CMS Pub. 100-08, ch. 4, § 4.16.3

Necessary Factors for Protected Discounts

(Rev. 11032; Issued: 09-30-21; Effective: 10-12-21; Implementation: 11-10-21)

This section applies to UPICs and MACs.

For a discount program to be protected for Part B billing, certain factors must exist.

These factors ensure that the benefit of the discount or other reduction in price is

reported and passed on to the Medicare or Medicaid programs. A rebate rendered after

the time of sale is not protected under any circumstances. The discount must be made at

the time of sale of the good or service. In other words, rebates are not permitted for

items or services if payable on the basis of charges. The discount must be offered for the

same item or service that is being purchased or furnished. The discount must be clearly

and accurately reported on the claim form.

The following types of discounts may be protected if they comply with all of the

applicable standards in the discount safe harbor:

Credit or coupon directly redeemable from the seller The following types of

discounts are not protected:

• Rebates offered to beneficiaries

• Cash payment

• Furnishing an item or service free of charge or at a reduced charge in

exchange for any agreement to buy a different item or service

• Reduction in price applicable to one payer but not to Medicare or a

State health care program

• Routine reduction or waiver of any coinsurance or deductible amount

owed by a program beneficiary

NOTE: There is a separate safe harbor for routine waiver of co-payments for inpatient

hospital services. (Refer to 42 CFR §1001.952(k)(1).)