CMS Pub. 100-04, ch. 1, § 60.1.3.1

Originally with the creation of the ability of outpatient institutional providers to submit

non-covered charges, only two types of fully non-covered claims were permitted: (1) No

payment claims using condition code 21, or (2) Demand bills (see 60.3 below in this

chapter).

However, based on input from both Medicare contractors and providers, CMS recognized

the need for entirely non-covered claims that were provider-liable. This meant a new

billing method was necessary, as no payment claims with condition code 21 are never

provider liable, and liability on demand bills cannot be assured until after

review/adjudication by Medicare. A primary example of this need is a case in which a

provider has failed to provide an ABN when required under payment condition 2, and

chooses to accept all liability for services billed as non-covered.

Therefore, entirely non-covered outpatient claims are also allowed when billed with all

non-covered charges, as long as either:

(1) There are no indicators of liability on the claim at the claim or line level

preventing the shared system from defaulting to hold providers liable on all

denied line items; or

(2) All indicators at the claim or line level show provider, not beneficiary, liability.

An example of such an indicator is the -GZ modifier, which is often used in the case

where a provider fails to give an ABN. In both cases, these line items, all submitted as

non-covered, will be denied as provider liable.