CMS Pub. 100-02, ch. 15, § 40.12

If the Medicare contractor becomes aware that the physician/practitioner has failed to maintain opt-out as

indicated in §40.11, it must send the physician/practitioner a letter advising the physician/practitioner that it

has received a claim and believes that the physician/ practitioner may have inadvertently failed to maintain

opt-out. It must describe the situation in §40.11 that it believes exists and its basis for its belief. It must ask

the physician or practitioner to provide it with an explanation of what happened and how, within 45 days,

the physician or practitioner will resolve it. (See Pub. 100-04, Medicare Claims Processing Manual, Chapter

1, “General Billing Requirements,” §70.6).

If the Medicare contractor received a claim from the opt-out physician/practitioner, it must ask the

physician/practitioner if the received claim was: (a) an emergency or urgent situation, with missing

documentation, or (b) filed in error. When the reason for the letter is that the physician/practitioner filed a

claim that the physician/practitioner did not identify as an emergency or urgent care service, the Medicare

contractor must request that the physician/practitioner submit the following information with the

physician’s/practitioner’s response:

• Emergency/urgent care documentation if the claim was for a service furnished in an emergency or

urgent situation but included no documentation to that effect; and/or

• If the claim was filed in error, the Medicare contractor must ask the physician/practitioner to explain

whether the filing was an isolated incident or a systematic problem affecting a number of claims.

In the case of any potential failure to maintain opt-out (including but not limited to improper submission of a

claim), the Medicare contractor must explain in its request to the physician or practitioner that it would like

to resolve this matter as soon as possible. It must instruct the physician/practitioner to provide the

information it requested within 45 days of the date of its development letter. It must provide the physician

or practitioner with the name and telephone number of a contact person in case they have any questions.

If the violation was due to a systems problem, the Medicare contractor must ask the physician or practitioner

to include with his or her response an explanation of the actions being taken to correct the problem and

when the physician or practitioner expects the system error to be fixed. If the violation persists beyond the

time period indicated in the physician’s or practitioner’s response, the Medicare contractor must contact the

physician or practitioner again to ascertain why the problem still exists and when the physician or

practitioner expects to have it corrected. It must repeat this process until the system problem is corrected.

Also, in the Medicare contractor’s development request, it must advise the physician or practitioner that if

no response is received by the due date, the Medicare contractor will assume that there has been no

correction of the failure to maintain opt-out and that this could result in a determination that the

physician/practitioner is once again subject to Medicare rules.

In the case of wrongly filed claims, the Medicare contractor must hold the claim and any others it receives

from the physician or practitioner in suspense until it hears from the physician or practitioner or the response

date lapses. In this case, if the physician or practitioner responds that the claim was filed in error, the

Medicare contractor must continue processing the claim, deny the claim, and send the physician or

practitioner the appropriate Remittance Advice and send the beneficiary a Medicare Summary Notice

(MSN) with the appropriate language explaining that the claim was submitted erroneously and the

beneficiary is responsible for the physician’s or practitioner’s charge. In other words, the limiting charge

provision does not apply and the beneficiary is responsible for all charges. This process will apply to all

claims until the physician or practitioner is able to get the problem fixed.

If the Medicare contractor does not receive a response from the physician or practitioner by the development

letter due date or if it is determined that the opt-out physician or practitioner knowingly and willfully failed

to maintain opt-out, it must notify the physician or practitioner that the effects of failure to maintain opt-out

specified in §40.11 apply. It must formally notify the physician/practitioner of this determination and

of the rules that again apply (e.g., mandatory submission of claims, limiting charge, etc.). It must

specifically include in this letter each of the effects of failing to opt-out that are identified in §40.11.

The act of claims submission by the beneficiary for an item or service provided by a physician or

practitioner who has opted out is not a violation by the physician or practitioner and does not nullify the

contract with the beneficiary. However, if there are what the Medicare contractor considers to be a

substantial number of claims submissions by beneficiaries for items or services by an opt-out physician or

practitioner, it must investigate to ensure that contracts between the physician or practitioner and the

beneficiaries exist and that the terms of the contracts meet the Medicare statutory requirements outlined in

this instruction. If noncompliance with the opt-out affidavit is determined, it must develop claims

submission or limiting charge violation cases, as appropriate, based on its findings.

In cases in which the beneficiary files an appeal of the denial of a beneficiary-filed claim for services from

an opt-out physician or practitioner, and alleges that there was no private contract, the Medicare contractor

must ask the physician/practitioner to provide it with a copy of the private contract. Where the physician or

practitioner does not provide a copy of a private contract that meets the requirements of §40.8 and was

signed by the beneficiary before the service was furnished, the Medicare contractor must make payment to

the beneficiary and proceed as described above.