§ 1395y. Exclusions from coverage and medicare as secondary payer

(a) Items or services specifically excluded Notwithstanding any other provision of this subchapter, no payment may be made under part A or part B of this subchapter for any expenses incurred for items or services— (1) (A) which, except for items and services described in a succeeding subparagraph, are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member, (B) in the case of items and services described in section of this title, which are not reasonable and necessary for the prevention of illness, (C) in the case of hospice care, which are not reasonable and necessary for the palliation or management of terminal illness, (D) in the case of clinical care items and services provided with the concurrence of the Secretary and with respect to research and experimentation conducted by, or under contract with, the Medicare Payment Advisory Commission or the Secretary, which are not reasonable and necessary to carry out the purposes of section of this title, (E) in the case of research conducted pursuant to section of this title, which is not reasonable and necessary to carry out the purposes of that section, (F) in the case of screening mammography, which is performed more frequently than is covered under section of this title or which is not conducted by a facility described in section of this title, in the case of screening pap smear and screening pelvic exam, which is performed more frequently than is provided under section of this title, and, in the case of screening for glaucoma, which is performed more frequently than is provided under section of this title, (G) in the case of prostate cancer screening tests (as defined in section of this title), which are performed more frequently than is covered under such section, (H) in the case of colorectal cancer screening tests, which are performed more frequently than is covered under section of this title, and (I) the frequency and duration of home health services which are in excess of normative guidelines that the Secretary shall establish by regulation; (2) for which the individual furnished such items or services has no legal obligation to pay, and which no other person (by reason of such individual’s membership in a prepayment plan or otherwise) has a legal obligation to provide or pay for, except in the case of Federally qualified health center services; (3) which are paid for directly or indirectly by a governmental entity (other than under this chapter and other than under a health benefits or insurance plan established for employees of such an entity), except in the case of rural health clinic services, as defined in section of this title, in the case of Federally qualified health center services, as defined in section of this title, in the case of services for which payment may be made under section of this title, and in such other cases as the Secretary may specify; (4) which are not provided within the United States (except for inpatient hospital services furnished outside the United States under the conditions described in section of this title and, subject to such conditions, limitations, and requirements as are provided under or pursuant to this subchapter, physicians’ services and ambulance services furnished an individual in conjunction with such inpatient hospital services but only for the period during which such inpatient hospital services were furnished); (5) which are required as a result of war, or of an act of war, occurring after the effective date of such individual’s current coverage under such part; (6) which constitute personal comfort items (except, in the case of hospice care, as is otherwise permitted under paragraph (1)(C)); (7) where such expenses are for routine physical checkups, eyeglasses (other than eyewear described in section of this title) or eye examinations for the purpose of prescribing, fitting, or changing eyeglasses, procedures performed (during the course of any eye examination) to determine the refractive state of the eyes, hearing aids or examinations therefor, or immunizations (except as otherwise allowed under section of this title and subparagraph (B), (F), (G), or (H) of paragraph (1)); (8) where such expenses are for orthopedic shoes or other supportive devices for the feet, other than shoes furnished pursuant to section of this title; (9) where such expenses are for custodial care (except, in the case of hospice care, as is otherwise permitted under paragraph (1)(C)); (10) where such expenses are for cosmetic surgery or are incurred in connection therewith, except as required for the prompt repair of accidental injury or for improvement of the functioning of a malformed body member; (11) where such expenses constitute charges imposed by immediate relatives of such individual or members of his household; (12) where such expenses are for services in connection with the care, treatment, filling, removal, or replacement of teeth or structures directly supporting teeth, except that payment may be made under part A of this subchapter in the case of inpatient hospital services in connection with the provision of such dental services if the individual, because of his underlying medical condition and clinical status or because of the severity of the dental procedure, requires hospitalization in connection with the provision of such services; (13) where such expenses are for— (A) the treatment of flat foot conditions and the prescription of supportive devices therefor, (B) the treatment of subluxations of the foot, or (C) routine foot care (including the cutting or removal of corns or calluses, the trimming of nails, and other routine hygienic care); (14) which are other than physicians’ services (as defined in regulations promulgated specifically for purposes of this paragraph), services described by section of this title, certified nurse-midwife services, qualified psychologist services, and services of a certified registered nurse anesthetist, and which are furnished to an individual who is a patient of a hospital or critical access hospital by an entity other than the hospital or critical access hospital, unless the services are furnished under arrangements (as defined in section of this title) with the entity made by the hospital or critical access hospital; (15) (A) which are for services of an assistant at surgery in a cataract operation (including subsequent insertion of an intraocular lens) unless, before the surgery is performed, the appropriate utilization and quality control peer review organization (under part B of subchapter XI of this chapter) or a carrier under section of this title has approved of the use of such an assistant in the surgical procedure based on the existence of a complicating medical condition, or (B) which are for services of an assistant at surgery to which section of this title applies; (16) in the case in which funds may not be used for such items and services under the Assisted Suicide Funding Restriction Act of 1997 [ U.S.C. et seq.]; (17) where the expenses are for an item or service furnished in a competitive acquisition area (as established by the Secretary under section of this title) by an entity other than an entity with which the Secretary has entered into a contract under section of this title for the furnishing of such an item or service in that area, unless the Secretary finds that the expenses were incurred in a case of urgent need, or in other circumstances specified by the Secretary; (18) which are covered skilled nursing facility services described in section of this title and which are furnished to an individual who is a resident of a skilled nursing facility during a period in which the resident is provided covered post-hospital extended care services (or, for services described in section of this title, which are furnished to such an individual without regard to such period), by an entity other than the skilled nursing facility, unless the services are furnished under arrangements (as defined in section of this title) with the entity made by the skilled nursing facility; (19) which are for items or services which are furnished pursuant to a private contract described in section of this title; (20) in the case of outpatient occupational therapy services or outpatient physical therapy services furnished as an incident to a physician’s professional services (as described in section of this title), that do not meet the standards and conditions (other than any licensing requirement specified by the Secretary) under the second sentence of section of this title (or under such sentence through the operation of section of this title) as such standards and conditions would apply to such therapy services if furnished by a therapist; (21) where such expenses are for home health services (including medical supplies described in section of this title, but excluding durable medical equipment to the extent provided for in such section) furnished to an individual who is under a plan of care of the home health agency if the claim for payment for such services is not submitted by the agency; or (22) subject to subsection (h) of this section, for which a claim is submitted other than in an electronic form specified by the Secretary. Paragraph (7) shall not apply to Federally qualified health center services described in section of this title. In making a national coverage determination (as defined in paragraph (1)(B) of section of this title) the Secretary shall ensure that the public is afforded notice and opportunity to comment prior to implementation by the Secretary of the determination; meetings of advisory committees established under section of this title with respect to the determination are made on the record; in making the determination, the Secretary has considered applicable information (including clinical experience and medical, technical, and scientific evidence) with respect to the subject matter of the determination; and in the determination, provide a clear statement of the basis for the determination (including responses to comments received from the public), the assumptions underlying that basis, and make available to the public the data (other than proprietary data) considered in making the determination. (b) Medicare as secondary payer (1) Requirements of group health plans (A) Working aged under group health plans (i) In general A group health plan— (I) may not take into account that an individual (or the individual’s spouse) who is covered under the plan by virtue of the individual’s current employment status with an employer is entitled to benefits under this subchapter under section of this title, and (II) shall provide that any individual age 65 or older (and the spouse age 65 or older of any individual) who has current employment status with an employer shall be entitled to the same benefits under the plan under the same conditions as any such individual (or spouse) under age 65. (ii) Exclusion of group health plan of a small employer Clause (i) shall not apply to a group health plan unless the plan is a plan of, or contributed to by, an employer that has 20 or more employees for each working day in each of 20 or more calendar weeks in the current calendar year or the preceding calendar year. (iii) Exception for small employers in multiemployer or multiple employer group health plans Clause (i) also shall not apply with respect to individuals enrolled in a multiemployer or multiple employer group health plan if the coverage of the individuals under the plan is by virtue of current employment status with an employer that does not have 20 or more individuals in current employment status for each working day in each of 20 or more calendar weeks in the current calendar year and the preceding calendar year; except that the exception provided in this clause shall only apply if the plan elects treatment under this clause. (iv) Exception for individuals with end stage renal disease Subparagraph (C) shall apply instead of clause (i) to an item or service furnished in a month to an individual if for the month the individual is, or (without regard to entitlement under section of this title) would upon application be, entitled to benefits under section of this title. (v) “Group health plan” defined In this subparagraph, and subparagraph (C), the term “group health plan” has the meaning given such term in section 5000(b)(1) of the Internal Revenue Code of 1986, without regard to section 5000(d) of such Code. (B) Disabled individuals in large group health plans (i) In general A large group health plan (as defined in clause (iii)) may not take into account that an individual (or a member of the individual’s family) who is covered under the plan by virtue of the individual’s current employment status with an employer is entitled to benefits under this subchapter under section of this title. (ii) Exception for individuals with end stage renal disease Subparagraph (C) shall apply instead of clause (i) to an item or service furnished in a month to an individual if for the month the individual is, or (without regard to entitlement under section of this title) would upon application be, entitled to benefits under section of this title. (iii) “Large group health plan” defined In this subparagraph, the term “large group health plan” has the meaning given such term in section 5000(b)(2) of the Internal Revenue Code of 1986, without regard to section 5000(d) of such Code. (C) Individuals with end stage renal disease A group health plan (as defined in subparagraph (A)(v))— (i) may not take into account that an individual is entitled to or eligible for benefits under this subchapter under section of this title during the 12-month period which begins with the first month in which the individual becomes entitled to benefits under part A of this subchapter under the provisions of section of this title, or, if earlier, the first month in which the individual would have been entitled to benefits under such part under the provisions of section of this title if the individual had filed an application for such benefits; and (ii) may not differentiate in the benefits it provides between individuals having end stage renal disease and other individuals covered by such plan on the basis of the existence of end stage renal disease, the need for renal dialysis, or in any other manner; except that clause (ii) shall not prohibit a plan from paying benefits secondary to this subchapter when an individual is entitled to or eligible for benefits under this subchapter under section of this title after the end of the 12-month period described in clause (i). Effective for items and services furnished on or after February 1, 1991, and before August 5, 1997, (with respect to periods beginning on or after February 1, 1990), this subparagraph shall be applied by substituting “18-month” for “12-month” each place it appears. Effective for items and services furnished on or after August 5, 1997, (with respect to periods beginning on or after the date that is 18 months prior to August 5, 1997), clauses (i) and (ii) shall be applied by substituting “30-month” for “12-month” each place it appears. (D) Treatment of certain members of religious orders In this subsection, an individual shall not be considered to be employed, or an employee, with respect to the performance of services as a member of a religious order which are considered employment only by virtue of an election made by the religious order under section 3121(r) of the Internal Revenue Code of 1986. (E) General provisions For purposes of this subsection: (i) Aggregation rules (I) All employers treated as a single employer under subsection (a) or (b) of section 52 of the Internal Revenue Code of 1986 shall be treated as a single employer. (II) All employees of the members of an affiliated service group (as defined in section 414(m) of such Code) shall be treated as employed by a single employer. (III) Leased employees (as defined in section 414(n)(2) of such Code) shall be treated as employees of the person for whom they perform services to the extent they are so treated under section 414(n) of such Code.  In applying sections of the Internal Revenue Code of 1986 under this clause, the Secretary shall rely upon regulations and decisions of the Secretary of the Treasury respecting such sections. (ii) “Current employment status” defined An individual has “current employment status” with an employer if the individual is an employee, is the employer, or is associated with the employer in a business relationship. (iii) Treatment of self-employed persons as employers The term “employer” includes a self-employed person. (F) Limitation on beneficiary liability An individual who is entitled to benefits under this subchapter and is furnished an item or service for which such benefits are incorrectly paid is not liable for repayment of such benefits under this paragraph unless payment of such benefits was made to the individual. (2) Medicare secondary payer (A) In general Payment under this subchapter may not be made, except as provided in subparagraph (B), with respect to any item or service to the extent that— (i) payment has been made, or can reasonably be expected to be made, with respect to the item or service as required under paragraph (1), or (ii) payment has been made, or can reasonably be expected to be made promptly (as determined in accordance with regulations) under a workmen’s compensation law or plan of the United States or a State or under an automobile or liability insurance policy or plan (including a self-insured plan) or under no fault insurance. In this subsection, the term “primary plan” means a group health plan or large group health plan, to the extent that clause (i) applies, and a workmen’s compensation law or plan, an automobile or liability insurance policy or plan (including a self-insured plan) or no fault insurance, to the extent that clause (ii) applies. (B) Conditional payment (i) Repayment required Any payment under this subchapter with respect to any item or service to which subparagraph (A) applies shall be conditioned on reimbursement to the appropriate Trust Fund established by this subchapter when notice or other information is received that payment for such item or service has been or could be made under such subparagraph. If reimbursement is not made to the appropriate Trust Fund before the expiration of the 60-day period that begins on the date such notice or other information is received, the Secretary may charge interest (beginning with the date on which the notice or other information is received) on the amount of the reimbursement until reimbursement is made (at a rate determined by the Secretary in accordance with regulations of the Secretary of the Treasury applicable to charges for late payments). (ii) Action by United States In order to recover payment under this subchapter for such an item or service, the United States may bring an action against any entity which is required or responsible (directly, as a third-party administrator, or otherwise) to make payment with respect to such item or service (or any portion thereof) under a primary plan (and may, in accordance with paragraph (3)(A) collect double damages against that entity), or against any other entity (including any physician or provider) that has received payment from that entity with respect to the item or service, and may join or intervene in any action related to the events that gave rise to the need for the item or service. The United States may not recover from a third-party administrator under this clause in cases where the third-party administrator would not be able to recover the amount at issue from the employer or group health plan and is not employed by or under contract with the employer or group health plan at the time the action for recovery is initiated by the United States or for whom it provides administrative services due to the insolvency or bankruptcy of the employer or plan. (iii) Subrogation rights The United States shall be subrogated (to the extent of payment made under this subchapter for such an item or service) to any right under this subsection of an individual or any other entity to payment with respect to such item or service under a primary plan. (iv) Waiver of rights The Secretary may waive (in whole or in part) the provisions of this subparagraph in the case of an individual claim if the Secretary determines that the waiver is in the best interests of the program established under this subchapter. (v) Claims-filing period Notwithstanding any other time limits that may exist for filing a claim under an employer group health plan, the United States may seek to recover conditional payments in accordance with this subparagraph where the request for payment is submitted to the entity required or responsible under this subsection to pay with respect to the item or service (or any portion thereof) under a primary plan within the 3-year period beginning on the date on which the item or service was furnished. (C) Treatment of questionnaires The Secretary may not fail to make payment under subparagraph (A) solely on the ground that an individual failed to complete a questionnaire concerning the existence of a primary plan. (3) Enforcement (A) Private cause of action There is established a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with such paragraphs (1) and (2)(A). (B) Reference to excise tax with respect to nonconforming group health plans For provision imposing an excise tax with respect to nonconforming group health plans, see section 5000 of the Internal Revenue Code of 1986. (C) Prohibition of financial incentives not to enroll in a group health plan or a large group health plan It is unlawful for an employer or other entity to offer any financial or other incentive for an individual entitled to benefits under this subchapter not to enroll (or to terminate enrollment) under a group health plan or a large group health plan which would (in the case of such enrollment) be a primary plan (as defined in paragraph (2)(A)). Any entity that violates the previous sentence is subject to a civil money penalty of not to exceed $5,000 for each such violation. The provisions of section of this title (other than subsections (a) and (b)) shall apply to a civil money penalty under the previous sentence in the same manner as such provisions apply to a penalty or proceeding under section of this title. (4) Coordination of benefits Where payment for an item or service by a primary plan is less than the amount of the charge for such item or service and is not payment in full, payment may be made under this subchapter (without regard to deductibles and coinsurance under this subchapter) for the remainder of such charge, but— (A) payment under this subchapter may not exceed an amount which would be payable under this subchapter for such item or service if paragraph (2)(A) did not apply; and (B) payment under this subchapter, when combined with the amount payable under the primary plan, may not exceed— (i) in the case of an item or service payment for which is determined under this subchapter on the basis of reasonable cost (or other cost-related basis) or under section of this title, the amount which would be payable under this subchapter on such basis, and (ii) in the case of an item or service for which payment is authorized under this subchapter on another basis— (I) the amount which would be payable under the primary plan (without regard to deductibles and coinsurance under such plan), or (II) the reasonable charge or other amount which would be payable under this subchapter (without regard to deductibles and coinsurance under this subchapter),  whichever is greater. (5) Identification of secondary payer situations (A) Requesting matching information (i) Commissioner of Social Security The Commissioner of Social Security shall, not less often than annually, transmit to the Secretary of the Treasury a list of the names and TINs of medicare beneficiaries (as defined in section 6103(l)(12) of the Internal Revenue Code of 1986) and request that the Secretary disclose to the Commissioner the information described in subparagraph (A) of such section. (ii) Administrator The Administrator of the Health Care Financing Administration shall request, not less often than annually, the Commissioner of the Social Security Administration to disclose to the Administrator the information described in subparagraph (B) of section 6103(l)(12) of the Internal Revenue Code of 1986. (B) Disclosure to fiscal intermediaries and carriers In addition to any other information provided under this subchapter to fiscal intermediaries and carriers, the Administrator shall disclose to such intermediaries and carriers (or to such a single intermediary or carrier as the Secretary may designate) the information received under subparagraph (A) for purposes of carrying out this subsection. (C) Contacting employers (i) In general With respect to each individual (in this subparagraph referred to as an “employee”) who was furnished a written statement under section 6051 of the Internal Revenue Code of 1986 by a qualified employer (as defined in section 6103(l)(12)(E)(iii) of such Code), as disclosed under subparagraph (B), the appropriate fiscal intermediary or carrier shall contact the employer in order to determine during what period the employee or employee’s spouse may be (or have been) covered under a group health plan of the employer and the nature of the coverage that is or was provided under the plan (including the name, address, and identifying number of the plan). (ii) Employer response Within 30 days of the date of receipt of the inquiry, the employer shall notify the intermediary or carrier making the inquiry as to the determinations described in clause (i). An employer (other than a Federal or other governmental entity) who willfully or repeatedly fails to provide timely and accurate notice in accordance with the previous sentence shall be subject to a civil money penalty of not to exceed $1,000 for each individual with respect to which such an inquiry is made. The provisions of section of this title (other than subsections (a) and (b)) shall apply to a civil money penalty under the previous sentence in the same manner as such provisions apply to a penalty or proceeding under section of this title. (D) Obtaining information from beneficiaries Before an individual applies for benefits under part A of this subchapter or enrolls under part B of this subchapter, the Administrator shall mail the individual a questionnaire to obtain information on whether the individual is covered under a primary plan and the nature of the coverage provided under the plan, including the name, address, and identifying number of the plan. (6) Screening requirements for providers and suppliers (A) In general Notwithstanding any other provision of this subchapter, no payment may be made for any item or service furnished under part B of this subchapter unless the entity furnishing such item or service completes (to the best of its knowledge and on the basis of information obtained from the individual to whom the item or service is furnished) the portion of the claim form relating to the availability of other health benefit plans. (B) Penalties An entity that knowingly, willfully, and repeatedly fails to complete a claim form in accordance with subparagraph (A) or provides inaccurate information relating to the availability of other health benefit plans on a claim form under such subparagraph shall be subject to a civil money penalty of not to exceed $2,000 for each such incident. The provisions of section of this title (other than subsections (a) and (b)) shall apply to a civil money penalty under the previous sentence in the same manner as such provisions apply to a penalty or proceeding under section of this title. (c) Drug products No payment may be made under part B of this subchapter for any expenses incurred for— (1) a drug product— (A) which is described in section 107(c)(3) of the Drug Amendments of 1962, (B) which may be dispensed only upon prescription, (C) for which the Secretary has issued a notice of an opportunity for a hearing under subsection (e) of section 355 of title 21 on a proposed order of the Secretary to withdraw approval of an application for such drug product under such section because the Secretary has determined that the drug is less than effective for all conditions of use prescribed, recommended, or suggested in its labeling, and (D) for which the Secretary has not determined there is a compelling justification for its medical need; and (2) any other drug product— (A) which is identical, related, or similar (as determined in accordance with section 310.6 of title 21 of the Code of Federal Regulations) to a drug product described in paragraph (1), and (B) for which the Secretary has not determined there is a compelling justification for its medical need, until such time as the Secretary withdraws such proposed order. (d) Repealed. Pub. L. 100–93, § 8(c)(1)(A), Aug. 18, 1987, 101 Stat. 692 (e) Item or service by excluded individual or entity or at direction of excluded physician; limitation of liability of beneficiaries with respect to services furnished by excluded individuals and entities (1) No payment may be made under this subchapter with respect to any item or service (other than an emergency item or service, not including items or services furnished in an emergency room of a hospital) furnished— (A) by an individual or entity during the period when such individual or entity is excluded pursuant to section , , or of this title from participation in the program under this subchapter; or (B) at the medical direction or on the prescription of a physician during the period when he is excluded pursuant to section , , or of this title from participation in the program under this subchapter and when the person furnishing such item or service knew or had reason to know of the exclusion (after a reasonable time period after reasonable notice has been furnished to the person). (2) Where an individual eligible for benefits under this subchapter submits a claim for payment for items or services furnished by an individual or entity excluded from participation in the programs under this subchapter, pursuant to section , , , (as in effect on September 2, 1982), 1395u(j)(2), 1395y(d) (as in effect on August 18, 1987), or 1395cc of this title, and such beneficiary did not know or have reason to know that such individual or entity was so excluded, then, to the extent permitted by this subchapter, and notwithstanding such exclusion, payment shall be made for such items or services. In each such case the Secretary shall notify the beneficiary of the exclusion of the individual or entity furnishing the items or services. Payment shall not be made for items or services furnished by an excluded individual or entity to a beneficiary after a reasonable time (as determined by the Secretary in regulations) after the Secretary has notified the beneficiary of the exclusion of that individual or entity. (f) Utilization guidelines for provision of home health services The Secretary shall establish utilization guidelines for the determination of whether or not payment may be made, consistent with paragraph (1)(A) of subsection (a) of this section, under part A or part B of this subchapter for expenses incurred with respect to the provision of home health services, and shall provide for the implementation of such guidelines through a process of selective postpayment coverage review by intermediaries or otherwise. (g) Contracts with utilization and quality control peer review organizations The Secretary shall, in making the determinations under paragraphs (1) and (9) of subsection (a) of this section, and for the purposes of promoting the effective, efficient, and economical delivery of health care services, and of promoting the quality of services of the type for which payment may be made under this subchapter, enter into contracts with utilization and quality control peer review organizations pursuant to part B of subchapter XI of this chapter. (h) Waiver of electronic form requirement (1) The Secretary— (A) shall waive the application of subsection (a)(22) of this section in cases in which— (i) there is no method available for the submission of claims in an electronic form; or (ii) the entity submitting the claim is a small provider of services or supplier; and (B) may waive the application of such subsection in such unusual cases as the Secretary finds appropriate. (2) For purposes of this subsection, the term “small provider of services or supplier” means— (A) a provider of services with fewer than 25 full-time equivalent employees; or (B) a physician, practitioner, facility, or supplier (other than provider of services) with fewer than 10 full-time equivalent employees. (i) Awards and contracts for original research and experimentation of new and existing medical procedures; conditions In order to supplement the activities of the Medicare Payment Advisory Commission under section of this title in assessing the safety, efficacy, and cost-effectiveness of new and existing medical procedures, the Secretary may carry out, or award grants or contracts for, original research and experimentation of the type described in clause (ii) of section of this title with respect to such a procedure if the Secretary finds that— (1) such procedure is not of sufficient commercial value to justify research and experimentation by a commercial organization; (2) research and experimentation with respect to such procedure is not of a type that may appropriately be carried out by an institute, division, or bureau of the National Institutes of Health; and (3) such procedure has the potential to be more cost-effective in the treatment of a condition than procedures currently in use with respect to such condition.

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