Claims Submitted for Items or Services Furnished to Medicare Beneficiaries in State or Local Custody under a Penal Authority and Examples of Application of Government Entity Exclusion
MLN Matters® Number: MM6544 Revised
Related Change Request (CR) #: 6544
Related CR Release Date: September 4, 2009
Effective Date: December 7, 2009
Related CR Transmittal #: R1812CP and R110BP
Implementation Date: December 7, 2009
Note: This article was revised on September 14, 2009, to add DME MACs in the "Provider Affected" section. DME MACs may also receive claims and are included in Change Request 6544. All other information remains unchanged.
Provider Types Affected
This article is for physicians, providers, and suppliers submitting claims to Medicare contractors (carriers, DME Medicare Administrative Contractors (DME MACs), Fiscal Intermediaries (FIs), and/or A/B MACs) for services provided to individuals or groups of individuals who are in 'custody' under a penal statute or rule.
Provider Action Needed: STOP – Impact to You
This article is based on Change Request (CR) 6544 which describes special conditions that must be met in order for Medicare to make payment for services provided to individuals or groups of individuals who are in the custody of the police or other penal authorities or in the custody of a government agency under a penal statute or rule.
CAUTION – What You Need to Know
CR 6544 instructs Medicare contractors that “payment may be made for services furnished to individuals or groups of individuals who are in the custody of the police or other penal authorities or in the custody of a government agency under a penal statute only if the following conditions are met: State or local law requires those individuals or groups of individuals to repay the cost of medical services they receive while in custody, and the State or local government entity enforces the requirement to pay by billing all such individuals, whether or not covered by Medicare or any other health insurance, and by pursuing the collection of the amounts they owe in the same way and with the same vigor that it pursues the collection of other debts."
GO – What You Need to Do
See the Background and Additional Information Sections of this article for further details regarding these changes.
Background
- The beneficiary has no legal obligation to pay for the services and
- No other person or organization has a legal obligation to provide or pay for that service
In addition, under the Social Security Act (Section 1862(a)(3)), if services are paid for directly or indirectly by a governmental entity, Medicare does not pay for the services.
In the Fiscal Year (FY) 2008 Inpatient Prospective Payment System (IPPS) final rule published in the Federal Register, Volume 72, Number 162 (72 FR 47409 and 47410 – August 22, 2007; see http://edocket.access.gpo.gov/2007/07-3820.htm
on the Internet), the Centers for Medicare & Medicaid Services (CMS) clarified the regulations at 42 CFR Section 411.4(b) (see http://edocket.access.gpo.gov/cfr_2002/octqtr/42cfr411.4.htm on the Internet) by stating that for purposes of Medicare payment, individuals who are in 'custody' include, but are not limited to, individuals who are:
- Under arrest
- Incarcerated
- Imprisoned
- Escaped from confinement
- Under supervised release
- On medical furlough
- Required to reside in mental health facilities
- Required to reside in halfway houses
- Required to live under home detention or
- Confined completely or partially in any way under a penal statute or rule
The Medicare Claims Processing Manual, Chapter 1, section 10.4 describes the special conditions that must be met in order for Medicare to make payment for individuals who are in custody as follows:
“Payment may be made for services furnished to individuals or groups of individuals who are in the custody of the police or other penal authorities or in the custody of a government agency under a penal statute only if the following conditions are met:
1. State or local law requires those individuals or groups of individuals to repay the cost of medical services they receive while in custody, and
2. The State or local government entity enforces the requirement to pay by billing all such individuals, whether or not covered by Medicare or any other health insurance, and by pursuing the collection of the amounts they owe in the same way and with the same vigor that it pursues the collection of other debts"
Providers and suppliers are reminded that if they render services or items to a prisoner or patient in a jurisdiction that meets these conditions of 42 CFR 411.4(b), they are to include modifier QJ on claims submitted to carriers, A/B MACs, or DME MACs or use condition code 63 on institutional claims sent to Medicare FIs or A/B MACs.
Change Request (CR) 6544 also amends the Medicare Benefit Policy Manual (Chapter 16, section 50.3.3) and the Medicare Claims Processing Manual (Chapter 1, section 10.4) in order to be consistent with 42 CFR Section 411.4(b). These revisions are included as attachments to CR 6544.
Additional Information
There are two transmittals associated with the official instruction, CR 6544, issued to your carrier, FI, and A/B MAC regarding this change. The first transmittal amends the Medicare Claims Processing Manual and it may be viewed at
If you have questions, please contact the Palmetto GBA Provider Contact Center at our toll-free number, (866) 332-7025 (Ohio and West Virginia) or (888) 828-2092 (South Carolina Part B).
Disclaimer
This article was prepared as a service to the public and is not intended to grant rights or impose obligations. This article may contain references or links to statutes, regulations, or other policy materials. The information provided is only intended to be a general summary. It is not intended to take the place of either the written law or regulations. We encourage readers to review the specific statutes, regulations and other interpretive materials for a full and accurate statement of their contents.