Background - News & Events (Landing) 2016

Search NewsRoom

Advanced Search >

All Alerts & Newsletters

CMS Guidance Bars Providers from Seeking Payment Over Medicare Rates from Secondary Payors

November 21, 2005

By Felicia Schweitzer & Robert Roth

Unpublicized guidance from the Centers for Medicare & Medicaid Services (“CMS”) in a September 10, 2004 memorandum clarifies CMS' policy on health care providers' ability to seek amounts in excess of Medicare specified amounts from insurers under contract with the provider that are secondary to Medicare. In a reversal of previous guidance provided by CMS staff in February 2002, CMS stated that providers who participate in the Medicare program are prohibited from billing secondary insurers for the remainder of the provider's charges up to the secondary insurer's allowable amount for items and services for which the beneficiary is entitled to have Medicare make primary payment, regardless of the terms of the provider's contract with the secondary insurer.

In its previous February 2002 guidance, CMS staff drew a distinction between physicians and other Medicare “suppliers” – who may not charge secondary payors amounts in excess of those specified by Medicare – and hospitals and others defined as “providers” under the Medicare law, who, CMS staff previously opined, were permitted to seek such additional payments under certain circumstances. Specifically, CMS staff previously advised Crowell & Moring that while providers of services are prohibited from charging a beneficiary more than the applicable deductible and coinsurance amounts for a Medicare-covered service, “Medicare law and regulations do not prohibit providers from collecting more than the applicable deductible and coinsurance amounts for a Medicare-covered service from a beneficiary's private retiree GHP coverage (which is secondary to Medicare) provided that the provider does not attempt to collect from the beneficiary any amounts that exceed the applicable deductible and coinsurance amounts.” The September 2004 memo rejects this position.

The September 10, 2004 CMS memorandum states that under section 1866(a)(1)(A) of the Social Security Act, providers, such as hospitals, who participate in Medicare are prohibited from charging any individual or “any other person” for items or services for which such individual is entitled to have payment made by Medicare. CMS interprets the term “any other person” to include secondary insurers, stating that this reading is consistent with the purpose of the Medicare law to protect Medicare beneficiaries from “being burdened with charges, either directly or indirectly, beyond what Medicare has agreed to pay.” CMS states that if providers were permitted to bill their charges to a secondary insurer, beneficiaries could be burdened by increased secondary insurance premiums. Therefore, the CMS policy provides that providers are prohibited from billing a secondary insurer for covered services, except for Medicare deductible and coinsurance amounts.

CMS staff confirms that participating providers may charge beneficiaries' private health plans for deductible and coinsurance amounts and clarifies that providers generally may charge beneficiaries' health plans for services that are not covered by Medicare, such as the cost of private hospital room covered by a private health plan but not Medicare.

Please contact for more information.