CMS Pub. 100-04, ch. 30, § 150.15

Refund Has Been Made

(Rev. 1587, Issued: 09-05-08, Effective: 03-03-08, Implementation: 03-01-09)

If the contractor denies Part B payment for an item of medical equipment or supplies on

the basis of §1862(a)(1), §1834(a)(17)(B), §1834(j)(1), or §1834(a)(15) of the Act, and

the beneficiary is relieved of liability for payment for that item under §1834(a)(18) of the

Act, the effect of the denial, subject to State law, cancels the contract for the sale or rental

of the item and, if the item is resaleable or re-rentable, permits the supplier to repossess

that item for resale or re-rental. In the case of consumable items or any other items which

are not fit for resale or re-rental and which cannot be made fit for resale or re-rental,

suppliers are strongly discouraged from recovering these items since such actions

reasonably could be viewed as purely punitive in nature. If a supplier makes proper

refund under §1834(a)(18) of the Act, Medicare rules do not prohibit the supplier from

recovering from the beneficiary items which are resalable or re-rentable.

Alternatively, when the contract of sale or rental is cancelled on the basis described

above, whether or not the supplier physically repossesses the resaleable or re-rentable

item, the supplier may enter into a new sale or rental transaction with the beneficiary with

respect to that item as long as the beneficiary has been informed of their liability. If the

circumstances which preclude payment for the item have been removed, e.g., the supplier

has now obtained a supplier number, the supplier may submit to the contractor a new Part

B claim based on the resale or re-rental of the item to the beneficiary. If Part B payment

is still precluded, the supplier can establish the beneficiary’s liability for payment for the

denied resold or re-rented item by giving the beneficiary an ABN notifying the

beneficiary of the likelihood that Medicare will not pay for the item and obtaining the

beneficiary’s signed agreement to pay for the item. The resale or re-rental of the item to

the beneficiary does not change the fact that the beneficiary is relieved of liability in

connection with the original transaction.

Under the capped-rental method, if the contractor determines that the supplier is

obligated to make a refund, the supplier must repay Medicare those rental payments that

the supplier has received for the item. However, the Medicare beneficiary must return

the item to the supplier.