Services Excluded By Statute

Published 01/12/2018

Medicare will not pay for services excluded by statute, which often are services not recognized as part of a covered Medicare benefit. Examples of such services are given to beneficiaries in the 'Medicare and You' handbook which can be found on the Medicare website and is updated on an annual basis, at the end of the 'Part A/Part B Cost and Coverage' subsection under Section 4 on the 'Original Medicare Plan'. Such services cannot necessarily be recognized in the definition of a specific procedure or diagnosis code. For example, under some conditions, a given code may be covered as part of a given benefit, but under other cases when not benefit is applied, the same code would not be covered.   

For claims submitted to Medicare, these services may be:

  • Not submitted to Medicare at all
  • Submitted as non-covered line items or
  • Submitted on entirely non-covered claims xx0 Type of Bills (TOB)

Medicare does not require procedures excluded by statute to be billed on institutional claims submitted to Medicare unless:

  • Established policy requires either all services in a certain period, covered or non-covered, be billed together so that all such services can be bundled for payment consideration (i.e., procedures provided on the same day to beneficiaries under OPPS which are usually payment status indicator E or M), or billing is required for reasons other than payment (i.e., utilization chargeable in inpatient settings) or
  • A beneficiary requests Medicare be billed in a manner that the service in question will be reviewed by Medicare. For access to the payment status indicator providers may review the Federal Register for OPPS that usually is updated each November and available on the CMS OPPS website in Addendum B of the Federal Register   

To submit a non-covered line item on a claim with other covered services (Payment Liability Conditions 1 and 3), use the HCPCS modifier GY on all line items for statutory exclusions. Submit all charges for those item(s) as non-covered charges, and otherwise complete the claim as is appropriate for the covered charges. More information is given on the HCPCS modifier GY. This option should only be used when providers are unable to split non-covered services onto a separate claim.

To submit statutory exclusions on entirely non-covered claims (Payment Liability Condition 1 only), use condition code 21, a claim-level code, signifying ALL charges that are submitted on the claim are non-covered charges. HCPCS modifier GY is not needed to be appended to any of the procedure codes on such a claim, and all charges must be submitted as non-covered along with TOB xx0 for a totally non-covered claim.

Providers that are submitting totally non-covered claims (TOB xx0) must have all units and charges submitted as non-covered with the 21 condition code so the provider/beneficiary may receive a denial from Medicare on the non-covered claim to facilitate payment by subsequent insurers. These claims will be denied as beneficiary liable. If some of the codes are not recognized by Medicare (usually payment status indicator M) they will need to be left off the claim as they usually receive a front end edit that restricts them from being submitted to Medicare. 

Common Eligibility Rejection Questions:

Why did the claim reject with Reason Code U5200?

  • Beneficiary is not entitled to Medicare coverage for the type of services billed on the claim

Why did the claim reject with Reason Code U5210?

  • Beneficiary’s entitlement for Medicare coverage was terminated prior to the first date for services provided on the claim

Provider Actions

Verify beneficiary eligibility prior to claim submission

  • Ask to see the Beneficiary’s Red, White and Blue Medicare Card
  • Utilize Self-Service Tools
    • eServices
    • Interactive Voice Response (IVR)
    • FISS/Direct Data Entry (DDE) System (until April 1, 2014)

Preventing Eligibility/Entitlement Errors

  • Verify prior records before submitting claims
    • Looks at claims history in FISS/DDE
    • Check remittance advice
  • Verify beneficiary coverage and eligibility information in Common Working File (CWF), IVR, OPS
  • Submit informational no-pay encounter claims with appropriate coding
  • Develop and implement internal processes (steps taken prior to submitting claims) to avoid errors

Importance of Checking Eligibility

  • Medicare ID number is used to identify beneficiary
    • Must be entered on all Medicare claims
  • Registration/admission staff should
    • Obtain and verify the Medicare ID Number on CWF
  • Verifying the Medicare ID number will
    • Reduce claim rejections and RTP
    • Increase Medicare cash flow
    • Save on staff time
    • Save facility money

Common Misconceptions for Not Checking Beneficiary Eligibility

  • No need to verify information; copy of Medicare card is sufficient verification
  • Medicare number never changes
  • Medicare is always primary payer
  • Part A or Part B will never terminate
  • Providers are not given access to beneficiary eligibility


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