician, or other supplier was previously investigated or audited as a result of not following the policy or rule. • The provider, physician, or other supplier previously agreed to a Medicare enrollment Agreement as a result of not following the policy or rule. • The provider, physician, or other supplier was previously informed that its claims had been reviewed/denied as a result of the claims not meeting certain Medicare requirements, which are related to the policy or rule; or • The provider, physician, or other supplier previously received documented training/outreach from CMS or one of its Contractors, related to the same policy or rule. Generally, a provider, physician, or other suppliers’ allegation that it was not at fault with respect to payment for noncovered services because it was not aware of the Medicare coverage provisions is not a basis for finding it without fault if any of the above conditions is met. However, there may be other circumstances that justify a finding that the provider, physician, or other supplier was not at fault. The Contractor shall consider all the circumstances, including such factors as whether and to what extent a coverage rule is spelled out in regulations, instructions, or in a CMS notice, and whether a Contractor misinformed the provider, physician, or other supplier about the rule; in deciding whether a provider, physician, or other supplier acted reasonably in billing for and accepting payment for noncovered services. 2. Medically Unnecessary or Custodial Services. The Contractor shall apply the criteria in the Medicare Claims Processing Manual, Chapter 30, Financial Liability Protections in determining whether the provider, physician, or other supplier should have known that the services were not covered. I. For Part A, the overpayment resulted from payment for services rendered in a nonparticipating portion of the facility that is not certified for Medicare or for services to a beneficiary in a bed that Medicare certified for a type of care other than what the provider furnished. J. For Part B, the overpayment resulted with a payment to a physician on claim/s which did not accept the assignment. Since, the physician was paid but did not accept assignment, the physician is liable whether the beneficiary had also been paid. K. Overpayment was for rental of durable medical equipment and the supplier billed under the one-time authorization procedure. Pursuant to Medicare Claims Processing, Chapter 20, suppliers of durable medical equipment who have accepted assignment may be reimbursed for rental items based on a one-time authorization by the beneficiary, i.e., without the need to obtain the beneficiary’s signature each month. A supplier using the procedure must have filed with the Contractor, a statement that it assumes unconditional responsibility for rental overpayments for periods after the beneficiary's death or while s/he was institutionalized or while s/he no longer needed or used the equipment. L Items or Services Were Furnished by Practitioner or Supplier not Qualified for Medicare Reimbursement Two examples of such services are: • A laboratory test performed by a nonqualified independent laboratory, or • Services rendered by a naturopath.