CMS Pub. 100-04, ch. 30, § 110.4

Where payment is made under the limitation on liability provision, because it was

determined that both the provider, practitioner, or supplier and the beneficiary did not

know and could not have been expected to know that services were not reasonable and

necessary, the usual deductible and coinsurance amounts apply.

When payment under limitation on liability is made for noncovered services, the

contractor processes the bill in the same manner as any payment bill for covered services.

For institutional services, if both the beneficiary and the provider have liability waived,

the A/B MAC (A) charges the number of days or visits paid for under the limitation on

liability provision to the beneficiary’s utilization record. For noninstitutional services, it

applies deductible and coinsurance, and, where applicable, statutory limits on services.

For situations where the contractor determines that the provider, practitioner, or supplier

knew or should have known that the services were not reasonable and necessary, and the

beneficiary did not know and could not have been expected to know that the services

were not reasonable and necessary, the beneficiary qualifies for indemnification and is

not responsible for paying deductible and coinsurance charges related to the denied

claim. Additionally, where such indemnification is made, the contractor does not charge

the beneficiary’s Medicare utilization record days, visits, deductibles, or coinsurance (nor

does it apply statutory limits, e.g., the psychiatric services Limit) for the denied items and

services furnished.

The contractor follows the no-payment procedures in the relevant bill processing

instructions in the following cases:

• Either the beneficiary or the provider/practitioner/supplier, or both knew or

should have known that services were not covered.

• The provider, practitioner, or supplier knew or should have known that the

services were not covered even though the beneficiary did not know. In these

cases, the notice to the beneficiary will have informed the beneficiary that, even

though no Medicare payment is being made, the beneficiary is not liable for the

cost of the services and that the beneficiary may be indemnified for any improper

payments the beneficiary made to the provider, practitioner, or supplier.

Where no Medicare payment is made because limitation on liability does not apply, or

where payment ceases because of notice in a noncovered case, the normal provisions for

no-payment situations apply.

For ancillary and outpatient services billed by institutional providers, the provider follows

the instructions in Chapter 4 for hospitals, Chapter 7 for SNFs, and Chapter 10 for HHAs

to process bills for these types of claims. Further, where ancillary services may not be

paid under Part A because they were rendered in connection with a noncovered inpatient

stay, the provider may still bill under Part B for ancillary services that may be covered

under §1861(s)(3)-(9) of the Act.