42cfr411 1aaaa

§ 411.9 42 CFR Ch.
IV (10–1–09 Edition)
(3) Services furnished in or by a par- torial waters adjoining the land areas
ticipating general or special hospital of the United States.
that— (2) Services furnished on board ship
(i) Is operated by a State or local are considered to have been furnished
government agency; and in United States territorial waters if
(ii) Serves the general community. they were furnished while the ship was
(4) Services furnished in a hospital or in a port of one of the jurisdictions
elsewhere, as a means of controlling in- listed in paragraph (a)(1) of this sec-
fectious diseases or because the indi- tion, or within 6 hours before arrival
vidual is medically indigent. at, or 6 hours after departure from,
(5) Services furnished by a partici- such a port.
pating hospital or SNF of the Indian (3) A hospital that is not physically
Health Service. situated in one of the jurisdictions list-
(6) Services furnished by a public or ed in paragraph (a)(1) of this section is
private health facility that— considered to be outside the United
(i) Is not a Federal provider or other States, even if it is owned or operated
facility operated by a Federal agency; by the United States Government.
(ii) Receives U.S. government funds (b) Exception. Under the cir-
under a Federal program that provides cumstances specified in subpart H of
support to facilities that furnish health part 424 of this chapter, payment may
care services; be made for covered inpatient services
(iii) Customarily seeks payment for furnished in a foreign hospital and, on
services not covered under Medicare the basis of an itemized bill, for cov-
from all available sources, including ered physicians’ services and ambu-
private insurance and patients’ cash re- lance service furnished in connection
sources; and with those inpatient services, but only
(iv) Limits the amounts it collects or for the period during which the inpa-
seeks to collect from a Medicare Part tient hospital services are furnished.
B beneficiary and others on the bene- § 411.10 Services required as a result
ficiary’s behalf to: of war.
(A) Any unmet deductible applied to
the charges related to the reasonable Medicare does not pay for services
costs that the facility incurs in pro- that are required as a result of war, or
viding the covered services; an act of war, that occurs after the ef-
(B) Twenty percent of the remainder fective date of a beneficiary’s current
of those charges; coverage for hospital insurance bene-
fits or supplementary medical insur-
(C) The charges for noncovered serv-
ance benefits.
ices.
(7) Rural health clinic services that § 411.12 Charges imposed by an imme-
meet the requirements set forth in part diate relative or member of the
491 of this chapter. beneficiary’s household.
[54 FR 41734, Oct. 11, 1989, as amended at 56 (a) Basic rule. Medicare does not pay
FR 2139, Jan. 22, 1991] for services usually covered under
Medicare if the charges for those serv-
§ 411.9 Services furnished outside the ices are imposed by—
United States. (1) An immediate relative of the ben-
(a) Basic rule. Except as specified in eficiary; or
paragraph (b) of this section, Medicare (2) A member of the beneficiary’s
does not pay for services furnished out- household.
side the United States. For purposes of (b) Definitions. As used in this sec-
this paragraph (a), the following rules tion—
apply: Immediate relative means any of the
(1) The United States includes the 50 following:
States, the District of Columbia, Puer- (1) Husband or wife.
to Rico, the Virgin Islands, Guam, (2) Natural or adoptive parent, child,
American Samoa, The Northern Mar- or sibling.
erowe on DSK5CLS3C1PROD with CFR
iana Islands, and for purposes of serv- (3) Stepparent, stepchild, step-
ices rendered on board ship, the terri- brother, or stepsister.
416
VerDate Nov<24>2008 11:17 Dec 10, 2009 Jkt 217180 PO 00000 Frm 00426 Fmt 8010 Sfmt 8010 Y:\SGML\217180.XXX 217180
Centers for Medicare & Medicaid Services, HHS § 411.8
this chapter, for services furnished to § 411.6 Services furnished by a Federal

Medicare beneficiaries, Medicare pay- provider of services or other Fed-
ment is not made for those services un- eral agency.
less the conditions of subpart C of part (a) Basic rule. Except as provided in
466 of this chapter are met. paragraph (b) of this section, Medicare
does not pay for services furnished by a
§ 411.4 Services for which neither the Federal provider of services or other
beneficiary nor any other person is
Federal agency.
legally obligated to pay.
(b) Exceptions. Payment may be
(a) General rule. Except as provided in made—
§ 411.8(b) (for services paid by a govern- (1) For emergency hospital services,
mental entity), Medicare does not pay if the conditions of § 424.103 of this
for a service if— chapter are met;
(1) The beneficiary has no legal obli- (2) For services furnished by a par-
gation to pay for the service; and ticipating Federal provider which CMS
(2) No other person or organization has determined is providing services to
(such as a prepayment plan of which the public generally as a community
the beneficiary is a member) has a institution or agency;
legal obligation to provide or pay for (3) For services furnished by partici-
that service. pating hospitals and SNFs of the In-
(b) Special conditions for services fur- dian Health Service; and
nished to individuals in custody of penal (4) For services furnished under ar-
authorities. Individuals who are in cus- rangements (as defined in § 409.3 of this
tody include, but are not limited to, in- chapter) made by a participating hos-
dividuals who are under arrest, incar- pital.
cerated, imprisoned, escaped from con-
finement, under supervised release, on § 411.7 Services that must be furnished
medical furlough, required to reside in at public expense under a Federal
law or Federal Government con-
mental health facilities, required to re- tract.
side in halfway houses, required to live
under home detention, or confined (a) Basic rule. Except as provided in
completely or partially in any way paragraph (b) of this section, payment
under a penal statute or rule. Payment may not be made for services that any
may be made for services furnished to provider or supplier is obligated to fur-
individuals or groups of individuals nish at public expense, in accordance
who are in the custody of police or with a law of, or a contract with, the
other penal authorities or in the cus- United States.
tody of a government agency under a (b) Exception. Payment may be made
penal statute only if the following con- for services that a hospital or SNF of
ditions are met: the Indian Health Service is obligated
(1) State or local law requires those to furnish at public expense.
individuals or groups of individuals to § 411.8 Services paid for by a Govern-
repay the cost of medical services they ment entity.
receive while in custody.
(a) Basic rule. Except as provided in
(2) The State or local government en-
paragraph (b) of this section, Medicare
tity enforces the requirement to pay by
does not pay for services that are paid
billing all such individuals, whether or
for directly or indirectly by a govern-
not covered by Medicare or any other ment entity.
health insurance, and by pursuing col-
(b) Exceptions. Payment may be made
lection of the amounts they owe in the
for the following:
same way and with the same vigor that
(1) Services furnished under a health
it pursues the collection of other debts.
insurance plan established for employ-
[54 FR 41734, Oct. 11, 1989, as amended at 72 ees of the government entity.
FR 47410, Aug. 22, 2007] (2) Services furnished under a title of
the Social Security Act other than

title XVIII.
415
§ 411.9 42 CFR Ch. IV (10–1–09 Edition)
ance benefits.
ices.
416

Federal agency.
for the following:

title XVIII.
415

Federal agency.
for the following:

title XVIII.
415
§ 411.52 42 CFR Ch. IV (10–1–09 Edition)
obtain any payment that can reason- bursement to CMS in accordance with
ably be expected under no-fault insur- subpart B of this part.
ance.
[71 FR 9470, Feb. 24, 2006]
(b) Except as specified in § 411.53,
Medicare does not pay until the bene-
§ 411.54 Limitation on charges when a
ficiary has exhausted his or her rem- beneficiary has received a liability
edies under no-fault insurance. insurance payment or has a claim
(c) Except as specified in § 411.53, pending against a liability insurer.
Medicare does not pay for services that
would have been covered by the no- (a) Definition. As used in this section,
fault insurance if the beneficiary had Medicare-covered services means services
filed a proper claim. for which Medicare benefits are pay-
(d) However, if a claim is denied for able or would be payable except for ap-
reasons other than not being a proper plicable Medicare deductible and coin-
claim, Medicare pays for the services if surance provisions. Medicare benefits
they are covered under Medicare. are payable notwithstanding potential
liability insurance payments, but are
§ 411.52 Basis for conditional Medicare recoverable in accordance with § 411.24.
payment in liability cases. (b) Applicability. This section applies
(a) A conditional Medicare payment when a beneficiary has received a li-
may be made in liability cases under ability insurance payment or has a
either of the following circumstances: claim pending against a liability in-
(1) The beneficiary has filed a proper surer for injuries or illness allegedly
claim for liability insurance benefits caused by another party.
but the intermediary or carrier deter- (c) Itemized bill. A hospital must,
mines that the liability insurer will upon request, furnish to the bene-
not pay promptly for any reason other ficiary or his or her representative an
than the circumstances described in itemized bill of the hospital’s charges.
§ 411.32(a)(1). This includes cases in
(d) Exception—(1) Prepaid health plans.
which the liability insurance carrier
If the services were furnished through
has denied the claim.
an organization that has a contact
(2) The beneficiary has not filed a
under section 1876 of the Act (that is,
claim for liability insurance benefits.
(b) Any conditional payment that an HMO or CMP), or through an orga-
CMS makes is conditioned on reim- nization that is paid under section
bursement to CMS in accordance with 1833(a)(1)(A) of the Act (that is,
subpart B of this part. through an HCPP) the rules of § 417.528
of this chapter apply.
[71 FR 9470, Feb. 24, 2006] (2) Special rules for Oregon. For the
§ 411.53 Basis for conditional Medicare State of Oregon, because of a court de-
payment in no-fault cases. cision, and in the absence of a reversal
on appeal or a statutory clarification
(a) A conditional Medicare payment
overturning the decision, there are the
may be made in no-fault cases under ei-
following special rules:
ther of the following circumstances:
(1) The beneficiary has filed a proper (i) The provider or supplier may elect
claim for no-fault insurance benefits to bill a liability insurer or place a lien
but the intermediary or carrier deter- against the beneficiary’s liability set-
mines that the no-fault insurer will not tlement for Medicare covered services,
pay promptly for any reason other rather than bill only Medicare for
than the circumstances described in Medicare covered services, if the liabil-
§ 411.32(a)(1). This includes cases in ity insurer pays within 120 days after
which the no-fault insurance carrier the earlier of the following dates:
has denied the claim. (A) The date the provider or supplier
(2) The beneficiary, because of phys- files a claim with the insurer or places
ical or mental incapacity, failed to a lien against a potential liability set-
meet a claim-filing requirement stipu- tlement.
lated in the policy. (B) The date the services were pro-
(b) Any conditional payment that vided or, in the case of inpatient hos-
CMS makes is conditioned on reim- pital services, the date of discharge.
432
(ii) If the liability insurer does not basis of disability, and covered under
pay within the 120-day period, the pro- the plan by virtue of the individual’s or
vider or supplier: a family member’s current employ-
(A) Must withdraw its claim with the ment status with an employer. (Sec-
liability insurer and/or withdraw its tion 1862(b)(1)(B))
lien against a potential liability settle- (2) Sections 1862(b)(1)(A), (B), and (C)
ment. of the Act provide that group health
(B) May only bill Medicare for Medi- plans and large group health plans may
care covered services. not take into account that the individ-
(C) May bill the beneficiary only for uals described in paragraph (a)(1) of
applicable Medicare deductible and co- this section are entitled to Medicare on
insurance amounts plus the amount of the basis of age or disability, or eligi-
any charges that may be made to a ble for, or entitled to Medicare on the
beneficiary under 413.35 of this chapter basis of ESRD.
(when cost limits are applied to these (3) Section 1862(b)(1)(A)(i)(II) of the
services) or under 489.32 of this chapter Act provides that group health plans of
(when services are partially covered). employers of 20 or more employees
[54 FR 41734, Oct. 11, 1989, as amended at 68 must provide to any employee or
FR 43942, July 25, 2003] spouse age 65 or older the same bene-
fits, under the same conditions, that it
Subpart E—Limitations on Payment provides to employees and spouses
for Services Covered Under under 65. The requirement applies re-
Group Health Plans: General gardless of whether the individual or
spouse 65 or older is entitled to Medi-
Provisions care.
(4) Section 1862(b)(1)(C)(ii) of the Act
SOURCE: 60 FR 45362, Aug. 31, 1995, unless
provides that group health plans may
otherwise noted.
not differentiate in the benefits they
§ 411.100 Basis and scope. provide between individuals who have
ESRD and other individuals covered
(a) Statutory basis. (1) Section 1862(b) under the plan on the basis of the ex-
of the Act provides in part that Medi- istence of ESRD, the need for renal di-
care is secondary payer, under specified alysis, or in any other manner. Actions
conditions, for services covered under that constitute ‘‘differentiating’’ are
any of the following: listed in § 411.161(b).
(i) Group health plans of employers
(b) Scope. This subpart sets forth gen-
that employ at least 20 employees and
eral rules pertinent to—
that cover Medicare beneficiaries age
65 or older who are covered under the (1) Medicare payment for services
plan by virtue of the individual’s cur- that are covered under a group health
rent employment status with an em- plan and are furnished to certain bene-
ployer or the current employment sta- ficiaries who are entitled on the basis
tus of a spouse of any age. (Section of ESRD, age, or disability.
1862(b)(1)(A)) (2) The prohibition against taking
(ii) Group health plans (without re- into account Medicare entitlement
gard to the number of individuals em- based on age or disability, or Medicare
ployed and irrespective of current em- eligibility or entitlement based on
ployment status) that cover individ- ESRD.
uals who have ESRD. Except as pro- (3) The prohibition against differen-
vided in § 411.163, group health plans tiation in benefits between individuals
are always primary payers throughout who have ESRD and other individuals
the first 18 months of ESRD-based covered under the plan.
Medicare eligibility or entitlement. (4) The requirement to provide to
(Section 1862(b)(1)(C)) those 65 or over the same benefits
(iii) Large group health plans (that under the same conditions as are pro-
is, plans of employers that employ at vided to those under 65.
least 100 employees) and that cover (5) The appeals procedures for group
Medicare beneficiaries who are under health plans that CMS determines are
age 65, entitled to Medicare on the nonconforming plans.
433
§ 411.52 42 CFR Ch. IV (10–1–09 Edition)
ance.
[71 FR 9470, Feb. 24, 2006]
432
§ 411.52 42 CFR Ch. IV (10–1–09 Edition)
ance.
[71 FR 9470, Feb. 24, 2006]
432
Subpart D—Limitations on Medi- Self-insured plan means a plan under

care Payment for Services which an individual, or a private or
Covered Under Liability or No- governmental entity, carries its own
risk instead of taking out insurance
Fault Insurance with a carrier. This term includes a
§ 411.50 General provisions. plan of an individual or other entity
engaged in a business, trade, or profes-
(a) Limits on applicability. The provi-
sion, a plan of a non-profit organiza-
sions of this subpart C do not apply to
tion such as a social, fraternal, labor,
any services required because of acci-
educational, religious, or professional
dents that occurred before December 5,
organization, and the plan established
1980.
by the Federal government to pay li-
(b) Definitions.
ability claims under the Federal Tort
Automobile means any self-propelled
Claims Act. An entity that engages in
land vehicle of a type that must be reg-
a business, trade, or profession is
istered and licensed in the State in
which it is owned. deemed to have a self-insured plan for
purposes of liability insurance if it car-
Liability insurance means insurance
(including a self-insured plan) that pro- ries its own risk (whether by a failure
vides payment based on legal liability to obtain insurance, or otherwise) in
for injury or illness or damage to prop- whole or in part.
erty. It includes, but is not limited to, Underinsured motorist insurance means
automobile liability insurance, unin- insurance under which the policy-
sured motorist insurance, underinsured holder’s level of protection against
motorist insurance, homeowners’ li- losses caused by another is extended to
ability insurance, malpractice insur- compensate for inadequate coverage in
ance, product liability insurance, and the other party’s policy or plan.
general casualty insurance. Uninsured motorist insurance means
Liability insurance payment means a insurance under which the policy-
payment by a liability insurer, or an holder’s insurer will pay for damages
out-of-pocket payment, including a caused by a motorist who has no auto-
payment to cover a deductible required mobile liability insurance or who car-
by a liability insurance policy, by any ries less than the amount of insurance
individual or other entity that carries required by law, or is underinsured.
liability insurance or is covered by a (c) Limitation on payment for services
self-insured plan. covered under no-fault insurance. Except
No-fault insurance means insurance as provided under §§ 411.52 and 411.53
that pays for medical expenses for inju- with respect to conditional payments.
ries sustained on the property or prem- Medicare does not pay for the fol-
ises of the insured, or in the use, occu- lowing:
pancy, or operation of an automobile, (1) Services for which payment has
regardless of who may have been re- been made or can reasonably be ex-
sponsible for causing the accident. This pected to be made under automobile
insurance includes but is not limited to no-fault insurance.
automobile, homeowners, and commer- (2) Services furnished on or after No-
cial plans. It is sometimes called vember 13, 1989 for which payment has
‘‘medical payments coverage’’, ‘‘per-
been made or can reasonably be ex-
sonal injury protection’’, or ‘‘medical
pected to be made under any no-fault
expense coverage’’.
insurance other than automobile no-
Prompt or promptly, when used in con-
fault.
nection with payment by a liability in-
surer means payment within 120 days [54 FR 41734, Oct. 11, 1989, as amended at 55
after the earlier of the following: FR 1820, Jan. 19, 1990; 71 FR 9470, Feb. 24,
(1) The date a claim is filed with an 2006]
insurer or a lien is filed against a po-
tential liability settlement. § 411.51 Beneficiary’s responsibility
with respect to no-fault insurance.
(2) The date the service was furnished
or, in the case of inpatient hospital (a) The beneficiary is responsible for
services, the date of discharge. taking whatever action is necessary to
431
§ 411.52 42 CFR Ch. IV (10–1–09 Edition)
ance.
[71 FR 9470, Feb. 24, 2006]
432
Subpart D—Limitations on Medi- Self-insured plan means a plan under

care Payment for Services which an individual, or a private or
Covered Under Liability or No- governmental entity, carries its own
risk instead of taking out insurance
Fault Insurance with a carrier. This term includes a
§ 411.50 General provisions. plan of an individual or other entity
engaged in a business, trade, or profes-
(a) Limits on applicability. The provi-
sion, a plan of a non-profit organiza-
sions of this subpart C do not apply to
tion such as a social, fraternal, labor,
any services required because of acci-
educational, religious, or professional
dents that occurred before December 5,
organization, and the plan established
1980.
by the Federal government to pay li-
(b) Definitions.
ability claims under the Federal Tort
Automobile means any self-propelled
Claims Act. An entity that engages in
land vehicle of a type that must be reg-
a business, trade, or profession is
istered and licensed in the State in
which it is owned. deemed to have a self-insured plan for
purposes of liability insurance if it car-
Liability insurance means insurance
(including a self-insured plan) that pro- ries its own risk (whether by a failure
vides payment based on legal liability to obtain insurance, or otherwise) in
for injury or illness or damage to prop- whole or in part.
erty. It includes, but is not limited to, Underinsured motorist insurance means
automobile liability insurance, unin- insurance under which the policy-
sured motorist insurance, underinsured holder’s level of protection against
motorist insurance, homeowners’ li- losses caused by another is extended to
ability insurance, malpractice insur- compensate for inadequate coverage in
ance, product liability insurance, and the other party’s policy or plan.
general casualty insurance. Uninsured motorist insurance means
Liability insurance payment means a insurance under which the policy-
payment by a liability insurer, or an holder’s insurer will pay for damages
out-of-pocket payment, including a caused by a motorist who has no auto-
payment to cover a deductible required mobile liability insurance or who car-
by a liability insurance policy, by any ries less than the amount of insurance
individual or other entity that carries required by law, or is underinsured.
liability insurance or is covered by a (c) Limitation on payment for services
self-insured plan. covered under no-fault insurance. Except
No-fault insurance means insurance as provided under §§ 411.52 and 411.53
that pays for medical expenses for inju- with respect to conditional payments.
ries sustained on the property or prem- Medicare does not pay for the fol-
ises of the insured, or in the use, occu- lowing:
pancy, or operation of an automobile, (1) Services for which payment has
regardless of who may have been re- been made or can reasonably be ex-
sponsible for causing the accident. This pected to be made under automobile
insurance includes but is not limited to no-fault insurance.
automobile, homeowners, and commer- (2) Services furnished on or after No-
cial plans. It is sometimes called vember 13, 1989 for which payment has
‘‘medical payments coverage’’, ‘‘per-
been made or can reasonably be ex-
sonal injury protection’’, or ‘‘medical
pected to be made under any no-fault
expense coverage’’.
insurance other than automobile no-
Prompt or promptly, when used in con-
fault.
nection with payment by a liability in-
surer means payment within 120 days [54 FR 41734, Oct. 11, 1989, as amended at 55
after the earlier of the following: FR 1820, Jan. 19, 1990; 71 FR 9470, Feb. 24,
(1) The date a claim is filed with an 2006]
insurer or a lien is filed against a po-
tential liability settlement. § 411.51 Beneficiary’s responsibility
with respect to no-fault insurance.
(2) The date the service was furnished
or, in the case of inpatient hospital (a) The beneficiary is responsible for
services, the date of discharge. taking whatever action is necessary to
431
§ 411.47 42 CFR Ch. IV (10–1–09 Edition)
§ 411.47 Apportionment of a lump-sum medical expenses (as determined under

compromise settlement of a work- paragraph (a) of this section) is ap-
ers’ compensation claim. plied, at the workers’ compensation
(a) Determining amount of compromise rate of payment prevailing in the par-
settlement considered as a payment for ticular jurisdiction, in the following
medical expenses. (1) If a compromise order:
settlement allocates a portion of the (1) First to any beneficiary payments
payment for medical expenses and also for services payable under workers’
gives reasonable recognition to the in- compensation but not covered under
come replacement element, that appor- Medicare.
tionment may be accepted as a basis (2) Then to any beneficiary payments
for determining Medicare payments. for services payable under workers’
(2) If the settlement does not give compensation and also covered under
reasonable recognition to both ele- Medicare Part B. (These include de-
ments of a workers’ compensation ductible and coinsurance amounts and,
award or does not apportion the sum in unassigned cases, the charge in ex-
granted, the portion to be considered cess of the reasonable charge.)
as payment for medical expenses is (3) Last to any beneficiary payments
computed as follows: for services payable under workers’
(i) Determine the ratio of the amount compensation and also covered under
awarded (less the reasonable and nec- Medicare Part A. (These include Part A
essary costs incurred in procuring the deductible and coinsurance amounts
settlement) to the total amount that and charges for services furnished after
would have been payable under work- benefits are exhausted.)
ers’ compensation if the claim had not The difference between the amount of
been compromised. the workers’ compensation payment
(ii) Multiply that ratio by the total for medical expenses and any bene-
medical expenses incurred as a result ficiary payments constitutes the Medi-
of the injury or disease up to the date care overpayment. The beneficiary is
of the settlement. The product is the liable for that amount.
amount of the workers’ compensation Example: In the example in paragraph (a) of
settlement to be considered as pay- this section, it was determined that the
ment for medical expenses. workers’ compensation settlement paid for
$6,000 of the total medical expenses. The
Example: As the result of a work injury, an $18,000 in medical expenses included $1,500 in
individual suffered loss of income and in- charges for services not covered under Medi-
curred medical expenses for which the total care, $7,500 in charges for services covered
workers’ compensation payment would have under Medicare Part B, and $9,000 in hospital
been $24,000 if the case had not been com- charges for services covered under Medicare
promised. The medical expenses amounted to Part A. All charges were at the workers’
$18,000. The workers’ compensation carrier compensation payment rate, that is, in
made a settlement with the beneficiary amounts the provider or supplier must ac-
under which it paid $8,000 in total. A sepa- cept as payment in full.
rate award was made for legal fees. Since the The Medicare reasonable charge for physi-
workers’ compensation compromise settle- cians’ services was $7,000 and Medicare paid
ment was for one-third of the amount which $5,600 (80 percent of the reasonable charge).
would have been payable under workers’ The Part B deductible had been met. The
compensation had the case not been com- Medicare payment rate for the hospital serv-
promised ($8,000/$24,000=1⁄3), the workers’ ices was $8,000. Medicare paid the hospital
compensation compromise settlement is con- $7,480 ($8,000—the Part A deductible of $520).
sidered to have paid for one-third of the total In this situation, the beneficiary’s pay-
medical expenses (1⁄3×$18,000=$6,000). ments totalled $3,920:
(b) Determining the amount of the Services not covered under Medicare $1,500
Excess of physicians’ charges over
Medicare overpayment. When condi-
reasonable charges ......................... 500
tional Medicare payments have been Medicare Part B coinsurance ............ 1,400
made, and the beneficiary receives a Part A deductible .............................. 520
compromise settlement payment, the
Medicare overpayment is determined Total ........................................ 3,920
as set forth in this paragraph (b). The
The Medicare overpayment, for which the

amount of the workers’ compensation beneficiary is liable, would be $2,080 ($6,000–
payment that is considered to be for $3,920).
430
service under the particular workers’ is intended to compensate the indi-

compensation program, Medicare pays vidual for all future medical expenses
for the service if it is a covered service. required because of the work-related
(3) Medicare makes secondary pay- injury or disease, Medicare payments
ments in accordance with §§ 411.32 and for such services are excluded until
411.33. medical expenses related to the injury
[54 FR 41734, Oct. 11, 1989, as amended at 71 or disease equal the amount of the
FR 9470, Feb. 24, 2006] lump-sum payment.
(b) Lump-sum compromise settlement.
§ 411.43 Beneficiary’s responsibility
with respect to workers’ compensa- (1) A lump-sum compromise settlement
tion. is deemed to be a workers’ compensa-
tion payment for Medicare purposes,
(a) The beneficiary is responsible for
even if the settlement agreement stip-
taking whatever action is necessary to
obtain any payment that can reason- ulates that there is no liability under
ably be expected under workers’ com- the workers’ compensation law or plan.
pensation. (2) If a settlement appears to rep-
(b) Except as specified in § 411.45(a), resent an attempt to shift to Medicare
Medicare does not pay until the bene- the responsibility for payment of med-
ficiary has exhausted his or her rem- ical expenses for the treatment of a
edies under workers’ compensation. work-related condition, the settlement
(c) Except as specified in § 411.45(b), will not be recognized. For example, if
Medicare does not pay for services that the parties to a settlement attempt to
would have been covered under work- maximize the amount of disability ben-
ers’ compensation if the beneficiary efits paid under workers’ compensation
had filed a proper claim. by releasing the workers’ compensa-
(d) However, if a claim is denied for tion carrier from liability for medical
reasons other than not being a proper expenses for a particular condition
claim, Medicare pays for the services if even though the facts show that the
they are covered under Medicare.
condition is work-related, Medicare
§ 411.45 Basis for conditional Medicare will not pay for treatment of that con-
payment in workers’ compensation dition.
cases. (c) Lump-sum compromise settlement:
(a) A conditional Medicare payment Effect on services furnished before the
may be made under either of the fol- date of settlement. Medicare pays for
lowing circumstances: medical expenses incurred before the
(1) The beneficiary has filed a proper lump-sum compromise settlement only
claim for workers’ compensation bene- to the extent specified in § 411.47.
fits, but the intermediary or carrier de- (d) Lump-sum compromise settlement:
termines that the workers’ compensa- Effect on payment for services furnished
tion carrier will not pay promptly. after the date of settlement—(1) Basic
This includes cases in which a workers’ rule. Except as specified in paragraph
compensation carrier has denied a (d)(2) of this section, if a lump-sum
claim. compromise settlement forecloses the
(2) The beneficiary, because of phys- possibility of future payment of work-
ical or mental incapacity, failed to file
ers’ compensation benefits, medical ex-
a proper claim.
penses incurred after the date of the
(b) Any conditional payment that
CMS makes is conditioned on reim- settlement are payable under Medi-
bursement to CMS in accordance with care.
subpart B of this part. (2) Exception. If the settlement agree-
ment allocates certain amounts for
[71 FR 9470, Feb. 24, 2006, as amended at 73
specific future medical services, Medi-
FR 9685, Feb. 22, 2008]
care does not pay for those services
§ 411.46 Lump-sum payments. until medical expenses related to the
(a) Lump-sum commutation of future injury or disease equal the amount of
benefits. If a lump-sum compensation the lump-sum settlement allocated to

award stipulates that the amount paid future medical expenses.
429

a proper claim.
FR 9685, Feb. 22, 2008]

429

a proper claim.
FR 9685, Feb. 22, 2008]

429
§ 411.408 42 CFR Ch. IV (10–1–09 Edition)
have known that the services were ex- claims because the services are found
cluded from coverage on the basis of to be not reasonable and necessary, a
the following: notice of denial will be sent to both the
(1) Its receipt of CMS notices, includ- physician and the beneficiary. The phy-
ing manual issuances, bulletins, or sician who does not accept assignment
other written guides or directives from will have the same rights as a physi-
intermediaries, carriers, or QIOs, in- cian who submits claims on an assign-
cluding notification of QIO screening ment-related basis, as detailed in sub-
criteria specific to the condition of the part H of part 405 and subpart B of part
beneficiary for whom the furnished 473, to appeal the determination, and
services are at issue and of medical will be subject to the same time limi-
procedures subject to preadmission re- tations.
view by a QIO. (d) When a refund is not required. A re-
(2) FEDERAL REGISTER publications
fund of any amounts collected for serv-
containing notice of national coverage
ices not reasonable and necessary is
decisions or of other specifications re-
not required if—
garding noncoverage of an item or
service. (1) The physician did not know, and
(3) Its knowledge of what are consid- could not reasonably have been ex-
ered acceptable standards of practice pected to know, that Medicare would
by the local medical community. not pay for the service; or
(2) Before the service was provided—
[54 FR 41734, Oct. 11, 1989, as amended at 60 (i) The physician informed the bene-
FR 48425, Sept. 19, 1995]
ficiary, or someone acting on the bene-
§ 411.408 Refunds of amounts collected ficiary’s behalf, in writing that the
for physician services not reason- physician believed Medicare was likely
able and necessary, payment not ac- to deny payment for the specific serv-
cepted on an assignment-related ice; and
basis. (ii) The beneficiary (or someone eligi-
(a) Basic rule. Except as provided in ble to sign for the beneficiary under
paragraph (d) of this section, a physi- § 424.36(b) of this chapter) signed a
cian who furnishes a beneficiary serv- statement agreeing to pay for that
ices for which the physician does not service.
undertake to claim payment on an as- (e) Criteria for determining that a phy-
signment-related basis must refund sician knew that services were excluded as
any amounts collected from the bene- not reasonable and necessary. A physi-
ficiary for services otherwise covered if cian will be determined to have known
Medicare payment is denied because that furnished services were excluded
the services are found to be not reason- from coverage as not reasonable and
able and necessary under § 411.15(k). necessary if one or more of the condi-
(b) Time limits for making refunds. A tions in § 411.406 of this subpart are
timely refund of any incorrectly col- met.
lected amounts of money must be made
(f) Acceptable evidence of prior notice to
to the beneficiary to whom the services
a beneficiary that Medicare was likely to
were furnished. A refund is timely if—
deny payment for a particular service. To
(1) A physician who does not request
qualify for waiver of the refund re-
a review within 30 days after receipt of
quirement under paragraph (d)(2) of
the denial notice makes the refund
within that time period; or this section, the physician must inform
(2) A physician who files a request for the beneficiary (or person acting on his
review within 30 days after receipt of or her behalf) that the physician be-
the denial notice makes the refund lieves Medicare is likely to deny pay-
within 15 days after receiving notice of ment.
an initial adverse review determina- (1) The notice must—
tion, whether or not the physician fur- (i) Be in writing, using approved no-
ther appeals the initial adverse review tice language;
determination. (ii) Cite the particular service or
(c) Notices and appeals. If payment is services for which payment is likely to
denied for nonassignment-related be denied; and
496
Centers for Medicare & Medicaid Services, HHS Pt. 412
(iii) Cite the physician’s reasons for 412.30 Exclusion of new rehabilitation units
believing Medicare payment will be de- and expansion of units already excluded.
nied.
Subpart C—Conditions for Payment Under
(2) The notice is not acceptable evi- the Prospective Payment Systems for
dence if— Inpatient Operating Costs and Inpa-
(i) The physician routinely gives this tient Capital-Related Costs
notice to all beneficiaries for whom he
or she furnishes services; or 412.40 General requirements.
412.42 Limitations on charges to bene-
(ii) The notice is no more than a ficiaries.
statement to the effect that there is a 412.44 Medical review requirements: Admis-
possibility that Medicare may not pay sions and quality review.
for the service. 412.46 Medical review requirements: Physi-
(g) Applicability of sanctions to physician acknowledgement.
cians who fail to make refunds under this 412.48 Denial of payment as a result of ad-
missions and quality review.
section. A physician who knowingly and 412.50 Furnishing of inpatient hospital serv-
willfully fails to make refunds as re- ices directly or under arrangements.
quired by this section may be subject 412.52 Reporting and recordkeeping require-
to sanctions as provided for in chapter ments.
V, parts 1001, 1002, and 1003 of this title.
Subpart D—Basic Methodology for Deter-
[55 FR 24568, June 18, 1990; 55 FR 35142, 35143, mining Prospective Payment Federal
Aug. 28, 1990] Rates for Inpatient Operating Costs
412.60 DRG classification and weighting fac-
PART 412—PROSPECTIVE PAYMENT tors.
SYSTEMS FOR INPATIENT HOS- 412.62 Federal rates for inpatient operating
PITAL SERVICES costs for fiscal year 1984.
412.63 Federal rates for inpatient operating
costs for Federal fiscal years 1984
Subpart A—General Provisions through 2004.
Sec. 412.64 Federal rates for inpatient operating
costs for Federal fiscal year 2005 and sub-
412.1 Scope of part.
sequent fiscal years.
412.2 Basis of payment.
412.4 Discharges and transfers. Subpart E—Determination of Transition Pe-
412.6 Cost reporting periods subject to the riod Payment Rates for the Prospective
prospective payment systems. Payment System for Inpatient Oper-
412.8 Publication of schedules for deter- ating Costs
mining prospective payment rates.
412.10 Changes in the DRG classification 412.70 General description.
system. 412.71 Determination of base-year inpatient
operating costs.
Subpart B—Hospital Services Subject to 412.72 Modification of base-year costs.
and Excluded From the Prospective 412.73 Determination of the hospital-spe-
Payment Systems for Inpatient Oper- cific rate based on a Federal fiscal year
1982 base period.
ating Costs and Inpatient Capital-Re-
412.75 Determination of the hospital-spe-
lated Costs cific rate for inpatient operating costs
based on a Federal fiscal year 1987 base
412.20 Hospital services subject to the pro-
period.
spective payment systems.
412.76 Recovery of excess transition period
412.22 Excluded hospitals and hospital payment amounts resulting from unlaw-
units: General rules. ful claims.
412.23 Excluded hospitals: Classifications. 412.77 Determination of the hospital-spe-
412.25 Excluded hospital units: Common re- cific rate for inpatient operating costs
quirements. for sole community hospitals based on a
412.27 Excluded psychiatric units: Addi- Federal fiscal year 1996 base period.
tional requirements. 412.78 Determination of the hospital-spe-
412.29 Excluded rehabilitation units: Addi- cific rate for inpatient operating costs
tional requirements. for sole community hospitals based on a
Federal fiscal year 2006 base period.

412.79 Determination of the hospital-spe-
cific rate for inpatient operating costs
497
(3) The provider, practitioner, or sup- (3) After a beneficiary is notified that
plier knew, or could reasonably have there is no Medicare payment for a
been expected to know that the serv- service that is not covered by Medi-
ices were not covered. care, he or she is presumed to know
(4) The beneficiary files a proper re- that there is no Medicare payment for
quest for indemnification before the any form of subsequent treatment for
end of the sixth month after whichever the non-covered condition.
of the following is later: (c) Source of notice. The notice was
(i) The month is which the bene- given by one of the following:
ficiary paid the provider, practitioner, (1) The QIO, intermediary, or carrier.
or supplier. (2) The group or committee respon-
(ii) The month in which the inter- sible for utilization review for the pro-
mediary or carrier notified the bene- vider that furnished the services.
ficiary (or someone on his or her be-
(3) The provider, practitioner, or sup-
half) that the beneficiary would not be
plier that furnished the service.
liable for the services.
For good cause shown by the bene- [54 FR 41734, Oct. 11, 1989, as amended at 69
ficiary, the 6-month period may be ex- FR 66423, Nov. 15, 2004]
tended.
(b) Amount of indemnification. 1 The § 411.406 Criteria for determining that
a provider, practitioner, or supplier
amount of indemnification is the total knew that services were excluded
that the beneficiary paid the provider, from coverage as custodial care or
practitioner, or supplier. as not reasonable and necessary.
(c) Effect of indemnification. The
amount of indemnification is consid- (a) Basic rule. A provider, practi-
ered an overpayment to the provider, tioner, or supplier that furnished serv-
practitioner, or supplier, and as such is ices which constitute custodial care
recoverable under this part or in ac- under § 411.15(g) or that are not reason-
cordance with other applicable provi- able and necessary under § 411.15(k) is
sions of law. considered to have known that the
services were not covered if any one of
§ 411.404 Criteria for determining that the conditions specified in paragraphs
a beneficiary knew that services (b) through (e) of this section is met.
were excluded from coverage as (b) Notice from the QIO, intermediary
custodial care or as not reasonable or carrier. The QIO, intermediary, or
and necessary.
carrier had informed the provider,
(a) Basic rule. A beneficiary who re- practitioner, or supplier that the serv-
ceives services that constitute custo- ices furnished were not covered, or that
dial care under § 411.15(g) or that are similar or reasonably comparable serv-
not reasonable and necessary under ices were not covered.
§ 411.15(k), is considered to have known (c) Notice from the utilization review
that the services were not covered if committee or the beneficiary’s attending
the criteria of paragraphs (b) and (c) of phyician. The utilization review group
this section are met. or committee for the provider or the
(b) Written notice. (1) Written notice beneficiary’s attending physician had
is given to the beneficiary, or to some- informed the provider that these serv-
one acting on his or her behalf, that ices were not covered.
the services were not covered because
(d) Notice from the provider, practi-
they did not meet Medicare coverage
tioner, or supplier to the beneficiary. Be-
guidelines.
fore the services were furnished, the
(2) A notice concerning similar or
provider, practitioner or supplier in-
reasonably comparable services fur-
formed the beneficiary that—
nished on a previous occasion also
meets this criterion. (1) The services were not covered; or
(2) The beneficiary no longer needed
1 For services furnished before 1988, the in-
covered services.
demnification amount was reduced by any (e) Knowledge based on experience, ac-
tual notice, or constructive notice. It is
deductible or coinsurance amounts that

would have been applied if the services had clear that the provider, practitioner, or
been covered. supplier could have been expected to
495
§ 411.408 42 CFR Ch. IV (10–1–09 Edition)
have known that the services were ex- claims because the services are found
cluded from coverage on the basis of to be not reasonable and necessary, a
the following: notice of denial will be sent to both the
(1) Its receipt of CMS notices, includ- physician and the beneficiary. The phy-
ing manual issuances, bulletins, or sician who does not accept assignment
other written guides or directives from will have the same rights as a physi-
intermediaries, carriers, or QIOs, in- cian who submits claims on an assign-
cluding notification of QIO screening ment-related basis, as detailed in sub-
criteria specific to the condition of the part H of part 405 and subpart B of part
beneficiary for whom the furnished 473, to appeal the determination, and
services are at issue and of medical will be subject to the same time limi-
procedures subject to preadmission re- tations.
view by a QIO. (d) When a refund is not required. A re-
(2) FEDERAL REGISTER publications
fund of any amounts collected for serv-
containing notice of national coverage
ices not reasonable and necessary is
decisions or of other specifications re-
not required if—
garding noncoverage of an item or
service. (1) The physician did not know, and
(3) Its knowledge of what are consid- could not reasonably have been ex-
ered acceptable standards of practice pected to know, that Medicare would
by the local medical community. not pay for the service; or
(2) Before the service was provided—
[54 FR 41734, Oct. 11, 1989, as amended at 60 (i) The physician informed the bene-
FR 48425, Sept. 19, 1995]
ficiary, or someone acting on the bene-
§ 411.408 Refunds of amounts collected ficiary’s behalf, in writing that the
for physician services not reason- physician believed Medicare was likely
able and necessary, payment not ac- to deny payment for the specific serv-
cepted on an assignment-related ice; and
basis. (ii) The beneficiary (or someone eligi-
(a) Basic rule. Except as provided in ble to sign for the beneficiary under
paragraph (d) of this section, a physi- § 424.36(b) of this chapter) signed a
cian who furnishes a beneficiary serv- statement agreeing to pay for that
ices for which the physician does not service.
undertake to claim payment on an as- (e) Criteria for determining that a phy-
signment-related basis must refund sician knew that services were excluded as
any amounts collected from the bene- not reasonable and necessary. A physi-
ficiary for services otherwise covered if cian will be determined to have known
Medicare payment is denied because that furnished services were excluded
the services are found to be not reason- from coverage as not reasonable and
able and necessary under § 411.15(k). necessary if one or more of the condi-
(b) Time limits for making refunds. A tions in § 411.406 of this subpart are
timely refund of any incorrectly col- met.
lected amounts of money must be made
(f) Acceptable evidence of prior notice to
to the beneficiary to whom the services
a beneficiary that Medicare was likely to
were furnished. A refund is timely if—
deny payment for a particular service. To
(1) A physician who does not request
qualify for waiver of the refund re-
a review within 30 days after receipt of
quirement under paragraph (d)(2) of
the denial notice makes the refund
within that time period; or this section, the physician must inform
(2) A physician who files a request for the beneficiary (or person acting on his
review within 30 days after receipt of or her behalf) that the physician be-
the denial notice makes the refund lieves Medicare is likely to deny pay-
within 15 days after receiving notice of ment.
an initial adverse review determina- (1) The notice must—
tion, whether or not the physician fur- (i) Be in writing, using approved no-
ther appeals the initial adverse review tice language;
determination. (ii) Cite the particular service or
(c) Notices and appeals. If payment is services for which payment is likely to
denied for nonassignment-related be denied; and
496
tended.
and necessary.
guidelines.
covered services.

495
§ 411.387 42 CFR Ch. IV (10–1–09 Edition)
§ 411.387 Parties affected by advisory plier that had accepted assignment of

opinions. benefits for those services.
An advisory opinion issued by CMS (2) Neither the beneficiary nor the
does not apply in any way to any indi- provider, practitioner, or supplier
vidual or entity that does not join in knew, or could reasonably have been
the request for the opinion. Individuals expected to know, that the services
or entities other than the requestor(s) were excluded from coverage under
may not rely on an advisory opinion. § 411.15 (g) or (k).
(b) Time limits on payment—(1) Basic
[69 FR 57230, Sept. 24, 2004]
rule. Except as provided in paragraph
§ 411.388 When advisory opinions are (b)(2) of this section, payment may not
not admissible evidence. be made for inpatient hospital care,
posthospital SNF care, or home health
The failure of a party to seek or to
services furnished after the earlier of
receive an advisory opinion may not be
the following:
introduced into evidence to prove that
the party either intended or did not in- (i) The day on which the beneficiary
tend to violate the provisions of sec- has been determined, under § 411.404, to
tions 1128, 1128A or 1128B of the Act. have knowledge, actual or imputed,
that the services were excluded from
[69 FR 57230, Sept. 24, 2004] coverage by reason of § 411.15(g) or
§ 411.15(k).
§ 411.389 Range of the advisory opin-
ion. (ii) The day on which the provider
has been determined, under § 411.406 to
(a) An advisory opinion states only have knowledge, actual or imputed,
CMS’s opinion regarding the subject that the services are excluded from
matter of the request. If the subject of coverage by reason of § 411.15(g) or
an advisory opinion is an arrangement § 411.15(k).
that must be approved by or is regu- (2) Exception. Payment may be made
lated by any other agency, CMS’s advi- for services furnished during the first
sory opinion cannot be read to indicate day after the limit established in para-
CMS’s views on the legal or factual graph (b)(1) of this section, if the QIO
issues that may be raised before that or the intermediary determines that
agency. the additional period of one day is nec-
(b) An advisory opinion that CMS essary for planning post-discharge
issues under this part does not bind or care. It the QIO or the intermediary de-
obligate any agency other than the De- termines that yet another day is nec-
partment. It does not affect the reques- essary for planning post-discharge
tor’s, or anyone else’s, obligations to care, payment may be made for serv-
any other agency, or under any statu- ices furnished during the second day
tory or regulatory provision other than after the limit established in paragraph
that which is the specific subject mat- (b)(1) of this section.
ter of the advisory opinion.
[69 FR 57230, Sept. 24, 2004] § 411.402 Indemnification of bene-
ficiary.
Subpart K—Payment for Certain (a) Conditions for indemnification. If
Excluded Services Medicare payment is precluded because
the conditions of § 411.400(a)(2) are not
§ 411.400 Payment for custodial care met. Medicare indemnifies the bene-
and services not reasonable and ficiary (and recovers from the provider,
necessary. practitioner, or supplier), if the fol-
(a) Conditions for payment. Notwith- lowing conditions are met:
standing the exclusions set forth in (1) The beneficiary paid the provider,
§ 411.15 (g) and (k). Medicare pays for practitioner, or supplier some or all of
‘‘custodial care’’ and ‘‘services not rea- the charges for the excluded services.
sonable and necessary’’ if the following (2) The beneficiary did not know and
conditions are met: could not reasonably have been ex-
(1) The services were funished by a pected to know that the services were
provider or by a practitioner or sup- not covered.
494
tended.
and necessary.
guidelines.
covered services.

495
§ 411.387 42 CFR Ch. IV (10–1–09 Edition)

[69 FR 57230, Sept. 24, 2004]
the following:
§ 411.15(k).
ficiary.
494
§ 411.37 42 CFR Ch. IV (10–1–09 Edition)
terms of the provider agreement or the (2) Apply the ratio to the Medicare
conditions of assignment. payment. The product is the Medicare
(2) The amount, if any, by which the share of procurement costs.
applicable Medicare deductible and co- (3) Subtract the Medicare share of
insurance amounts exceed any primary procurement costs from the Medicare
payment made or due to the bene- payments. The remainder is the Medi-
ficiary or to the provider or supplier care recovery amount.
for the medical services. (d) Medicare payments equal or exceed
(3) The amount of any charges that the judgment or settlement amount. If
may be made to a beneficiary under Medicare payments equal or exceed the
§ 413.35 of this chapter when cost limits judgment or settlement amount, the
are applied to the services, or under recovery amount is the total judgment
§ 489.32 of this chapter when the serv- or settlement payment minus the total
ices are partially covered, but only to procurement costs.
the extent that the primary payer is (e) CMS incurs procurement costs be-
not responsible for those charges. cause of opposition to its recovery. If
(d) Exception. The limitations of CMS must bring suit against the party
paragraph (c) of this section do not that received payment because that
apply if the services were furnished by party opposes CMS’s recovery, the re-
a supplier that is not a participating covery amount is the lower of the fol-
supplier and has not accepted assign- lowing:
ment for the services or claimed pay- (1) Medicare payment.
ment under § 424.64 of this chapter. (2) The total judgment or settlement
amount, minus the party’s total pro-
§ 411.37 Amount of Medicare recovery curement cost.
when a primary payment is made
as a result of a judgment or settle- Subpart C—Limitations on Medi-
ment. care Payment for Services
(a) Recovery against the party that re- Covered Under Workers’
ceived payment—(1) General rule. Medi- Compensation
care reduces its recovery to take ac-
count of the cost of procuring the judg- § 411.40 General provisions.
ment or settlement, as provided in this (a) Definition. ‘‘Workers’ compensation
section, if— plan of the United States’’ includes the
(i) Procurement costs are incurred workers’ compensation plans of the 50
because the claim is disputed; and States, the District of Columbia, Amer-
(ii) Those costs are borne by the ican Samoa, Guam, Puerto Rico, and
party against which CMS seeks to re- the Virgin Islands, as well as the sys-
cover. tems provided under the Federal Em-
(2) Special rule. If CMS must file suit ployees’ Compensation Act and the
because the party that received pay- Longshoremen’s and Harbor Workers’
ment opposes CMS’s recovery, the re- Compensation Act.
covery amount is as set forth in para- (b) Limitations on Medicare payment.
graph (e) of this section. (1) Medicare does not pay for any serv-
(b) Recovery against the primary payer. ices for which—
If CMS seeks recovery from the pri- (i) Payment has been made, or can
mary payer, in accordance with reasonably be expected to be made
§ 411.24(i), the recovery amount will be under a workers’ compensation law or
no greater than the amount deter- plan of the United States or a state; or
mined under paragraph (c) or (d) or (e) (ii) Payment could be made under the
of this section. Federal Black Lung Program, but is
(c) Medicare payments are less than the precluded solely because the provider
judgment or settlement amount. If Medi- of the services has failed to secure,
care payments are less than the judg- from the Department of Labor, a pro-
ment or settlement amount, the recov- vider number to include in the claim.
ery is computed as follows: (2) If the payment for a service may
(1) Determine the ratio of the pro- not be made under workers’ compensa-
curement costs to the total judgment tion because the service is furnished by
or settlement payment. a source not authorized to provide that
428

a proper claim.
FR 9685, Feb. 22, 2008]

429

Federal agency.
for the following:

title XVIII.
415
§ 411.387 42 CFR Ch. IV (10–1–09 Edition)

[69 FR 57230, Sept. 24, 2004]
the following:
§ 411.15(k).
ficiary.
494
§ 411.387 42 CFR Ch. IV (10–1–09 Edition)

[69 FR 57230, Sept. 24, 2004]
the following:
§ 411.15(k).
ficiary.
494
§ 411.387 42 CFR Ch. IV (10–1–09 Edition)

[69 FR 57230, Sept. 24, 2004]
the following:
§ 411.15(k).
ficiary.
494
complicated fact patterns, within a proval, or discontinue the action with-

reasonable time period. in a reasonable ‘‘wind down’’ period, as
(2) If the 90th day falls on a Saturday, determined by CMS.
Sunday, or Federal holiday, the time
[69 FR 57229, Sept. 24, 2004]
period ends at the close of the first
business day following the weekend or § 411.384 Disclosing advisory opinions
holiday; and supporting information.
(3) The 90-day period is suspended
from the time CMS’ (a) Advisory opinions that CMS
(i) Notifies the requestor that the issues and releases in accordance with
costs have reached or are likely to ex- the procedures set forth in this subpart
ceed the triggering amount as de- are available to the public.
scribed in § 411.375(c)(2) until CMS re- (b) Promptly after CMS issues an ad-
ceives written notice from the re- visory opinion and releases it to the re-
questor to continue processing the requestor, CMS makes available a copy
quest; of the advisory opinion for public in-
(ii) Requests additional information spection during its normal hours of op-
from the requestor until CMS receives eration and on the DHHS/CMS Web
the additional information; site.
(iii) Notifies the requestor of the full (c) Any predecisional document, or
amount due until CMS receives pay- part of such predecisional document,
ment of this amount; and that is prepared by CMS, the Depart-
(iv) Notifies the requestor of the need ment of Justice, or any other Depart-
for expert advice until CMS receives ment or agency of the United States in
the expert advice. connection with an advisory opinion
(d) After CMS has notified the re- request under the procedures set forth
questor of the full amount owed and in this part is exempt from disclosure
has received full payment of that under 5 U.S.C. 552, and will not be made
amount, CMS issues the advisory opin- publicly available.
ion and promptly mails it to the re- (d) Documents submitted by the re-
questor by regular first class U.S. mail. questor to CMS in connection with a
[69 FR 57229, Sept. 24, 2004] request for an advisory opinion are
available to the public to the extent
§ 411.382 CMS’s right to rescind advi- they are required to be made available
sory opinions. by 5 U.S.C. 552, through procedures set
Any advice CMS gives in an opinion forth in 45 CFR part 5.
does not prejudice its right to recon- (e) Nothing in this section limits
sider the questions involved in the CMS’s obligation, under applicable
opinion and, if it determines that it is laws, to publicly disclose the identity
in the public interest, to rescind or re- of the requesting party or parties, and
voke the opinion. CMS provides notice the nature of the action CMS has taken
to the requestor of its decision to re- in response to the request.
scind or revoke the opinion so that the [69 FR 57230, Sept. 24, 2004]
requestor and the parties involved in
the requestor’s arrangement may dis- § 411.386 CMS’s advisory opinions as
continue any course of action they exclusive.
have taken in accordance with the ad-
The procedures described in this sub-
visory opinion. CMS does not proceed
part constitute the only method by
against the requestor with respect to
which any individuals or entities can
any action the requestor and the in-
obtain a binding advisory opinion on
volved parties have taken in good faith
the subject of a physician’s referrals,
reliance upon CMS’s advice under this
as described in § 411.370. CMS has not
part, provided—
and does not issue a binding advisory
(a) The requestor presented to CMS a
opinion on the subject matter in
full, complete and accurate description
§ 411.370, in either oral or written form,
of all the relevant facts; and
except through written opinions it
(b) The parties promptly discontinue
issues in accordance with this subpart.

the action upon receiving notice that
CMS had rescinded or revoked its ap- [69 FR 57230, Sept. 24, 2004]
493

[69 FR 57229, Sept. 24, 2004]
part, provided—

493

[69 FR 57229, Sept. 24, 2004]
part, provided—

493
§ 411.377 42 CFR Ch. IV (10–1–09 Edition)
until the time CMS receives that opin- § 411.379 When CMS accepts a request.
ion.
(a) Upon receiving a request for an
[69 FR 57228, Sept. 24, 2004] advisory opinion, CMS promptly makes
an initial determination of whether the
§ 411.377 Expert opinions from outside request includes all of the information
sources.
it will need to process the request.
(a) CMS may request expert advice (b) Within 15 working days of receiv-
from qualified sources if CMS believes ing the request, CMS—
that the advice is necessary to respond (1) Formally accepts the request for
to a request for an advisory opinion. an advisory opinion;
For example, CMS may require the use
(2) Notifies the requestor about the
of accountants or business experts to
additional information it needs; or
assess the structure of a complex busi-
ness arrangement or to ascertain a (3) Declines to formally accept the
physician’s or immediate family mem- request.
ber’s financial relationship with enti- (c) If the requestor provides the addi-
ties that provide designated health tional information CMS has requested,
services. or otherwise resubmits the request,
(b) If CMS determines that it needs CMS processes the resubmission in ac-
to obtain expert advice in order to cordance with paragraphs (a) and (b) of
issue a requested advisory opinion, this section as if it were an initial re-
CMS notifies the requestor of that fact quest for an advisory opinion.
and provides the identity of the appro- (d) Upon accepting the request, CMS
priate expert and an estimate of the notifies the requestor by regular U.S.
costs of the expert advice. As indicated mail of the date that CMS formally ac-
in § 411.375(d), the requestor must pay cepted the request.
the estimated cost of the expert advice. (e) The 90-day period that CMS has to
(c) Once CMS has received payment issue an advisory opinion set forth in
for the estimated cost of the expert ad- § 411.380(c) does not begin until CMS
vice, CMS arranges for the expert to has formally accepted the request for
provide a prompt review of the issue or an advisory opinion.
issues in question. CMS considers any
[69 FR 57229, Sept. 24, 2004]
additional expenses for the expert ad-
vice, beyond the estimated amount, as
§ 411.380 When CMS issues a formal
part of the costs CMS has incurred in advisory opinion.
responding to the request, and the re-
sponsibility of the requestor, as de- (a) CMS considers an advisory opin-
scribed in § 411.375(c). ion to be issued once it has received
payment and once the opinion has been
[69 FR 57229, Sept. 24, 2004] dated, numbered, and signed by an au-
§ 411.378 Withdrawing a request. thorized CMS official.
(b) An advisory opinion contains a
The party requesting an advisory description of the material facts known
opinion may withdraw the request be- to CMS that relate to the arrangement
fore CMS issues a formal advisory opin- that is the subject of the advisory opin-
ion. This party must submit the with- ion, and states CMS’s opinion about
drawal in writing to the same address the subject matter of the request based
as the request, as indicated in on those facts. If necessary, CMS in-
§ 411.372(a). Even if the party withdraws cludes in the advisory opinion material
the request, the party must pay the facts that could be considered con-
costs the Department has expended in fidential information or trade secrets
processing the request, as discussed in within the meaning of 18 U.S.C. 1095.
§ 411.375. CMS reserves the right to (c)(1) CMS issues an advisory opinion,
keep any request for an advisory opin- in accordance with the provisions of
ion and any accompanying documents this part, within 90 days after it has
and information, and to use them for formally accepted the request for an
any governmental purposes permitted advisory opinion, or, for requests that
by law. CMS determines, in its discretion, in-

[69 FR 57229, Sept. 24, 2004] volve complex legal issues or highly
492

[69 FR 57229, Sept. 24, 2004]
part, provided—

493
§ 411.377 42 CFR Ch. IV (10–1–09 Edition)
ion.
sources.
[69 FR 57229, Sept. 24, 2004]

492
§ 411.377 42 CFR Ch. IV (10–1–09 Edition)
ion.
sources.
[69 FR 57229, Sept. 24, 2004]

492
§ 411.377 42 CFR Ch. IV (10–1–09 Edition)
ion.
sources.
[69 FR 57229, Sept. 24, 2004]

492
and with knowledge that this request ment incurs in responding to the re-
for an advisory opinion is being sub- quest for an advisory opinion.
mitted to the Department of Health (2) In its request for an advisory
and Human Services, I certify that all opinion, the requestor may designate a
of the information provided is true and triggering dollar amount. If CMS esti-
correct, and constitutes a complete de- mates that the costs of processing the
scription of the facts regarding which advisory opinion request have reached
an advisory opinion is sought, to the or are likely to exceed the designated
best of my knowledge and belief.’’ triggering dollar amount, CMS notifies
(b) If the advisory opinion relates to the requestor.
a proposed arrangement, in addition to (3) If CMS notifies the requestor that
the certification required by paragraph the actual or estimated cost of proc-
(a) of this section, the following certifi- essing the request has reached or is
cation must be included and signed by likely to exceed the triggering dollar
the requestor: ‘‘The arrangement de- amount, CMS stops processing the re-
scribed in this request for an advisory quest until the requestor makes a writ-
opinion is one into which [the re- ten request for CMS to continue. If
questor], in good faith, plans to enter.’’ CMS is delayed in processing the re-
This statement may be made contin- quest for an advisory opinion because
gent on a favorable advisory opinion, of this procedure, the time within
in which case the requestor should add which CMS must issue an advisory
one of the following phrases to the cer- opinion is suspended until the re-
tification: questor asks CMS to continue working
(1) ‘‘if CMS issues a favorable advi- on the request.
sory opinion.’’ (4) If the requestor chooses not to
(2) ‘‘if CMS and the OIG issue favor- pay for CMS to complete an advisory
able advisory opinions.’’ opinion, or withdraws the request, the
[69 FR 57227, Sept. 24, 2004] requestor is still obligated to pay for
all costs CMS has identified as costs it
§ 411.375 Fees for the cost of advisory incurred in processing the request for
opinions. an advisory opinion, up to that point.
(a) Initial payment. Parties must in- (5) If the costs CMS has incurred in
clude with each request for an advisory responding to the request are greater
opinion submitted through December than the amount the requestor has
31, 1998, a check or money order pay- paid, CMS, before issuing the advisory
able to CMS for $250. For requests sub- opinion, notifies the requestor of any
mitted after this date, parties must in- additional amount that is due. CMS
clude a check or money order in this does not issue an advisory opinion
amount, unless CMS has revised the until the requestor has paid the full
amount of the initial fee in a program amount that is owed. Once the re-
issuance, in which case, the requestor questor has paid CMS the total amount
must include the revised amount. This due for the costs of processing the re-
initial payment is nonrefundable. quest, CMS issues the advisory opinion.
(b) How costs are calculated. Before The time period CMS has for issuing
issuing the advisory opinion, CMS cal- advisory opinions is suspended from
culates the costs the Department has the time CMS notifies the requestor of
incurred in responding to the request. the amount owed until the time CMS
The calculation includes the costs of receives full payment.
salaries, benefits, and overhead for an- (d) Fees for outside experts. (1) In addi-
alysts, attorneys, and others who have tion to the fees identified in this sec-
worked on the request, as well as ad- tion, the requestor also must pay any
ministrative and supervisory support required fees for expert opinions, if
for these individuals. any, from outside sources, as described
(c) Agreement to pay all costs. (1) By in § 411.377.
submitting the request for an advisory (2) The time period for issuing an ad-
opinion, the requestor agrees, except as visory opinion is suspended from the
indicated in paragraph (c)(3) of this time that CMS notifies the requestor
section, to pay all costs the Depart- that it needs an outside expert opinion
491
§ 411.377 42 CFR Ch. IV (10–1–09 Edition)
ion.
sources.
[69 FR 57229, Sept. 24, 2004]

492
§ 411.373 42 CFR Ch. IV (10–1–09 Edition)
(i) A complete description of the ar- lieves the referral prohibition in sec-
rangement that the requestor is under- tion 1877 of the Act might or might not
taking, or plans to undertake, includ- be triggered by the arrangement and
ing: the purpose of the arrangement; which, if any, exceptions to the prohi-
the nature of each party’s (including bition the requestor believes might
each entity’s) contribution to the ar- apply. The requestor should attempt to
rangement; the direct or indirect rela- designate which facts are relevant to
tionships between the parties, with an each issue or question raised in the re-
emphasis on the relationships between quest and should cite the provisions of
physicians involved in the arrangement law under which each issue or question
(or their immediate family members arises.
who are involved) and any entities that (7) An indication of whether the par-
provide designated health services; the ties involved in the request have also
types of services for which a physician asked for or are planning to ask for an
wishes to refer, and whether the refer- advisory opinion on the arrangement
rals will involve Medicare or Medicaid in question from the OIG under section
patients; 1128D(b) of the Act (42 U.S.C. 1320a–
(ii) Complete copies of all relevant 7d(b)) and whether the arrangement is
documents or relevant portions of doc- or is not, to the best of the requestor’s
uments that affect or could affect the knowledge, the subject of an investiga-
arrangement, such as personal services tion.
or employment contracts, leases, (8) The certification(s) described in
deeds, pension or insurance plans, fi- § 411.373. The certification(s) must be
nancial statements, or stock certifi- signed by—
cates (or, if these relevant documents (i) The requestor, if the requestor is
do not yet exist, a complete descrip- an individual;
tion, to the best of the requestor’s (ii) The chief executive officer, or
knowledge, of what these documents comparable officer, of the requestor, if
are likely to contain); the requestor is a corporation;
(iii) Detailed statements of all collat- (iii) The managing partner of the re-
eral or oral understandings, if any; and questor, if the requestor is a partner-
(iv) Descriptions of any other ar- ship; or
rangements or relationships that could (iv) A managing member, if the re-
affect CMS’s analysis. questor is a limited liability company.
(9) A check or money order payable
(5) Complete information on the iden-
to CMS in the amount described in
tity of all entities involved either di-
§ 411.375(a).
rectly or indirectly in the arrange-
(c) Additional information CMS might
ment, including their names, addresses,
require. If the request does not contain
legal form, ownership structure, nature
all of the information required by para-
of the business (products and services)
graph (b) of this section, or, if either
and, if relevant, their Medicare and
before or after accepting the request,
Medicaid provider numbers. The re-
CMS believes it needs more informa-
questor must also include a brief de-
tion in order to render an advisory
scription of any other entities that
opinion, it may request whatever addi-
could affect the outcome of the opin-
tional information or documents it
ion, including those with which the re-
deems necessary. Additional informa-
questor, the other parties, or the im-
tion must be provided in writing,
mediate family members of involved
signed by the same person who signed
physicians, have any financial rela-
the initial request (or by an individual
tionships (either direct or indirect, and
in a comparable position), and be cer-
as defined in section 1877(a)(2) of the
tified as described in § 411.373.
Act and § 411.351), or in which any of
the parties holds an ownership or con- [69 FR 57227, Sept. 24, 2004]
trol interest as defined in section
1124(a)(3) of the Act. § 411.373 Certification.
(6) A discussion of the specific issues (a) Every request must include the
or questions the requestor would like following signed certification: ‘‘With
CMS to address including, if possible, a knowledge of the penalties for false

description of why the requestor be- statements provided by 18 U.S.C. 1001
490
and with knowledge that this request ment incurs in responding to the re-
for an advisory opinion is being sub- quest for an advisory opinion.
mitted to the Department of Health (2) In its request for an advisory
and Human Services, I certify that all opinion, the requestor may designate a
of the information provided is true and triggering dollar amount. If CMS esti-
correct, and constitutes a complete de- mates that the costs of processing the
scription of the facts regarding which advisory opinion request have reached
an advisory opinion is sought, to the or are likely to exceed the designated
best of my knowledge and belief.’’ triggering dollar amount, CMS notifies
(b) If the advisory opinion relates to the requestor.
a proposed arrangement, in addition to (3) If CMS notifies the requestor that
the certification required by paragraph the actual or estimated cost of proc-
(a) of this section, the following certifi- essing the request has reached or is
cation must be included and signed by likely to exceed the triggering dollar
the requestor: ‘‘The arrangement de- amount, CMS stops processing the re-
scribed in this request for an advisory quest until the requestor makes a writ-
opinion is one into which [the re- ten request for CMS to continue. If
questor], in good faith, plans to enter.’’ CMS is delayed in processing the re-
This statement may be made contin- quest for an advisory opinion because
gent on a favorable advisory opinion, of this procedure, the time within
in which case the requestor should add which CMS must issue an advisory
one of the following phrases to the cer- opinion is suspended until the re-
tification: questor asks CMS to continue working
(1) ‘‘if CMS issues a favorable advi- on the request.
sory opinion.’’ (4) If the requestor chooses not to
(2) ‘‘if CMS and the OIG issue favor- pay for CMS to complete an advisory
able advisory opinions.’’ opinion, or withdraws the request, the
[69 FR 57227, Sept. 24, 2004] requestor is still obligated to pay for
all costs CMS has identified as costs it
§ 411.375 Fees for the cost of advisory incurred in processing the request for
opinions. an advisory opinion, up to that point.
(a) Initial payment. Parties must in- (5) If the costs CMS has incurred in
clude with each request for an advisory responding to the request are greater
opinion submitted through December than the amount the requestor has
31, 1998, a check or money order pay- paid, CMS, before issuing the advisory
able to CMS for $250. For requests sub- opinion, notifies the requestor of any
mitted after this date, parties must in- additional amount that is due. CMS
clude a check or money order in this does not issue an advisory opinion
amount, unless CMS has revised the until the requestor has paid the full
amount of the initial fee in a program amount that is owed. Once the re-
issuance, in which case, the requestor questor has paid CMS the total amount
must include the revised amount. This due for the costs of processing the re-
initial payment is nonrefundable. quest, CMS issues the advisory opinion.
(b) How costs are calculated. Before The time period CMS has for issuing
issuing the advisory opinion, CMS cal- advisory opinions is suspended from
culates the costs the Department has the time CMS notifies the requestor of
incurred in responding to the request. the amount owed until the time CMS
The calculation includes the costs of receives full payment.
salaries, benefits, and overhead for an- (d) Fees for outside experts. (1) In addi-
alysts, attorneys, and others who have tion to the fees identified in this sec-
worked on the request, as well as ad- tion, the requestor also must pay any
ministrative and supervisory support required fees for expert opinions, if
for these individuals. any, from outside sources, as described
(c) Agreement to pay all costs. (1) By in § 411.377.
submitting the request for an advisory (2) The time period for issuing an ad-
opinion, the requestor agrees, except as visory opinion is suspended from the
indicated in paragraph (c)(3) of this time that CMS notifies the requestor
section, to pay all costs the Depart- that it needs an outside expert opinion
491
concerning whether a physician’s refer- tion is under investigation, or is or has

ral relating to designated health serv- been the subject of a proceeding involv-
ices (other than clinical laboratory ing the Department of Health and
services) is prohibited under section Human Services or another govern-
1877 of the Act. In the advisory opinion, mental agency; or
CMS determines whether a business ar- (3) CMS believes that it cannot make
rangement described by the parties to an informed opinion or could only
that arrangement appears to con- make an informed opinion after exten-
stitute a ‘‘financial relationship’’ (as sive investigation, clinical study, test-
defined in section 1877(a)(2) of the Act) ing, or collateral inquiry.
that could potentially restrict a physi-
(f) Effects of an advisory opinion on
cian’s referrals, and whether the ar-
rangement or the designated health other Governmental authority. Nothing
services at issue appear to qualify for in this part limits the investigatory or
any of the exceptions to the referral prosecutorial authority of the OIG, the
prohibition described in section 1877 of Department of Justice, or any other
the Act. agency of the Government. In addition,
(1) The request must involve an exist- in connection with any request for an
ing arrangement or one into which the advisory opinion, CMS, the OIG, or the
requestor, in good faith, specifically Department of Justice may conduct
plans to enter. The planned arrange- whatever independent investigation it
ment may be contingent upon the believes appropriate.
party or parties receiving a favorable
[69 FR 57227, Sept. 24, 2004, as amended at 72
advisory opinion. CMS does not con- FR 51098, Sept. 5, 2007]
sider, for purposes of an advisory opin-
ion, requests that present a general § 411.372 Procedure for submitting a
question of interpretation, pose a hypo- request.
thetical situation, or involve the ac-
tivities of third parties. (a) Format for a request. A party or
(2) The requestor must be a party to parties must submit a request for an
the existing or proposed arrangement. advisory opinion to CMS in writing, in-
(c) Matters not subject to advisory opin- cluding an original request and 2 cop-
ions. CMS does not address through the ies. The request must be addressed to:
advisory opinion process— Centers for Medicare & Medicaid Serv-
(1) Whether the fair market value ices, Department of Health and Human
was, or will be, paid or received for any Services, Office of Financial Manage-
goods, services, or property; and ment, Division of Premium Billing and
(2) Whether an individual is a bona Collections, Mail Stop C3–09–27, Atten-
fide employee within the requirements tion: Advisory Opinions, 7500 Security
of section 3121(d)(2) of the Internal Rev- Boulevard, Baltimore, MD 21244–1850.
enue Code of 1986. (b) Information CMS requires with all
(d) Facts subject to advisory opinions. submissions. The request must include
CMS considers requests for advisory the following:
opinions that involve applying specific (1) The name, address, telephone
facts to the subject matter described in number, and Taxpayer Identification
paragraph (b) of this section. Reques- Number of the requestor.
tors must include in the advisory opin-
(2) The names and addresses, to the
ion request a complete description of
extent known, of all other actual and
the arrangement that the requestor is
undertaking, or plans to undertake, as potential parties to the arrangement
described in § 411.372. that is the subject of the request.
(e) Requests that will not be accepted. (3) The name, title, address, and day-
CMS does not accept an advisory opin- time telephone number of a contact
ion request or issue an advisory opin- person who will be available to discuss
ion if— the request with CMS on behalf of the
(1) The request is not related to a requestor.
named individual or entity; (4) A complete and specific descrip-
(2) CMS is aware that the same, or tion of all relevant information bear-
substantially the same, course of ac- ing on the arrangement, including—
489
§ 411.373 42 CFR Ch. IV (10–1–09 Edition)
(i) A complete description of the ar- lieves the referral prohibition in sec-
rangement that the requestor is under- tion 1877 of the Act might or might not
taking, or plans to undertake, includ- be triggered by the arrangement and
ing: the purpose of the arrangement; which, if any, exceptions to the prohi-
the nature of each party’s (including bition the requestor believes might
each entity’s) contribution to the ar- apply. The requestor should attempt to
rangement; the direct or indirect rela- designate which facts are relevant to
tionships between the parties, with an each issue or question raised in the re-
emphasis on the relationships between quest and should cite the provisions of
physicians involved in the arrangement law under which each issue or question
(or their immediate family members arises.
who are involved) and any entities that (7) An indication of whether the par-
provide designated health services; the ties involved in the request have also
types of services for which a physician asked for or are planning to ask for an
wishes to refer, and whether the refer- advisory opinion on the arrangement
rals will involve Medicare or Medicaid in question from the OIG under section
patients; 1128D(b) of the Act (42 U.S.C. 1320a–
(ii) Complete copies of all relevant 7d(b)) and whether the arrangement is
documents or relevant portions of doc- or is not, to the best of the requestor’s
uments that affect or could affect the knowledge, the subject of an investiga-
arrangement, such as personal services tion.
or employment contracts, leases, (8) The certification(s) described in
deeds, pension or insurance plans, fi- § 411.373. The certification(s) must be
nancial statements, or stock certifi- signed by—
cates (or, if these relevant documents (i) The requestor, if the requestor is
do not yet exist, a complete descrip- an individual;
tion, to the best of the requestor’s (ii) The chief executive officer, or
knowledge, of what these documents comparable officer, of the requestor, if
are likely to contain); the requestor is a corporation;
(iii) Detailed statements of all collat- (iii) The managing partner of the re-
eral or oral understandings, if any; and questor, if the requestor is a partner-
(iv) Descriptions of any other ar- ship; or
rangements or relationships that could (iv) A managing member, if the re-
affect CMS’s analysis. questor is a limited liability company.
(9) A check or money order payable
(5) Complete information on the iden-
to CMS in the amount described in
tity of all entities involved either di-
§ 411.375(a).
rectly or indirectly in the arrange-
(c) Additional information CMS might
ment, including their names, addresses,
require. If the request does not contain
legal form, ownership structure, nature
all of the information required by para-
of the business (products and services)
graph (b) of this section, or, if either
and, if relevant, their Medicare and
before or after accepting the request,
Medicaid provider numbers. The re-
CMS believes it needs more informa-
questor must also include a brief de-
tion in order to render an advisory
scription of any other entities that
opinion, it may request whatever addi-
could affect the outcome of the opin-
tional information or documents it
ion, including those with which the re-
deems necessary. Additional informa-
questor, the other parties, or the im-
tion must be provided in writing,
mediate family members of involved
signed by the same person who signed
physicians, have any financial rela-
the initial request (or by an individual
tionships (either direct or indirect, and
in a comparable position), and be cer-
as defined in section 1877(a)(2) of the
tified as described in § 411.373.
Act and § 411.351), or in which any of
the parties holds an ownership or con- [69 FR 57227, Sept. 24, 2004]
trol interest as defined in section
1124(a)(3) of the Act. § 411.373 Certification.
(6) A discussion of the specific issues (a) Every request must include the
or questions the requestor would like following signed certification: ‘‘With
CMS to address including, if possible, a knowledge of the penalties for false

description of why the requestor be- statements provided by 18 U.S.C. 1001
490
§ 411.361 42 CFR Ch. IV (10–1–09 Edition)
(13) The transfer of the items or serv- (d) Reportable financial relationships.
ices occurs and all conditions in this For purposes of this section, a report-
paragraph (w) are satisfied on or before able financial relationship is any own-
December 31, 2013. ership or investment interest, as de-
fined at § 411.354(b) or any compensa-
[72 FR 51091, Sept. 5, 2007; 72 FR 68076, Dec. 4,
tion arrangement, as defined at
2007, as amended at 73 FR 48752, Aug. 19, 2008;
73 FR 57543, Oct. 3, 2008] § 411.354(c), except for ownership or in-
vestment interests that satisfy the ex-
§ 411.361 Reporting requirements. ceptions set forth in § 411.356(a) or
§ 411.356(b) regarding publicly-traded
(a) Basic rule. Except as provided in securities and mutual funds.
paragraph (b) of this section, all enti- (e) Form and timing of reports. Entities
ties furnishing services for which pay- that are subject to the requirements of
ment may be made under Medicare this section must submit the required
must submit information to CMS or to information, upon request, within the
the Office of Inspector General (OIG) time period specified by the request.
concerning their reportable financial Entities are given at least 30 days from
relationships (as defined in paragraph the date of the request to provide the
(d) of this section), in the form, man- information. Entities must retain the
ner, and at the times that CMS or OIG information, and documentation suffi-
specifies. cient to verify the information, for the
(b) Exception. The requirements of length of time specified by the applica-
paragraph (a) of this section do not ble regulatory requirements for the in-
apply to entities that furnish 20 or formation, and, upon request, must
fewer Part A and Part B services dur- make that information and documenta-
ing a calendar year, or to any Medicare tion available to CMS or OIG.
covered services furnished outside the (f) Consequences of failure to report.
United States. Any person who is required, but fails,
(c) Required information. The informa- to submit information concerning his
tion requested by CMS or OIG can in- or her financial relationships in ac-
clude the following: cordance with this section is subject to
(1) The name and unique physician a civil money penalty of up to $10,000
identification number (UPIN) or the for each day following the deadline es-
national provider identifier (NPI) of tablished under paragraph (e) of this
each physician who has a reportable fi- section until the information is sub-
nancial relationship with the entity. mitted. Assessment of these penalties
(2) The name and UPIN or NPI of will comply with the applicable provi-
each physician who has an immediate sions of part 1003 of this title.
family member (as defined at § 411.351) (g) Public disclosure. Information fur-
who has a reportable financial relation- nished to CMS or OIG under this sec-
ship with the entity. tion is subject to public disclosure in
(3) The covered services furnished by accordance with the provisions of part
the entity. 401 of this chapter.
(4) With respect to each physician [72 FR 51098, Sept. 5, 2007]
identified under paragraphs (c)(1) and
(c)(2) of this section, the nature of the § 411.370 Advisory opinions relating to
financial relationship (including the physician referrals.
extent or value of the ownership or in- (a) Period during which CMS accepts
vestment interest or the compensation requests. The provisions of § 411.370
arrangement) as evidenced in records through § 411.389 apply to requests for
that the entity knows or should know advisory opinions that are submitted
about in the course of prudently con- to CMS during any time period in
ducting business, including, but not which CMS is required by law to issue
limited to, records that the entity is the advisory opinions described in this
already required to retain to comply subpart.
with the rules of the Internal Revenue (b) Matters that qualify for advisory
Service and the Securities and Ex- opinions and who may request one. Any
change Commission and other rules of individual or entity may request a

the Medicare and Medicaid programs. written advisory opinion from CMS
488
concerning whether a physician’s refer- tion is under investigation, or is or has

ral relating to designated health serv- been the subject of a proceeding involv-
ices (other than clinical laboratory ing the Department of Health and
services) is prohibited under section Human Services or another govern-
1877 of the Act. In the advisory opinion, mental agency; or
CMS determines whether a business ar- (3) CMS believes that it cannot make
rangement described by the parties to an informed opinion or could only
that arrangement appears to con- make an informed opinion after exten-
stitute a ‘‘financial relationship’’ (as sive investigation, clinical study, test-
defined in section 1877(a)(2) of the Act) ing, or collateral inquiry.
that could potentially restrict a physi-
(f) Effects of an advisory opinion on
cian’s referrals, and whether the ar-
rangement or the designated health other Governmental authority. Nothing
services at issue appear to qualify for in this part limits the investigatory or
any of the exceptions to the referral prosecutorial authority of the OIG, the
prohibition described in section 1877 of Department of Justice, or any other
the Act. agency of the Government. In addition,
(1) The request must involve an exist- in connection with any request for an
ing arrangement or one into which the advisory opinion, CMS, the OIG, or the
requestor, in good faith, specifically Department of Justice may conduct
plans to enter. The planned arrange- whatever independent investigation it
ment may be contingent upon the believes appropriate.
party or parties receiving a favorable
advisory opinion. CMS does not con- FR 51098, Sept. 5, 2007]
sider, for purposes of an advisory opin-
ion, requests that present a general § 411.372 Procedure for submitting a
question of interpretation, pose a hypo- request.
thetical situation, or involve the ac-
tivities of third parties. (a) Format for a request. A party or
(2) The requestor must be a party to parties must submit a request for an
the existing or proposed arrangement. advisory opinion to CMS in writing, in-
(c) Matters not subject to advisory opin- cluding an original request and 2 cop-
ions. CMS does not address through the ies. The request must be addressed to:
advisory opinion process— Centers for Medicare & Medicaid Serv-
(1) Whether the fair market value ices, Department of Health and Human
was, or will be, paid or received for any Services, Office of Financial Manage-
goods, services, or property; and ment, Division of Premium Billing and
(2) Whether an individual is a bona Collections, Mail Stop C3–09–27, Atten-
fide employee within the requirements tion: Advisory Opinions, 7500 Security
of section 3121(d)(2) of the Internal Rev- Boulevard, Baltimore, MD 21244–1850.
enue Code of 1986. (b) Information CMS requires with all
(d) Facts subject to advisory opinions. submissions. The request must include
CMS considers requests for advisory the following:
opinions that involve applying specific (1) The name, address, telephone
facts to the subject matter described in number, and Taxpayer Identification
paragraph (b) of this section. Reques- Number of the requestor.
tors must include in the advisory opin-
(2) The names and addresses, to the
ion request a complete description of
extent known, of all other actual and
the arrangement that the requestor is
undertaking, or plans to undertake, as potential parties to the arrangement
described in § 411.372. that is the subject of the request.
(e) Requests that will not be accepted. (3) The name, title, address, and day-
CMS does not accept an advisory opin- time telephone number of a contact
ion request or issue an advisory opin- person who will be available to discuss
ion if— the request with CMS on behalf of the
(1) The request is not related to a requestor.
named individual or entity; (4) A complete and specific descrip-
(2) CMS is aware that the same, or tion of all relevant information bear-
substantially the same, course of ac- ing on the arrangement, including—
489
§ 411.37 42 CFR Ch. IV (10–1–09 Edition)
428
§ 411.361 42 CFR Ch. IV (10–1–09 Edition)
[72 FR 51091, Sept. 5, 2007; 72 FR 68076, Dec. 4,

488
§ 411.356 42 CFR Ch. IV (10–1–09 Edition)
§ 411.356 Exceptions to the referral riod as Congress may specify), is not a

prohibition related to ownership or specialty hospital.
investment interests. (2) A hospital that is located in Puer-
For purposes of § 411.353, the fol- to Rico, in the case of DHS furnished
lowing ownership or investment inter- by such a hospital.
ests do not constitute a financial rela- (3) A hospital that is located outside
tionship: of Puerto Rico, in the case of DHS fur-
nished by such a hospital, if—
(a) Publicly-traded securities. Owner-
(i) The referring physician is author-
ship of investment securities (includ-
ized to perform services at the hos-
ing shares or bonds, debentures, notes,
pital;
or other debt instruments) that at the (ii) Effective for the 18-month period
time the DHS referral was made could beginning on December 8, 2003 (or such
be purchased on the open market and other period as Congress may specify),
that meet the requirements of para- the hospital is not a specialty hospital;
graphs (a)(1) and (a)(2) of this section. and
(1) They are either— (iii) The ownership or investment in-
(i) Listed for trading on the New terest is in the entire hospital and not
York Stock Exchange, the American merely in a distinct part or department
Stock Exchange, or any regional ex- of the hospital.
change in which quotations are pub-
lished on a daily basis, or foreign secu- [72 FR 51091, Sept. 5, 2007]
rities listed on a recognized foreign, § 411.357 Exceptions to the referral
national, or regional exchange in which prohibition related to compensation
quotations are published on a daily arrangements.
basis; or
For purposes of § 411.353, the fol-
(ii) Traded under an automated inter- lowing compensation arrangements do
dealer quotation system operated by not constitute a financial relationship:
the National Association of Securities (a) Rental of office space. Payments
Dealers. for the use of office space made by a
(2) They are in a corporation that lessee to a lessor if there is a rental or
had stockholder equity exceeding $75 lease agreement that meets the fol-
million at the end of the corporation’s lowing requirements:
most recent fiscal year or on average (1) The agreement is set out in writ-
during the previous 3 fiscal years. ing, is signed by the parties, and speci-
‘‘Stockholder equity’’ is the difference fies the premises it covers.
in value between a corporation’s total (2) The term of the agreement is at
assets and total liabilities. least 1 year. To meet this requirement,
(b) Mutual funds. Ownership of shares if the agreement is terminated during
in a regulated investment company as the term with or without cause, the
defined in section 851(a) of the Internal parties may not enter into a new agree-
Revenue Code of 1986, if the company ment during the first year of the origi-
had, at the end of its most recent fiscal nal term of the agreement.
year, or on average during the previous (3) The space rented or leased does
3 fiscal years, total assets exceeding $75 not exceed that which is reasonable
million. and necessary for the legitimate busi-
(c) Specific providers. Ownership or in- ness purposes of the lease or rental and
vestment interest in the following enti- is used exclusively by the lessee when
ties, for purposes of the services speci- being used by the lessee (and is not
fied: shared with or used by the lessor or
(1) A rural provider, in the case of any person or entity related to the les-
DHS furnished in a rural area (as de- sor), except that the lessee may make
fined at § 411.351 of this subpart) by the payments for the use of space con-
provider. A ‘‘rural provider’’ is an enti- sisting of common areas if the pay-
ty that furnishes substantially all (not ments do not exceed the lessee’s pro
less than 75 percent) of the DHS that it rata share of expenses for the space
furnishes to residents of a rural area based upon the ratio of the space used
and, for the 18-month period beginning exclusively by the lessee to the total
on December 8, 2003 (or such other pe- amount of space (other than common
474
areas) occupied by all persons using the meet this requirement, if the agree-
common areas. ment is terminated during the term
(4) The rental charges over the term with or without cause, the parties may
of the agreement are set in advance not enter into a new agreement during
and are consistent with fair market the first year of the original term of
value. the agreement.
(5) The rental charges over the term (4) The rental charges over the term
of the agreement are not determined— of the agreement are set in advance,
(i) In a manner that takes into ac- are consistent with fair market value,
count the volume or value of any refer- and are not determined—
rals or other business generated be- (i) In a manner that takes into ac-
tween the parties; or count the volume or value of any refer-
(ii) The compensation arrangement rals or other business generated be-
described in § 411.354(c)(2)(ii) is set out tween the parties; or
in writing, signed by the parties, and (ii) Using a formula based on—
specifies the services covered by the ar- (A) A percentage of the revenue
rangement, except in the case of a bona raised, earned, billed, collected, or oth-
fide employment relationship between erwise attributable to the services per-
an employer and an employee, in which formed on or business generated by the
case the arrangement need not be set use of the equipment; or
out in a written contract, but must be (B) Per-unit of service rental charges,
for identifiable services and be com- to the extent that such charges reflect
mercially reasonable even if no r services provided to patients referred
(6) The agreement would be commer- between the parties.
cially reasonable even if no referrals
(5) The agreement would be commer-
were made between the lessee and the
lessor.
were made between the parties.
(6) The agreement would be commer-
(6) A holdover month-to-month rent-
al for up to 6 months immediately fol-
were made between the lessee and the
lowing the expiration of an agreement
lessor.
of at least 1 year that met the condi-
(7) A holdover month-to-month rent-
tions of paragraphs (b)(1) through (b)(5)
al for up to 6 months immediately fol-
of this section satisfies the require-
lowing the expiration of an agreement
ments of paragraph (b) of this section,
of at least 1 year that met the condi-
provided that the holdover rental is on
tions of paragraphs (a)(1) through (a)(6)
the same terms and conditions as the
of this section satisfies the require-
immediately preceding agreement.
ments of paragraph (a) of this section,
provided that the holdover rental is on (c) Bona fide employment relationships.
the same terms and conditions as the Any amount paid by an employer to a
immediately preceding agreement. physician (or immediate family mem-
(b) Rental of equipment. Payments ber) who has a bona fide employment
made by a lessee to a lessor for the use relationship with the employer for the
of equipment under the following con- provision of services if the following
ditions: conditions are met:
(1) A rental or lease agreement is set (1) The employment is for identifi-
out in writing, is signed by the parties, able services.
and specifies the equipment it covers. (2) The amount of the remuneration
(2) The equipment rented or leased under the employment is—
does not exceed that which is reason- (i) Consistent with the fair market
able and necessary for the legitimate value of the services; and
business purposes of the lease or rental (ii) Except as provided in paragraph
and is used exclusively by the lessee (c)(4) of this section, is not determined
when being used by the lessee and is in a manner that takes into account
not shared with or used by the lessor or (directly or indirectly) the volume or
any person or entity related to the les- value of any referrals by the referring
sor. physician.
(3) The agreement provides for a term (3) The remuneration is provided
of rental or lease of at least 1 year. To under an agreement that would be
475
§ 411.357 42 CFR Ch. IV (10–1–09 Edition)
commercially reasonable even if no re- (v) The compensation to be paid over

ferrals were made to the employer. the term of each arrangement is set in
(4) Paragraph (c)(2)(ii) of this section advance, does not exceed fair market
does not prohibit payment of remu- value, and, except in the case of a phy-
neration in the form of a productivity sician incentive plan (as defined at
bonus based on services performed per- § 411.351 of this subpart), is not deter-
sonally by the physician (or immediate mined in a manner that takes into ac-
family member of the physician). count the volume or value of any refer-
(d) Personal service arrangements. (1) rals or other business generated be-
General—Remuneration from an entity tween the parties.
under an arrangement or multiple ar- (vi) The services to be furnished
rangements to a physician or his or her under each arrangement do not involve
immediate family member, or to a the counseling or promotion of a busi-
group practice, including remuneration ness arrangement or other activity
for specific physician services fur- that violates any Federal or State law.
nished to a nonprofit blood center, if (vii) A holdover personal service ar-
the following conditions are met: rangement for up to 6 months following
(i) Each arrangement is set out in the expiration of an agreement of at
writing, is signed by the parties, and least 1 year that met the conditions of
specifies the services covered by the ar- paragraph (d) of this section satisfies
rangement. the requirements of paragraph (d) of
(ii) The arrangement(s) covers all of this section, provided that the holdover
the services to be furnished by the phy- personal service arrangement is on the
sician (or an immediate family member same terms and conditions as the im-
of the physician) to the entity. This re- mediately preceding agreement.
quirement is met if all separate ar- (2) Physician incentive plan exception.
rangements between the entity and the In the case of a physician incentive
physician and the entity and any fam-
plan (as defined at § 411.351) between a
ily members incorporate each other by
physician and an entity (or down-
reference or if they cross-reference a
stream contractor), the compensation
master list of contracts that is main-
may be determined in a manner
tained and updated centrally and is
(through a withhold, capitation, bonus,
available for review by the Secretary
upon request. The master list must be or otherwise) that takes into account
maintained in a manner that preserves directly or indirectly the volume or
the historical record of contracts. A value of any referrals or other business
physician or family member can ‘‘fur- generated between the parties, if the
nish’’ services through employees plan meets the following requirements:
whom they have hired for the purpose (i) No specific payment is made di-
of performing the services; through a rectly or indirectly under the plan to a
wholly-owned entity; or through locum physician or a physician group as an
tenens physicians (as defined at inducement to reduce or limit medi-
§ 411.351, except that the regular physically necessary services furnished with
cian need not be a member of a group respect to a specific individual enrolled
practice). with the entity.
(iii) The aggregate services con- (ii) Upon request of the Secretary,
tracted for do not exceed those that are the entity provides the Secretary with
reasonable and necessary for the legiti- access to information regarding the
mate business purposes of the arrange- plan (including any downstream con-
ment(s). tractor plans), in order to permit the
(iv) The term of each arrangement is Secretary to determine whether the
for at least 1 year. To meet this re- plan is in compliance with paragraph
quirement, if an arrangement is termi- (d)(2) of this section.
nated during the term with or without (iii) In the case of a plan that places
cause, the parties may not enter into a physician or a physician group at
the same or substantially the same ar- substantial financial risk as defined at
rangement during the first year of the § 422.208, the entity or any downstream
original term of the arrangement. contractor (or both) complies with the
476
requirements concerning physician in- of the lowest number of contiguous zip

centive plans set forth in § 422.208 and codes from which the hospital draws at
§ 422.210 of this chapter. least 90 percent of its inpatients. If the
(e) Physician recruitment. (1) Remu- hospital draws fewer than 90 percent of
neration provided by a hospital to re- its inpatients from all of the contig-
cruit a physician that is paid directly uous zip codes from which it draws in-
to the physician and that is intended patients, the ‘‘geographic area served
to induce the physician to relocate his by the hospital’’ may include non-
or her medical practice to the geo- contiguous zip codes, beginning with
graphic area served by the hospital in the noncontiguous zip code in which
order to become a member of the hos- the highest percentage of the hospital’s
pital’s medical staff, if all of the fol- inpatients resides, and continuing to
lowing conditions are met: add noncontiguous zip codes in decreas-
(i) The arrangement is set out in ing order of percentage of inpatients.
writing and signed by both parties; (iv) A physician will be considered to
(ii) The arrangement is not condi- have relocated his or her medical prac-
tioned on the physician’s referral of pa- tice if the medical practice was located
tients to the hospital; outside the geographic area served by
(iii) The hospital does not determine the hospital and—
(directly or indirectly) the amount of (A) The physician moves his or her
the remuneration to the physician medical practice at least 25 miles and
based on the volume or value of any ac- into the geographic area served by the
tual or anticipated referrals by the hospital; or
physician or other business generated (B) The physician moves his medical
between the parties; and practice into the geographic area
(iv) The physician is allowed to es- served by the hospital, and the physi-
tablish staff privileges at any other cian’s new medical practice derives at
hospital(s) and to refer business to any least 75 percent of its revenues from
other entities (except as referrals may professional services furnished to pa-
be restricted under an employment or tients (including hospital inpatients)
services contract that complies with not seen or treated by the physician at
§ 411.354(d)(4)). his or her prior medical practice site
(2)(i) The ‘‘geographic area served by during the preceding 3 years, measured
the hospital’’ is the area composed of on an annual basis (fiscal or calendar
the lowest number of contiguous zip year). For the initial ‘‘start up’’ year of
codes from which the hospital draws at the recruited physician’s practice, the
least 75 percent of its inpatients. The 75 percent test in the preceding sen-
geographic area served by the hospital tence will be satisfied if there is a rea-
may include one or more zip codes from sonable expectation that the recruited
which the hospital draws no inpatients, physician’s medical practice for the
provided that such zip codes are en- year will derive at least 75 percent of
tirely surrounded by zip codes in the its revenues from professional services
geographic area described above from furnished to patients not seen or treat-
which the hospital draws at least 75 ed by the physician at his or her prior
percent of its inpatients. medical practice site during the pre-
(ii) With respect to a hospital that ceding 3 years.
draws fewer than 75 percent of its inpa- (3) The recruited physician will not
tients from all of the contiguous zip be subject to the relocation require-
codes from which it draws inpatients, ment of this paragraph, provided that
the ‘‘geographic area served by the hos- he or she establishes his or her medical
pital’’ will be deemed to be the area practice in the geographic area served
composed of all of the contiguous zip by the recruiting hospital, if—
codes from which the hospital draws its (i) He or she is a resident or physi-
inpatients. cian who has been in practice 1 year or
(iii) Special optional rule for rural hos- less;
pitals. In the case of a hospital located (ii) He or she was employed on a full-
in a rural area (as defined at § 411.351), time basis for at least 2 years imme-
the ‘‘geographic area served by the hos- diately prior to the recruitment ar-
pital’’ may also be the area composed rangement by one of the following (and
477
§ 411.357 42 CFR Ch. IV (10–1–09 Edition)
did not maintain a private practice in (B) The lower of a per capita alloca-
addition to such full-time employ- tion or 20 percent of the practice’s ag-
ment): gregate costs.
(A) A Federal or State bureau of pris- (iv) Records of the actual costs and
ons (or similar entity operating one or the passed-through amounts are main-
more correctional facilities) to serve a tained for a period of at least 5 years
prison population; and made available to the Secretary
(B) The Department of Defense or De- upon request.
partment of Veterans Affairs to serve (v) The remuneration from the hos-
active or veteran military personnel pital under the arrangement is not de-
and their families; or termined in a manner that takes into
(C) A facility of the Indian Health account (directly or indirectly) the vol-
Service to serve patients who receive ume or value of any actual or antici-
medical care exclusively through the pated referrals by the recruited physi-
Indian Health Service; or cian or the physician practice (or any
(iii) The Secretary has deemed in an physician affiliated with the physician
advisory opinion issued under section practice) receiving the direct payments
1877(g) of the Act that the physician from the hospital.
does not have an established medical (vi) The physician practice may not
practice that serves or could serve a impose on the recruited physician prac-
significant number of patients who are tice restrictions that unreasonably re-
or could become patients of the restrict the recruited physician’s ability
cruiting hospital. to practice medicine in the geographic
(4) In the case of remuneration pro- area served by the hospital.
vided by a hospital to a physician ei- (vii) The arrangement does not vio-
ther indirectly through payments made late the anti-kickback statute (section
to another physician practice, or di- 1128B(b) of the Act), or any Federal or
rectly to a physician who joins a physi- State law or regulation governing bill-
cian practice, the following additional ing or claims submission.
conditions must be met: (5) Recruitment of a physician by a
(i) The written agreement in para- hospital located in a rural area (as de-
graph (e)(1) is also signed by the physi- fined at § 411.351) to an area outside the
cian practice. geographic area served by the hospital
(ii) Except for actual costs incurred is permitted under this exception if the
by the physician practice in recruiting Secretary determines in an advisory
the new physician, the remuneration is opinion issued under section 1877(g) of
passed directly through to or remains the Act that the area has a dem-
with the recruited physician. onstrated need for the recruited physi-
(iii) In the case of an income guar- cian and all other requirements of this
antee of any type made by the hospital paragraph (e) are met.
to a recruited physician who joins a (6) This paragraph (e) applies to re-
physician practice, the costs allocated muneration provided by a federally
by the physician practice to the re- qualified health center or a rural
cruited physician do not exceed the ac- health clinic in the same manner as it
tual additional incremental costs at- applies to remuneration provided by a
tributable to the recruited physician. hospital, provided that the arrange-
With respect to a physician recruited ment does not violate the anti-kick-
to join a physician practice located in back statute (section 1128B(b) of the
a rural area or HPSA, if the physician Act), or any Federal or State law or
is recruited to replace a physician who, regulation governing billing or claims
within the previous 12-month period, submission.
retired, relocated outside of the geo- (f) Isolated transactions. Isolated fi-
graphic area served by the hospital, or nancial transactions, such as a one-
died, the costs allocated by the physi- time sale of property or a practice, if
cian practice to the recruited physician all of the following conditions are met:
do not exceed either— (1) The amount of remuneration
(A) The actual additional incre- under the isolated transaction is—
mental costs attributable to the re- (i) Consistent with the fair market
cruited physician; or value of the transaction; and
478
(ii) Not determined in a manner that of inpatient hospital services under

takes into account (directly or indi- section 1861(b)(3) of the Act.
rectly) the volume or value of any re- (2) The arrangement began before,
ferrals by the referring physician or and has continued in effect without
other business generated between the interruption since, December 19, 1989.
parties. (3) With respect to the DHS covered
(2) The remuneration is provided under the arrangement, at least 75 per-
under an agreement that would be cent of these services furnished to pa-
commercially reasonable even if the tients of the hospital are furnished by
physician made no referrals to the en- the group under the arrangement.
tity. (4) The arrangement is in accordance
(3) There are no additional trans- with a written agreement that specifies
actions between the parties for 6 the services to be furnished by the par-
months after the isolated transaction, ties and the compensation for services
except for transactions that are specifi- furnished under the agreement.
cally excepted under the other provi- (5) The compensation paid over the
sions in § 411.355 through § 411.357 and term of the agreement is consistent
except for commercially reasonable with fair market value, and the com-
post-closing adjustments that do not pensation per unit of service is fixed in
take into account (directly or indi- advance and is not determined in a
rectly) the volume or value of referrals manner that takes into account the
or other business generated by the re- volume or value of any referrals or
ferring physician. other business generated between the
(g) Certain arrangements with hos- parties.
pitals. Remuneration provided by a hos- (6) The compensation is provided in
pital to a physician if the remunera- accordance with an agreement that
tion does not relate, directly or indi- would be commercially reasonable even
rectly, to the furnishing of DHS. To if no referrals were made to the entity.
qualify as ‘‘unrelated,’’ remuneration
(i) Payments by a physician. Payments
must be wholly unrelated to the fur-
made by a physician (or his or her im-
nishing of DHS and must not in any
mediate family member)—
way take into account the volume or
value of a physician’s referrals. Remu- (1) To a laboratory in exchange for
neration relates to the furnishing of the provision of clinical laboratory
DHS if it— services; or
(1) Is an item, service, or cost that (2) To an entity as compensation for
could be allocated in whole or in part any other items or services that are
to Medicare or Medicaid under cost re- furnished at a price that is consistent
porting principles; with fair market value, and that are
(2) Is furnished, directly or indi- not specifically excepted by another
rectly, explicitly or implicitly, in a se- provision in §§ 411.355 through 411.357
lective, targeted, preferential, or con- (including, but not limited to,
ditioned manner to medical staff or § 411.357(l)). ‘‘Services’’ in this context
other persons in a position to make or means services of any kind (not merely
influence referrals; or those defined as ‘‘services’’ for pur-
(3) Otherwise takes into account the poses of the Medicare program in
volume or value of referrals or other § 400.202 of this chapter).
business generated by the referring (j) Charitable donations by a physician.
physician. Bona fide charitable donations made by
(h) Group practice arrangements with a a physician (or immediate family mem-
hospital. An arrangement between a ber) to an entity if all of the following
hospital and a group practice under conditions are satisfied:
which DHS are furnished by the group (1) The charitable donation is made
but are billed by the hospital if the fol- to an organization exempt from tax-
lowing conditions are met: ation under the Internal Revenue Code
(1) With respect to services furnished (or to a supporting organization);
to an inpatient of the hospital, the ar- (2) The donation is neither solicited,
rangement is pursuant to the provision nor offered, in any manner that takes
479
§ 411.357 42 CFR Ch. IV (10–1–09 Edition)
into account the volume or value of re- of the excess nonmonetary compensa-
ferrals or other business generated be- tion) by the end of the calendar year in
tween the physician and the entity; which the excess nonmonetary com-
and pensation was received or within 180
(3) The donation arrangement does consecutive calendar days following
not violate the anti-kickback statute the date the excess nonmonetary com-
(section 1128B(b) of the Act), or any pensation was received by the physi-
Federal or State law or regulation gov- cian, whichever is earlier.
erning billing or claims submission. (iii) Paragraph (k)(3) may be used by
(k) Nonmonetary compensation. (1) an entity only once every 3 years with
Compensation from an entity in the respect to the same referring physi-
form of items or services (not including cian.
cash or cash equivalents) that does not (4) In addition to nonmonetary com-
exceed an aggregate of $300 per cal- pensation up to the limit described in
endar year, as adjusted for inflation in paragraph (k)(1) of this section, an en-
accordance with paragraph (k)(2) of tity that has a formal medical staff
this section, if all of the following con- may provide one local medical staff ap-
ditions are satisfied: preciation event per year for the entire
(i) The compensation is not deter- medical staff. Any gifts or gratuities
mined in any manner that takes into provided in connection with the med-
account the volume or value of refer- ical staff appreciation event are sub-
rals or other business generated by the ject to the limit in paragraph (k)(1).
referring physician. (l) Fair market value compensation.
(ii) The compensation may not be so- Compensation resulting from an ar-
licited by the physician or the physi- rangement between an entity and a
cian’s practice (including employees physician (or an immediate family
and staff members). member) or any group of physicians
(iii) The compensation arrangement (regardless of whether the group meets
does not violate the anti-kickback the definition of a group practice set
statute (section 1128B(b) of the Act) or forth in § 411.352) for the provision of
any Federal or State law or regulation items or services (other than the rental
governing billing or claims submission. of office space) by the physician (or an
(2) The annual aggregate nonmone- immediate family member) or group of
tary compensation limit in this para- physicians to the entity, or by the en-
graph (k) is adjusted each calendar tity to the physician (or an immediate
year to the nearest whole dollar by the family member) or a group of physi-
increase in the Consumer Price Index— cians, if the arrangement is set forth in
Urban All Items (CPI–U) for the 12- an agreement that meets the following
month period ending the preceding conditions:
September 30. CMS displays after Sep- (1) The arrangement is in writing,
tember 30 each year both the increase signed by the parties, and covers only
in the CPI–U for the 12-month period identifiable items or services, all of
and the new nonmonetary compensa- which are specified in the agreement.
tion limit on the physician self-referral (2) The writing specifies the time-
Web site: http://www.cms.hhs.gov/ frame for the arrangement, which can
PhysicianSelfReferral/10lCPI- be for any period of time and contain a
UlUpdates.asp. termination clause, provided that the
(3) Where an entity has inadvertently parties enter into only one arrange-
provided nonmonetary compensation ment for the same items or services
to a physician in excess of the limit (as during the course of a year. An ar-
set forth in paragraph (k)(1) of this sec- rangement made for less than 1 year
tion), such compensation is deemed to may be renewed any number of times if
be within the limit if— the terms of the arrangement and the
(i) The value of the excess nonmone- compensation for the same items or
tary compensation is no more than 50 services do not change.
percent of the limit; and (3) The writing specifies the com-
(ii) The physician returns to the enti- pensation that will be provided under
ty the excess nonmonetary compensa- the arrangement. The compensation

tion (or an amount equal to the value must be set in advance, consistent with
480
fair market value, and not determined not limited to, internet access, pagers,
in a manner that takes into account or two-way radios, used away from the
the volume or value of referrals or campus only to access hospital medical
other business generated by the refer- records or information or to access pa-
ring physician. Compensation for the tients or personnel who are on the hos-
rental of equipment may not be deter- pital campus, as well as the identifica-
mined using a formula based on— tion of the medical staff on a hospital
(i) A percentage of the revenue web site or in hospital advertising,
raised, earned, billed, collected, or oth- meets the ‘‘on campus’’ requirement of
erwise attributable to the services per- this paragraph (m) of this section.
formed or business generated through (4) The compensation is reasonably
the use of the equipment; or related to the provision of, or designed
(ii) Per-unit of service rental to facilitate directly or indirectly the
charges, to the extent that such delivery of, medical services at the
charges reflect services provided to pa- hospital.
tients referred between the parties. (5) The compensation is of low value
(4) The arrangement is commercially (that is, less than $25) with respect to
reasonable (taking into account the na- each occurrence of the benefit (for ex-
ture and scope of the transaction) and ample, each meal given to a physician
furthers the legitimate business pur- while he or she is serving patients who
poses of the parties. are hospitalized must be of low value).
(5) The arrangement does not violate The $25 limit in this paragraph (m)(5) is
the anti-kickback statute (section adjusted each calendar year to the
1128B(b) of the Act), or any Federal or nearest whole dollar by the increase in
State law or regulation governing bill- the Consumer Price Index—Urban All
ing or claims submission. Items (CPI–I) for the 12 month period
(6) The services to be performed ending the preceding September 30.
under the arrangement do not involve CMS displays after September 30 each
the counseling or promotion of a busi- year both the increase in the CPI–I for
ness arrangement or other activity the 12 month period and the new limits
that violates a Federal or State law. on the physician self-referral web site:
(m) Medical staff incidental benefits. http://www.cms.hhs.gov/
Compensation in the form of items or PhysicianSelfReferral/10lCPI-
services (not including cash or cash UlUpdates.asp.
equivalents) from a hospital to a mem- (6) The compensation is not deter-
ber of its medical staff when the item mined in any manner that takes into
or service is used on the hospital’s account the volume or value of refer-
campus, if all of the following condi- rals or other business generated be-
tions are met: tween the parties.
(1) The compensation is offered to all (7) The compensation arrangement
members of the medical staff prac- does not violate the anti-kickback
ticing in the same specialty (but not statute (section 1128B(b) of the Act), or
necessarily accepted by every member any Federal or State law or regulation
to whom it is offered) without regard governing billing or claims submission.
to the volume or value of referrals or (8) Other facilities and health care
other business generated between the clinics (including, but not limited to,
parties. federally qualified health centers) that
(2) Except with respect to identifica- have bona fide medical staffs may pro-
tion of medical staff on a hospital web vide compensation under this para-
site or in hospital advertising, the graph (m) on the same terms and con-
compensation is provided only during ditions applied to hospitals under this
periods when the medical staff mem- paragraph (m).
bers are making rounds or are engaged (n) Risk-sharing arrangements. Com-
in other services or activities that ben- pensation pursuant to a risk-sharing
efit the hospital or its patients. arrangement (including, but not lim-
(3) The compensation is provided by ited to, withholds, bonuses, and risk
the hospital and used by the medical pools) between a MCO or an IPA and a
staff members only on the hospital’s physician (either directly or indirectly

campus. Compensation, including, but through a subcontractor) for services
481
§ 411.357 42 CFR Ch. IV (10–1–09 Edition)
provided to enrollees of a health plan, erwise attributable to the services per-

provided that the arrangement does formed or business generated in the of-
not violate the anti-kickback statute fice space or to the services performed
(section 1128B(b) of the Act), or any or business generated through the use
Federal or State law or regulation gov- of the equipment; or
erning billing or claims submission. (B) Per-unit of service rental charges,
For purposes of this paragraph (n), to the extent that such charges reflect
‘‘health plan’’ and ‘‘enrollees’’ have the services provided to patients referred
meanings set forth in § 1001.952(l) of between the parties.
this title. (ii) The compensation arrangement
(o) Compliance training. Compliance described in § 411.354(c)(2)(ii) is set out
training provided by an entity to a in writing, signed by the parties, and
physician (or to the physician’s imme- specifies the services covered by the ar-
diate family member or office staff) rangement, except in the case of a bona
who practices in the entity’s local com- fide employment relationship between
munity or service area, provided that an employer and an employee, in which
the training is held in the local com- case the arrangement need not be set
munity or service area. For purposes of out in a written contract, but must be
this paragraph (o), ‘‘compliance train- for identifiable services and be com-
ing’’ means training regarding the mercially reasonable even if no refer-
basic elements of a compliance pro- rals are made to the employee; and
gram (for example, establishing poli- (iii) The compensation arrangement
cies and procedures, training of staff, does not violate the anti-kickback
internal monitoring, or reporting); spe- statute (section 1128B(b) of the Act), or
cific training regarding the require- any Federal or State law or regulation
ments of Federal and State health care governing billing or claims submission.
programs (for example, billing, coding, (2) The compensation arrangement
reasonable and necessary services, doc- described in § 411.354(c)(2)(ii) is set out
umentation, or unlawful referral ar- in writing, signed by the parties, and
rangements); or training regarding specifies the services covered by the ar-
other Federal, State, or local laws, reg- rangement, except in the case of a bona
ulations, or rules governing the con- fide employment relationship between
duct of the party for whom the train- an employer and an employee, in which
ing is provided. For purposes of this case the arrangement need not be set
paragraph, ‘‘compliance training’’ in- out in a written contract, but must be
cludes programs that offer continuing for identifiable services and be com-
medical education credit, provided that mercially reasonable even if no refer-
compliance training is the primary rals are made to the employer.
purpose of the program. (3) The compensation arrangement
(p) Indirect compensation arrange- does not violate the anti-kickback
ments. Indirect compensation arrange- statute (section 1128B(b) of the Act), or
ments, as defined at § 411.354(c)(2), if all any Federal or State law or regulation
of the following conditions are satis- governing billing or claims submission.
fied: (q) Referral services. Remuneration
(1)(i) The compensation received by that meets all of the conditions set
the referring physician (or immediate forth in § 1001.952(f) of this title.
family member) described in (r) Obstetrical malpractice insurance
§ 411.354(c)(2)(ii) is fair market value for subsidies. Remuneration that meets all
services and items actually provided of the conditions of paragraph (r)(1) or
and not determined in any manner that (2) of this section.
takes into account the volume or value (1) Remuneration that meets all of
of referrals or other business generated the conditions set forth in § 1001.952(o)
by the referring physician for the enti- of this title.
ty furnishing DHS. Compensation for (2) A payment from a hospital, feder-
the rental of office space or equipment ally qualified health center, or rural
may not be determined using a formula health clinic that is used to pay for
based on— some or all of the costs of malpractice
(A) A percentage of the revenue insurance premiums for a physician

raised, earned, billed, collected, or oth- who engages in obstetrical practice as
482
a routine part of his or her medical culated based on a bona fide assessment
practice, if all of the following condi- of the liability risk covered under the
tions are met: insurance.
(i)(A) The physician’s medical prac- (ix)(A) For each coverage period (not
tice is located in a rural area, a pri- to exceed 1 year), at least 75 percent of
mary care HPSA, or an area with dem- the physician’s obstetrical patients
onstrated need for the physician’s ob- treated under the coverage of the ob-
stetrical services as determined by the stetrical malpractice insurance during
Secretary in an advisory opinion issued the prior period (not to exceed 1 year)—
in accordance with section 1877(g)(6) of (1) Resided in a rural area, HPSA,
the Act; or medically underserved area, or an area
(B) At least 75 percent of the physi- with a demonstrated need for the phy-
cian’s obstetrical patients reside in a sician’s obstetrical services as deter-
medically underserved area or are mined by the Secretary in an advisory
members of a medically underserved opinion issued in accordance with sec-
population. tion 1877(g)(6) of the Act; or
(ii) The arrangement is set out in (2) Were part of a medically under-
writing, is signed by the physician and served population.
the hospital, federally qualified health (B) For the initial coverage period
center, or rural health clinic providing (not to exceed 1 year), the require-
the payment, and specifies the payments of paragraph (r)(2)(ix)(A) of this
ment to be made by the hospital, feder- section will be satisfied if the physi-
ally qualified health center, or rural cian certifies that he or she has a rea-
health clinic and the terms under sonable expectation that at least 75
which the payment is to be provided. percent of the physician’s obstetrical
(iii) The arrangement is not condi- patients treated under the coverage of
tioned on the physician’s referral of pa- the malpractice insurance will—
tients to the hospital, federally quali-
(1) Reside in a rural area, HPSA,
fied health center, or rural health clin-
medically underserved area, or an area
ic providing the payment.
with a demonstrated need for the phy-
(iv) The hospital, federally qualified
sician’s obstetrical services as deter-
health center, or rural health clinic
mined by the Secretary in an advisory
does not determine (directly or indi-
opinion issued in accordance with sec-
rectly) the amount of the payment
tion 1877(g)(6) of the Act; or
based on the volume or value of any ac-
tual or anticipated referrals by the (2) Be part of a medically under-
physician or any other business gen- served population.
erated between the parties. (x) The arrangement does not violate
(v) The physician is allowed to estab- the anti-kickback statute (section
lish staff privileges at any hospital(s), 1128B(b) of the Act), or any Federal or
federally qualified health center(s), or State law or regulation governing bill-
rural health clinic(s) and to refer busi- ing or claims submission.
ness to any other entities (except as re- (3) For purposes of paragraph (r)(2) of
ferrals may be restricted under an em- this section, costs of malpractice insur-
ployment arrangement or services con- ance premiums means:
tract that complies with § 411.354(d)(4)). (i) For physicians who engage in ob-
(vi) The payment is made to a person stetrical practice on a full-time basis,
or organization (other than the physi- any costs attributable to malpractice
cian) that is providing malpractice in- insurance; or
surance (including a self-funded organi- (ii) For physicians who engage in ob-
zation). stetrical practice on a part-time or
(vii) The physician treats obstetrical sporadic basis, the costs attributable
patients who receive medical benefits exclusively to the obstetrical portion
or assistance under any Federal health of the physician’s malpractice insur-
care program in a nondiscriminatory ance, and related exclusively to obstet-
manner. rical services provided—
(viii) The insurance is a bona fide (A) In a rural area, primary care
malpractice insurance policy or pro- HPSA, or an area with demonstrated

gram, and the premium, if any, is cal- need for the physician’s obstetrical
483
§ 411.357 42 CFR Ch. IV (10–1–09 Edition)
services, as determined by the Sec- ment, and the offer specifies the remu-
retary in an advisory opinion issued in neration being offered and requires the
accordance with section 1877(g)(6) of physician to move the location of his
the Act; or or her medical practice at least 25
(B) In any area, provided that at miles and outside of the geographic
least 75 percent of the physician’s ob- area served by the hospital making the
stetrical patients treated in the cov- retention payment.
erage period (not to exceed 1 year) re- (ii) The requirements of
sided in a medically underserved area § 411.357(e)(1)(i) through
or were part of a medically underserved § 411.357(e)(1)(iv) are satisfied.
population. (iii) Any retention payment is sub-
(s) Professional courtesy. Professional ject to the same obligations and re-
courtesy (as defined at § 411.351) offered strictions, if any, on repayment or for-
by an entity with a formal medical giveness of indebtedness as the written
staff to a physician or a physician’s im- recruitment offer or offer of employ-
mediate family member or office staff ment.
if all of the following conditions are (iv) The retention payment does not
met: exceed the lower of—
(1) The professional courtesy is of-
(A) The amount obtained by sub-
fered to all physicians on the entity’s
tracting the physician’s current in-
bona fide medical staff or in such enti-
come from physician and related serv-
ty’s local community or service area
ices from the income the physician
without regard to the volume or value
would receive from comparable physi-
of referrals or other business generated
between the parties; cian and related services in the written
(2) The health care items and services recruitment or employment offer, pro-
provided are of a type routinely provided that the respective incomes are
vided by the entity; determined using a reasonable and con-
(3) The entity has a professional sistent methodology, and that they are
courtesy policy that is set out in writ- calculated uniformly over no more
ing and approved in advance by the en- than a 24-month period; or
tity’s governing body; (B) The reasonable costs the hospital
(4) The professional courtesy is not would otherwise have to expend to re-
offered to a physician (or immediate cruit a new physician to the geographic
family member) who is a Federal area served by the hospital to join the
health care program beneficiary, un- medical staff of the hospital to replace
less there has been a good faith show- the retained physician.
ing of financial need; and (v) The requirements of paragraph
(5) The arrangement does not violate (t)(3) are satisfied.
the anti-kickback statute (section (2) Written certification from physician.
1128B(b) of the Act), or any Federal or Remuneration provided by a hospital
State law or regulation governing bill- directly to a physician on the hos-
ing or claims submission. pital’s medical staff to retain the phy-
(t) Retention payments in underserved sician’s medical practice in the geo-
areas—(1) Bona fide written offer. Remu- graphic area served by the hospital (as
neration provided by a hospital di- defined in paragraph (e)(2) of this sec-
rectly to a physician on the hospital’s tion), if all of the following conditions
medical staff to retain the physician’s are met:
medical practice in the geographic area (i) The physician furnishes to the
served by the hospital (as defined in hospital before the retention payment
paragraph (e)(2) of this section), if all is made a written certification that the
of the following conditions are met: physician has a bona fide opportunity
(i) The physician has a bona fide firm, for future employment by a hospital,
written recruitment offer or offer of academic medical center (as defined at
employment from a hospital, academic § 411.355(e)), or physician organization
medical center (as defined at (as defined at § 411.351) that requires
§ 411.355(e)), or physician organization the physician to move the location of
(as defined at § 411.351) that is not re- his or her medical practice at least 25
lated to the hospital making the pay- miles and outside the geographic area
484
served by the hospital. The certifi- (B) At least 75 percent of the physi-
cation contains at least the following— cian’s patients reside in a medically
(A) Details regarding the steps taken underserved area or are members of a
by the physician to effectuate the em- medically underserved population.
ployment opportunity; (ii) The hospital does not enter into a
(B) Details of the physician’s employ- retention arrangement with a par-
ment opportunity, including the iden- ticular referring physician more fre-
tity and location of the physician’s fu- quently than once every 5 years.
ture employer or employment location (iii) The amount and terms of the re-
or both, and the anticipated income tention payment are not altered during
and benefits (or a range for income and the term of the arrangement in any
benefits); manner that takes into account the
(C) A statement that the future em- volume or value of referrals or other
ployer is not related to the hospital business generated by the physician.
making the payment; (iv) The arrangement does not vio-
(D) The date on which the physician late the anti-kickback statute (section
anticipates relocating his or her med- 1128B(b) of the Act), or any Federal or
ical practice outside of the geographic State law or regulation governing bill-
area served by the hospital; and ing or claims submission.
(E) Information sufficient for the (4) The Secretary may waive the relo-
hospital to verify the information in- cation requirement of paragraphs (t)(1)
cluded in the written certification. and (t)(2) of this section for payments
(ii) The hospital takes reasonable made to physicians practicing in a
steps to verify that the physician has a HPSA or an area with demonstrated
bona fide opportunity for future em- need for the physician through an advi-
ployment that requires the physician sory opinion issued in accordance with
to relocate outside the geographic area section 1877(g)(6) of the Act, if the re-
served by the hospital. tention payment arrangement other-
(iii) The requirements of wise complies with all of the conditions
§ 411.357(e)(1)(i) through of this paragraph.
§ 411.357(e)(1)(iv) are satisfied. (5) This paragraph (t) applies to re-
(iv) The retention payment does not muneration provided by a federally
exceed the lower of— qualified health center or a rural
(A) An amount equal to 25 percent of health clinic in the same manner as it
the physician’s current income (meas- applies to remuneration provided by a
ured over no more than a 24-month pe- hospital.
riod), using a reasonable and consistent (u) Community-wide health information
methodology that is calculated uni- systems. Items or services of informa-
formly; or tion technology provided by an entity
(B) The reasonable costs the hospital to a physician that allow access to, and
would otherwise have to expend to re- sharing of, electronic health care
cruit a new physician to the geographic records and any complementary drug
area served by the hospital to join the information systems, general health
medical staff of the hospital to replace information, medical alerts, and re-
the retained physician. lated information for patients served
(v) The requirements of paragraph by community providers and practi-
(t)(3) are satisfied. tioners, in order to enhance the com-
(3) Remuneration provided under munity’s overall health, provided
paragraph (t)(1) or (t)(2) must meet the that—
following additional requirements: (1) The items or services are avail-
(i)(A) The physician’s current med- able as necessary to enable the physi-
ical practice is located in a rural area cian to participate in a community-
or HPSA (regardless of the physician’s wide health information system, are
specialty) or is located in an area with principally used by the physician as
demonstrated need for the physician as part of the community-wide health in-
determined by the Secretary in an ad- formation system, and are not provided
visory opinion issued in accordance to the physician in any manner that

with section 1877(g)(6) of the Act; or takes into account the volume or value
485
§ 411.357 42 CFR Ch. IV (10–1–09 Edition)
of referrals or other business generated ices, is determined in a manner that

by the physician; takes into account the volume or value
(2) The community-wide health infor- of referrals or other business generated
mation systems are available to all between the parties.
providers, practitioners, and residents (7) The arrangement is set forth in a
of the community who desire to par- written agreement that—
ticipate; and (i) Is signed by the parties;
(3) The arrangement does not violate (ii) Specifies the items and services
the anti-kickback statute (section being provided and the donor’s cost of
1128B(b) of the Act), or any Federal or the items and services; and
State law or regulation governing bill- (iii) Covers all of the electronic pre-
ing or claims submission. scribing items and services to be pro-
(v) Electronic prescribing items and vided by the donor. This requirement is
services. Nonmonetary remuneration met if all separate agreements between
(consisting of items and services in the the donor and the physician (and the
form of hardware, software, or informa- donor and any family members of the
tion technology and training services) physician) incorporate each other by
necessary and used solely to receive reference or if they cross-reference a
and transmit electronic prescription master list of agreements that is main-
information, if all of the following contained and updated centrally and is
ditions are met: available for review by the Secretary
(1) The items and services are pro- upon request. The master list must be
vided by a— maintained in a manner that preserves
(i) Hospital to a physician who is a the historical record of agreements.
member of its medical staff; (8) The donor does not have actual
(ii) Group practice (as defined at knowledge of, and does not act in reck-
§ 411.352) to a physician who is a mem- less disregard or deliberate ignorance
ber of the group (as defined at § 411.351); of, the fact that the physician pos-
or sesses or has obtained items or services
(iii) PDP sponsor or MA organization equivalent to those provided by the
to a prescribing physician. donor.
(2) The items and services are pro- (w) Electronic health records items and
vided as part of, or are used to access, services. Nonmonetary remuneration
an electronic prescription drug pro- (consisting of items and services in the
gram that meets the applicable stand- form of software or information tech-
ards under Medicare Part D at the time nology and training services) necessary
the items and services are provided. and used predominantly to create,
(3) The donor (or any person on the maintain, transmit, or receive elec-
donor’s behalf) does not take any ac- tronic health records, if all of the fol-
tion to limit or restrict the use or com- lowing conditions are met:
patibility of the items or services with (1) The items and services are pro-
other electronic prescribing or elec- vided by an entity (as defined at
tronic health records systems. § 411.351) to a physician.
(4) For items or services that are of (2) The software is interoperable (as
the type that can be used for any pa- defined at § 411.351) at the time it is
tient without regard to payer status, provided to the physician. For purposes
the donor does not restrict, or take any of this paragraph, software is deemed
action to limit, the physician’s right or to be interoperable if a certifying body
ability to use the items or services for recognized by the Secretary has cer-
any patient. tified the software no more than 12
(5) Neither the physician nor the phy- months prior to the date it is provided
sician’s practice (including employees to the physician.
and staff members) makes the receipt (3) The donor (or any person on the
of items or services, or the amount or donor’s behalf) does not take any ac-
nature of the items or services, a con- tion to limit or restrict the use, com-
dition of doing business with the donor. patibility, or interoperability of the
(6) Neither the eligibility of a physi- items or services with other electronic
cian for the items or services, nor the prescribing or electronic health records
amount or nature of the items or serv- systems.
486
(4) Before receipt of the items and or other business generated between
services, the physician pays 15 percent the parties.
of the donor’s cost for the items and (7) The arrangement is set forth in a
services. The donor (or any party re- written agreement that—
lated to the donor) does not finance the (i) Is signed by the parties;
physician’s payment or loan funds to (ii) Specifies the items and services
be used by the physician to pay for the being provided, the donor’s cost of the
items and services. items and services, and the amount of
(5) Neither the physician nor the phy- the physician’s contribution; and
sician’s practice (including employees (iii) Covers all of the electronic
and staff members) makes the receipt health records items and services to be
of items or services, or the amount or provided by the donor. This require-
nature of the items or services, a con- ment is met if all separate agreements
dition of doing business with the donor. between the donor and the physician
(6) Neither the eligibility of a physi- (and the donor and any family mem-
cian for the items or services, nor the bers of the physician) incorporate each
amount or nature of the items or serv- other by reference or if they cross-ref-
ices, is determined in a manner that di- erence a master list of agreements that
rectly takes into account the volume is maintained and updated centrally
or value of referrals or other business and is available for review by the Sec-
generated between the parties. For pur- retary upon request. The master list
poses of this paragraph, the determina- must be maintained in a manner that
tion is deemed not to directly take into preserves the historical record of
account the volume or value of refer- agreements.
rals or other business generated be- (8) The donor does not have actual
tween the parties if any one of the fol- knowledge of, and does not act in reck-
lowing conditions is met: less disregard or deliberate ignorance
(i) The determination is based on the of, the fact that the physician pos-
total number of prescriptions written sesses or has obtained items or services
by the physician (but not the volume equivalent to those provided by the
or value of prescriptions dispensed or donor.
paid by the donor or billed to the pro- (9) For items or services that are of
gram); the type that can be used for any pa-
(ii) The determination is based on the tient without regard to payer status,
size of the physician’s medical practice the donor does not restrict, or take any
(for example, total patients, total pa- action to limit, the physician’s right or
tient encounters, or total relative ability to use the items or services for
value units); any patient.
(iii) The determination is based on (10) The items and services do not in-
the total number of hours that the phy- clude staffing of physician offices and
sician practices medicine; are not used primarily to conduct per-
(iv) The determination is based on sonal business or business unrelated to
the physician’s overall use of auto- the physician’s medical practice.
mated technology in his or her medical (11) The electronic health records
practice (without specific reference to software contains electronic pre-
the use of technology in connection scribing capability, either through an
with referrals made to the donor); electronic prescribing component or
(v) The determination is based on the ability to interface with the physi-
whether the physician is a member of cian’s existing electronic prescribing
the donor’s medical staff, if the donor system that meets the applicable
has a formal medical staff; standards under Medicare Part D at
(vi) The determination is based on the time the items and services are
the level of uncompensated care pro- provided.
vided by the physician; or (12) The arrangement does not vio-
(vii) The determination is made in late the anti-kickback statute (section
any reasonable and verifiable manner 1128B(b) of the Act), or any Federal or
that does not directly take into ac- State law or regulation governing bill-
count the volume or value of referrals ing or claims submission.
487
§ 411.361 42 CFR Ch. IV (10–1–09 Edition)
[72 FR 51091, Sept. 5, 2007; 72 FR 68076, Dec. 4,

488
§ 411.356 42 CFR Ch. IV (10–1–09 Edition)
§ 411.356 Exceptions to the referral riod as Congress may specify), is not a

prohibition related to ownership or specialty hospital.
investment interests. (2) A hospital that is located in Puer-
For purposes of § 411.353, the fol- to Rico, in the case of DHS furnished
lowing ownership or investment inter- by such a hospital.
ests do not constitute a financial rela- (3) A hospital that is located outside
tionship: of Puerto Rico, in the case of DHS fur-
nished by such a hospital, if—
(a) Publicly-traded securities. Owner-
(i) The referring physician is author-
ship of investment securities (includ-
ized to perform services at the hos-
ing shares or bonds, debentures, notes,
pital;
or other debt instruments) that at the (ii) Effective for the 18-month period
time the DHS referral was made could beginning on December 8, 2003 (or such
be purchased on the open market and other period as Congress may specify),
that meet the requirements of para- the hospital is not a specialty hospital;
graphs (a)(1) and (a)(2) of this section. and
(1) They are either— (iii) The ownership or investment in-
(i) Listed for trading on the New terest is in the entire hospital and not
York Stock Exchange, the American merely in a distinct part or department
Stock Exchange, or any regional ex- of the hospital.
change in which quotations are pub-
lished on a daily basis, or foreign secu- [72 FR 51091, Sept. 5, 2007]
rities listed on a recognized foreign, § 411.357 Exceptions to the referral
national, or regional exchange in which prohibition related to compensation
quotations are published on a daily arrangements.
basis; or
For purposes of § 411.353, the fol-
(ii) Traded under an automated inter- lowing compensation arrangements do
dealer quotation system operated by not constitute a financial relationship:
the National Association of Securities (a) Rental of office space. Payments
Dealers. for the use of office space made by a
(2) They are in a corporation that lessee to a lessor if there is a rental or
had stockholder equity exceeding $75 lease agreement that meets the fol-
million at the end of the corporation’s lowing requirements:
most recent fiscal year or on average (1) The agreement is set out in writ-
during the previous 3 fiscal years. ing, is signed by the parties, and speci-
‘‘Stockholder equity’’ is the difference fies the premises it covers.
in value between a corporation’s total (2) The term of the agreement is at
assets and total liabilities. least 1 year. To meet this requirement,
(b) Mutual funds. Ownership of shares if the agreement is terminated during
in a regulated investment company as the term with or without cause, the
defined in section 851(a) of the Internal parties may not enter into a new agree-
Revenue Code of 1986, if the company ment during the first year of the origi-
had, at the end of its most recent fiscal nal term of the agreement.
year, or on average during the previous (3) The space rented or leased does
3 fiscal years, total assets exceeding $75 not exceed that which is reasonable
million. and necessary for the legitimate busi-
(c) Specific providers. Ownership or in- ness purposes of the lease or rental and
vestment interest in the following enti- is used exclusively by the lessee when
ties, for purposes of the services speci- being used by the lessee (and is not
fied: shared with or used by the lessor or
(1) A rural provider, in the case of any person or entity related to the les-
DHS furnished in a rural area (as de- sor), except that the lessee may make
fined at § 411.351 of this subpart) by the payments for the use of space con-
provider. A ‘‘rural provider’’ is an enti- sisting of common areas if the pay-
ty that furnishes substantially all (not ments do not exceed the lessee’s pro
less than 75 percent) of the DHS that it rata share of expenses for the space
furnishes to residents of a rural area based upon the ratio of the space used
and, for the 18-month period beginning exclusively by the lessee to the total
on December 8, 2003 (or such other pe- amount of space (other than common
474
§ 411.355 42 CFR Ch. IV (10–1–09 Edition)
sufficient detail so that it can be objec- tioner, or supplier is set forth in a

tively verified, and the formula may written agreement signed by the par-
not be changed or modified during the ties.
course of the agreement in any manner (B) The requirement to make refer-
that takes into account the volume or rals to a particular provider, practi-
value of referrals or other business gen- tioner, or supplier does not apply if the
erated by the referring physician. patient expresses a preference for a dif-
(2) Unit-based compensation (includ- ferent provider, practitioner, or sup-
ing time-based or per-unit of service- plier; the patient’s insurer determines
based compensation) is deemed not to the provider, practitioner, or supplier;
take into account ‘‘the volume or value or the referral is not in the patient’s
of referrals’’ if the compensation is fair best medical interests in the physi-
market value for services or items ac-
cian’s judgment.
tually provided and does not vary dur-
(v) The required referrals relate sole-
ing the course of the compensation ar-
rangement in any manner that takes ly to the physician’s services covered
into account referrals of DHS. by the scope of the employment or the
(3) Unit-based compensation (includ- contract, and the referral requirement
ing time-based or per-unit of service- is reasonably necessary to effectuate
based compensation) is deemed not to the legitimate business purposes of the
take into account ‘‘other business gen- compensation arrangement. In no
erated between the parties,’’ provided event may the physician be required to
that the compensation is fair market make referrals that relate to services
value for items and services actually that are not provided by the physician
provided and does not vary during the under the scope of his or her employ-
course of the compensation arrangement or contract.
ment in any manner that takes into [72 FR 51086, Sept. 5, 2007; 72 FR 68076, Dec. 4,
account referrals or other business gen- 2007, as amended at 73 FR 48751, Aug. 19, 2008;
erated by the referring physician, in- 73 FR 57543, Oct. 3, 2008]
cluding private pay health care busi-
ness (except for services personally § 411.355 General exceptions to the re-
performed by the referring physician, ferral prohibition related to both
which are not considered ‘‘other busi- ownership/investment and com-
ness generated’’ by the referring physi- pensation.
cian). The prohibition on referrals set forth
(4) A physician’s compensation from in § 411.353 does not apply to the fol-
a bona fide employer or under a man- lowing types of services:
aged care contract or other contract (a) Physician services. (1) Physician
for personal services may be condi- services as defined in § 410.20(a) of this
tioned on the physician’s referrals to a chapter that are furnished—
particular provider, practitioner, or
(i) Personally by another physician
supplier, provided that the compensa-
who is a member of the referring physi-
tion arrangement meets all of the fol-
cian’s group practice or is a physician
lowing conditions. The compensation
in the same group practice (as defined
arrangement:
(i) Is set in advance for the term of at § 411.351) as the referring physician;
the agreement. or
(ii) Is consistent with fair market (ii) Under the supervision of another
value for services performed (that is, physician who is a member of the refer-
the payment does not take into ac- ring physician’s group practice or is a
count the volume or value of antici- physician in the same group practice
pated or required referrals). (as defined at § 411.351) as the referring
(iii) Otherwise complies with an ap- physician, provided that the super-
plicable exception under § 411.355 or vision complies with all other applica-
§ 411.357. ble Medicare payment and coverage
(iv) Complies with both of the fol- rules for the physician services.
lowing conditions: (2) For purposes of paragraph (a) of
(A) The requirement to make refer- this section, ‘‘physician services’’ in-
rals to a particular provider, practi- clude only those ‘‘incident to’’ services
468
(as defined at § 411.351) that are physi- (2) The referring physician or the re-
cian services under § 410.20(a) of this ferring physician’s group practice owns
chapter. or rents an office that is normally open
(b) In-office ancillary services. Services to the physician’s or group’s patients
(including certain items of durable for medical services at least 8 hours per
medical equipment (DME), as defined week; and
in paragraph (b)(4) of this section, and (3) The referring physician regularly
infusion pumps that are DME (includ- practices medicine and furnishes physi-
ing external ambulatory infusion cian services to patients at least 6
pumps), but excluding all other DME hours per week. The 6 hours must in-
and parenteral and enteral nutrients, clude some physician services that are
equipment, and supplies (such as infu- unrelated to the furnishing of DHS
sion pumps used for PEN)), that meet payable by Medicare, any other Federal
the following conditions: health care payer, or a private payer,
(1) They are furnished personally by even though the physician services
one of the following individuals: may lead to the ordering of DHS; or
(i) The referring physician. (C)(1) The referring physician is
present and orders the DHS during a
(ii) A physician who is a member of
patient visit on the premises as set
the same group practice as the refer-
forth in paragraph (b)(2)(i)(C)(2) of this
ring physician.
section or the referring physician or a
(iii) An individual who is supervised member of the referring physician’s
by the referring physician or, if the re- group practice (if any) is present while
ferring physician is in a group practice, the DHS is furnished during occupancy
by another physician in the group prac- of the premises as set forth in para-
tice, provided that the supervision graph (b)(2)(i)(C)(2) of this section;
complies with all other applicable (2) The referring physician or the re-
Medicare payment and coverage rules ferring physician’s group practice owns
for the services. or rents an office that is normally open
(2) They are furnished in one of the to the physician’s or group’s patients
following locations: for medical services at least 8 hours per
(i) The same building (as defined at week; and
§ 411.351), but not necessarily in the (3) The referring physician or one or
same space or part of the building, in more members of the referring physi-
which all of the conditions of para- cian’s group practice regularly prac-
graph (b)(2)(i)(A), (b)(2)(i)(B), or tices medicine and furnishes physician
(b)(2)(i)(C) of this section are satisfied: services to patients at least 6 hours per
(A)(1) The referring physician or his week. The 6 hours must include some
or her group practice (if any) has an of- physician services that are unrelated
fice that is normally open to the physi- to the furnishing of DHS payable by
cian’s or group’s patients for medical Medicare, any other Federal health
services at least 35 hours per week; and care payer, or a private payer, even
(2) The referring physician or one or though the physician services may lead
more members of the referring physi- to the ordering of DHS.
cian’s group practice regularly prac- (ii) A centralized building (as defined
tices medicine and furnishes physician at § 411.351) that is used by the group
services to patients at least 30 hours practice for the provision of some or all
per week. The 30 hours must include of the group practice’s clinical labora-
some physician services that are unre- tory services.
lated to the furnishing of DHS payable (iii) A centralized building (as de-
by Medicare, any other Federal health fined at § 411.351) that is used by the
care payer, or a private payer, even group practice for the provision of
though the physician services may lead some or all of the group practice’s DHS
to the ordering of DHS; or (other than clinical laboratory serv-
(B)(1) The patient receiving the DHS ices).
usually receives physician services (3) They are billed by one of the fol-
from the referring physician or mem- lowing:
bers of the referring physician’s group (i) The physician performing or su-
practice (if any); pervising the service.
469
§ 411.355 42 CFR Ch. IV (10–1–09 Edition)
(ii) The group practice of which the tice, or by an employee of the physi-
performing or supervising physician is cian or the group practice.
a member under a billing number as- (iv) A physician or group practice
signed to the group practice. that furnishes the DME meets all DME
(iii) The group practice if the super- supplier standards set forth in
vising physician is a ‘‘physician in the § 424.57(c) of this chapter.
group practice’’ (as defined at § 411.351) (v) The arrangement does not violate
under a billing number assigned to the the anti-kickback statute (section
group practice. 1128B(b) of the Act), or any Federal or
(iv) An entity that is wholly owned State law or regulation governing bill-
by the performing or supervising physi- ing or claims submission.
cian or by that physician’s group prac- (vi) All other requirements of the in-
tice under the entity’s own billing office ancillary services exception in
number or under a billing number as- paragraph (b) of this section are met.
signed to the physician or group prac- (5) A designated health service is
tice. ‘‘furnished’’ for purposes of paragraph
(v) An independent third party bill- (b) of this section in the location where
ing company acting as an agent of the the service is actually performed upon
physician, group practice, or entity a patient or where an item is dispensed
specified in paragraphs (b)(3)(i) through to a patient in a manner that is suffi-
(b)(3)(iv) of this section under a billing cient to meet the applicable Medicare
number assigned to the physician, payment and coverage rules.
group practice, or entity, provided that (6) Special rule for home care physi-
the billing arrangement meets the re- cians. In the case of a referring physi-
quirements of § 424.80(b)(5) of this chap- cian whose principal medical practice
ter. For purposes of this paragraph consists of treating patients in their
(b)(3), a group practice may have, and private homes, the ‘‘same building’’ re-
bill under, more than one Medicare quirements of paragraph (b)(2)(i) of this
billing number, subject to any applica- section are met if the referring physi-
ble Medicare program restrictions. cian (or a qualified person accom-
(4) For purposes of paragraph (b) of panying the physician, such as a nurse
this section, DME covered by the in-of- or technician) provides the DHS con-
fice ancillary services exception means temporaneously with a physician serv-
canes, crutches, walkers and folding ice that is not a designated health
manual wheelchairs, and blood glucose service provided by the referring physi-
monitors, that meet the following con- cian to the patient in the patient’s pri-
ditions: vate home. For purposes of paragraph
(i) The item is one that a patient re- (b)(5) of this section only, a private
quires for the purpose of ambulating, a home does not include a nursing, long-
patient uses in order to depart from term care, or other facility or institu-
the physician’s office, or is a blood glu- tion, except that a patient may have a
cose monitor (including one starter set private home in an assisted living or
of test strips and lancets, consisting of independent living facility.
no more than 100 of each). A blood glu- (c) Services furnished by an organiza-
cose monitor may be furnished only by tion (or its contractors or subcontractors)
a physician or employee of a physician to enrollees. Services furnished by an
or group practice that also furnishes organization (or its contractors or sub-
outpatient diabetes self-management contractors) to enrollees of one of the
training to the patient. following prepaid health plans (not in-
(ii) The item is furnished in a build- cluding services provided to enrollees
ing that meets the ‘‘same building’’ re- in any other plan or line of business of-
quirements in the in-office ancillary fered or administered by the same or-
services exception as part of the treat- ganization):
ment for the specific condition for (1) An HMO or a CMP in accordance
which the patient-physician encounter with a contract with CMS under sec-
occurred. tion 1876 of the Act and part 417, sub-
(iii) The item is furnished personally parts J through M of this chapter.
by the physician who ordered the DME, (2) A health care prepayment plan in
by another physician in the group prac- accordance with an agreement with
470
CMS under section 1833(a)(1)(A) of the programs at the accredited academic

Act and part 417, subpart U of this hospital (as defined at § 411.355(e)(3));
chapter. and
(3) An organization that is receiving (D) Provides either substantial aca-
payments on a prepaid basis for Medi- demic services or substantial clinical
care enrollees through a demonstration teaching services (or a combination of
project under section 402(a) of the So- academic services and clinical teaching
cial Security Amendments of 1967 (42 services) for which the faculty member
U.S.C. 1395b–1) or under section 222(a) receives compensation as part of his or
of the Social Security Amendments of her employment relationship with the
1972 (42 U.S.C. 1395b–1 note). academic medical center. Parties
(4) A qualified HMO (within the should use a reasonable and consistent
meaning of section 1310(d) of the Public method for calculating a physician’s
Health Service Act). academic services and clinical teaching
(5) A coordinated care plan (within services. A physician will be deemed to
the meaning of section 1851(a)(2)(A) of meet this requirement if he or she
the Act) offered by an organization in spends at least 20 percent of his or her
accordance with a contract with CMS professional time or 8 hours per week
under section 1857 of the Act and part providing academic services or clinical
422 of this chapter. teaching services (or a combination of
(6) A MCO contracting with a State academic services or clinical teaching
under section 1903(m) of the Act. services). A physician who does not
(7) A prepaid inpatient health plan spend at least 20 percent of his or her
(PIHP) or prepaid ambulance health professional time or 8 hours per week
plan (PAHP) contracting with a State providing academic services or clinical
under part 438 of this chapter. teaching services (or a combination of
(8) A health insuring organization academic services or clinical teaching
(HIO) contracting with a State under services) is not precluded from quali-
part 438, subpart D of this chapter. fying under this paragraph (e)(1)(i)(D).
(9) An entity operating under a dem-
(ii) The compensation paid to the re-
onstration project under sections
ferring physician must meet all of the
1115(a), 1915(a), 1915(b), or 1932(a) of the
following conditions:
Act.
(A) The total compensation paid by
(d) [Reserved]
each academic medical center compo-
(e) Academic medical centers. (1) Serv-
nent to the referring physician is set in
ices provided by an academic medical
advance.
center if all of the following conditions
are met: (B) In the aggregate, the compensa-
(i) The referring physician— tion paid by all academic medical cen-
(A) Is a bona fide employee of a com- ter components to the referring physi-
ponent of the academic medical center cian does not exceed fair market value
on a full-time or substantial part-time for the services provided.
basis. (A ‘‘component’’ of an academic (C) The total compensation paid by
medical center means an affiliated each academic medical center compo-
medical school, faculty practice plan, nent is not determined in a manner
hospital, teaching facility, institution that takes into account the volume or
of higher education, departmental pro- value of any referrals or other business
fessional corporation, or nonprofit sup- generated by the referring physician
port organization whose primary pur- within the academic medical center.
pose is supporting the teaching mission (iii) The academic medical center
of the academic medical center.) The must meet all of the following condi-
components need not be separate legal tions:
entities; (A) All transfers of money between
(B) Is licensed to practice medicine components of the academic medical
in the State(s) in which he or she prac- center must directly or indirectly sup-
tices medicine; port the missions of teaching, indigent
(C) Has a bona fide faculty appoint- care, research, or community service.
ment at the affiliated medical school (B) The relationship of the compo-
or at one or more of the educational nents of the academic medical center
471
§ 411.355 42 CFR Ch. IV (10–1–09 Edition)
must be set forth in one or more writ- the medical staff consists of faculty
ten agreements or other written docu- members, the affiliated hospital must
ments that have been adopted by the include or exclude all individual physi-
governing body of each component. If cians with the same class of privileges
the academic medical center is one at the affiliated hospital (for example,
legal entity, this requirement will be physicians holding courtesy privi-
satisfied if transfers of funds between leges).
components of the academic medical (3) An accredited academic hospital
center are reflected in the routine fi- for purposes of this section means a
nancial reports covering the compo- hospital or a health system that spon-
nents. sors four or more approved medical
(C) All money paid to a referring phy- education programs.
sician for research must be used solely
(f) Implants furnished by an ASC. Im-
to support bona fide research or teach-
plants furnished by an ASC, including,
ing and must be consistent with the
terms and conditions of the grant. but not limited to, cochlear implants,
(iv) The referring physician’s com- intraocular lenses, and other implanted
pensation arrangement does not vio- prosthetics, implanted prosthetic de-
late the anti-kickback statute (section vices, and implanted DME that meet
1128B(b) of the Act), or any Federal or the following conditions:
State law or regulation governing bill- (1) The implant is implanted by the
ing or claims submission. referring physician or a member of the
(2) The ‘‘academic medical center’’ referring physician’s group practice in
for purposes of this section consists an ASC that is certified by Medicare
of— under part 416 of this chapter and with
(i) An accredited medical school (in- which the referring physician has a fi-
cluding a university, when appropriate) nancial relationship.
or an accredited academic hospital (as (2) The implant is implanted in the
defined at § 411.355(e)(3)); patient during a surgical procedure
(ii) One or more faculty practice paid by Medicare to the ASC as an ASC
plans affiliated with the medical procedure under § 416.65 of this chapter.
school, the affiliated hospital(s), or the (3) The arrangement for the fur-
accredited academic hospital; and nishing of the implant does not violate
(iii) One or more affiliated hospitals the anti-kickback statute (section
in which a majority of the physicians 1128B(b) of the Act).
on the medical staff consists of physi- (4) All billing and claims submission
cians who are faculty members and a for the implants does not violate any
majority of all hospital admissions is Federal or State law or regulation gov-
made by physicians who are faculty erning billing or claims submission.
members. The hospital for purposes of
(5) The exception set forth in this
this paragraph (e)(2)(iii) may be the
paragraph (f) does not apply to any fi-
same hospital that satisfies the re-
nancial relationships between the re-
quirement of paragraph (e)(2)(i) of this
ferring physician and any entity other
section. For purposes of this para-
than the ASC in which the implant is
graph, a faculty member is a physician
who is either on the faculty of the af- furnished to, and implanted in, the pa-
filiated medical school or on the fac- tient.
ulty of one or more of the educational (g) EPO and other dialysis-related
programs at the accredited academic drugs. EPO and other dialysis-related
hospital. In meeting this paragraph drugs that meet the following condi-
(e)(2)(iii), faculty from any affiliated tions:
medical school or accredited academic (1) The EPO and other dialysis-re-
hospital education program may be ag- lated drugs are furnished in or by an
gregated, and residents and non-physi- ESRD facility. For purposes of this
cian professionals need not be counted. paragraph, ‘‘EPO and other dialysis-re-
Any faculty member may be counted, lated drugs’’ means certain outpatient
including courtesy and volunteer fac- prescription drugs that are required for
ulty. For purposes of determining the efficacy of dialysis and identified

whether the majority of physicians on as eligible for this exception on the
472
List of CPT/HCPCS Codes; and ‘‘fur- forth in §§ 410.36(a)(2)(ii) and 414.228 of

nished’’ means that the EPO or dialy- this chapter, respectively.
sis-related drugs are administered to a (2) The arrangement for the fur-
patient in the ESRD facility or, in the nishing of the eyeglasses or contact
case of EPO or Aranesp (or equivalent lenses does not violate the anti-kick-
drug identified on the List of CPT/ back statute (section 1128B(b) of the
HCPCS Codes) only, are dispensed by Act).
the ESRD facility for use at home. (3) All billing and claims submission
(2) The arrangement for the fur- for the eyeglasses or contact lenses
nishing of the EPO and other dialysis- does not violate any Federal or State
related drugs does not violate the anti- law or regulation governing billing or
kickback statute (section 1128B(b) of claims submission.
the Act).
(j) Intra-family rural referrals. (1)
(3) All billing and claims submission
Services provided pursuant to a refer-
for the EPO and other dialysis-related
ral from a referring physician to his or
drugs does not violate any Federal or
her immediate family member or to an
State law or regulation governing bill-
entity furnishing DHS with which the
ing or claims submission.
(4) The exception set forth in this immediate family member has a finan-
paragraph does not apply to any financial relationship, if all of the following
cial relationship between the referring conditions are met:
physician and any entity other than (i) The patient who is referred resides
the ESRD facility that furnishes the in a rural area as defined at § 411.351 of
EPO and other dialysis-related drugs to this subpart;
the patient. (ii) Except as provided in paragraph
(h) Preventive screening tests, immuni- (j)(1)(iii) of this section, in light of the
zations, and vaccines. Preventive patient’s condition, no other person or
screening tests, immunizations, and entity is available to furnish the serv-
vaccines that meet the following condi- ices in a timely manner within 25 miles
tions: of or 45 minutes transportation time
(1) The preventive screening tests, from the patient’s residence;
immunizations, and vaccines are sub- (iii) In the case of services furnished
ject to CMS-mandated frequency lim- to patients where they reside (for ex-
its. ample, home health services or DME),
(2) The arrangement for the provision no other person or entity is available
of the preventive screening tests, im- to furnish the services in a timely
munizations, and vaccines does not vio- manner in light of the patient’s condi-
late the anti-kickback statute (section tion; and
1128B(b) of the Act). (iv) The financial relationship does
(3) All billing and claims submission not violate the anti-kickback statute
for the preventive screening tests, im- (section 1128B(b) of the Act), or any
munizations, and vaccines does not vio- Federal or State law or regulation gov-
late any Federal or State law or regu- erning billing or claims submission.
lation governing billing or claims sub- (2) The referring physician or the im-
mission. mediate family member must make
(4) The preventive screening tests,
reasonable inquiries as to the avail-
immunizations, and vaccines must be
ability of other persons or entities to
covered by Medicare and must be listed
furnish the DHS. However, neither the
as eligible for this exception on the
referring physician nor the immediate
List of CPT/HCPCS Codes.
family member has any obligation to
(i) Eyeglasses and contact lenses fol-
inquire as to the availability of persons
lowing cataract surgery. Eyeglasses and
or entities located farther than 25
contact lenses that are covered by
miles of or 45 minutes transportation
Medicare when furnished to patients
time from (whichever test the referring
following cataract surgery that meet
the following conditions: physician utilized for purposes of para-
(1) The eyeglasses or contact lenses graph (j)(1)(ii)) the patient’s residence.
are provided in accordance with the [72 FR 51088, Sept. 5, 2007; 72 FR 68076, Dec. 4,
coverage and payment provisions set 2007]
473
30 consecutive calendar days imme- revenue or a portion of that property

diately following the date on which the or revenue.
compensation arrangement becomes (2) An ownership or investment inter-
noncompliant (without regard to est in a subsidiary company is neither
whether any referrals occur or com- an ownership or investment interest in
pensation is paid during such 30-day pe- the parent company, nor in any other
riod) and the compensation arrange- subsidiary of the parent, unless the
ment otherwise complies with all cri- subsidiary company itself has an own-
teria of the applicable exception. ership or investment interest in the
(2) Paragraph (g)(1) of this section parent or such other subsidiaries. It
may be used by an entity only once may, however, be part of an indirect fi-
every 3 years with respect to the same nancial relationship.
referring physician. (3) Ownership and investment inter-
ests do not include, among other
FR 48751, Aug. 19, 2008; 73 FR 57543, Oct. 3, things—
2008] (i) An interest in an entity that
arises from a retirement plan offered
§ 411.354 Financial relationship, com- by that entity to the physician (or a
pensation, and ownership or invest- member of his or her immediate fam-
ment interest. ily) through the physician’s (or imme-
(a) Financial relationships. (1) Finan- diate family member’s) employment
cial relationship means— with that entity;
(i) A direct or indirect ownership or (ii) Stock options and convertible se-
investment interest (as defined in para- curities received as compensation until
graph (b) of this section) in any entity the stock options are exercised or the
that furnishes DHS; or convertible securities are converted to
(ii) A direct or indirect compensation equity (before this time the stock op-
arrangement (as defined in paragraph tions or convertible securities are com-
(c) of this section) with an entity that pensation arrangements as defined in
furnishes DHS. paragraph (c) of this section);
(2) Types of financial relationships. (i) (iii) An unsecured loan subordinated
A direct financial relationship exists if to a credit facility (which is a com-
remuneration passes between the refer- pensation arrangement as defined in
ring physician (or a member of his or paragraph (c) of this section);
her immediate family) and the entity (iv) An ‘‘under arrangements’’ con-
furnishing DHS without any inter- tract between a hospital and an entity
vening persons or entities between the owned by one or more physicians (or a
entity furnishing DHS and the refer- group of physicians) providing DHS
ring physician (or a member of his or ‘‘under arrangements’’ with the hos-
her immediate family). pital (such a contract is a compensa-
(ii) An indirect financial relationship tion arrangement as defined in para-
exists under the conditions described in graph (c) of this section); or
paragraphs (b)(5) and (c)(2) of this sec- (v) A security interest held by a phy-
tion. sician in equipment sold by the physi-
(b) Ownership or investment interest. cian to a hospital and financed through
An ownership or investment interest in a loan from the physician to the hos-
the entity may be through equity, pital (such an interest is a compensa-
debt, or other means, and includes an tion arrangement as defined in para-
interest in an entity that holds an own- graph (c) of this section).
ership or investment interest in any (4) An ownership or investment inter-
entity that furnishes DHS. est that meets an exception set forth in
(1) An ownership or investment inter- § 411.355 or § 411.356 need not also meet
est includes, but is not limited to, an exception for compensation arrange-
stock, stock options other than those ments set forth in § 411.357 with respect
described in § 411.354(b)(3)(ii), partner- to profit distributions, dividends, or in-
ship shares, limited liability company terest payments on secured obliga-
memberships, as well as loans, bonds, tions.
or other financial instruments that are (5)(i) An indirect ownership or invest-

secured with an entity’s property or ment interest exists if—
465
§ 411.354 42 CFR Ch. IV (10–1–09 Edition)
(A) Between the referring physician rangement may still constitute a com-
(or immediate family member) and the pensation arrangement.)
entity furnishing DHS there exists an (1)(i) A direct compensation arrange-
unbroken chain of any number (but no ment exists if remuneration passes be-
fewer than one) of persons or entities tween the referring physician (or a
having ownership or investment inter- member of his or her immediate fam-
ests; and ily) and the entity furnishing DHS
(B) The entity furnishing DHS has without any intervening persons or en-
actual knowledge of, or acts in reckless tities.
disregard or deliberate ignorance of, (ii) Except as provided in paragraph
the fact that the referring physician (c)(3)(ii)(C) of this section, a physician
(or immediate family member) has is deemed to ‘‘stand in the shoes’’ of
some ownership or investment interest his or her physician organization and
(through any number of intermediary have a direct compensation arrange-
ownership or investment interests) in ment with an entity furnishing DHS
the entity furnishing the DHS. if—
(ii) An indirect ownership or invest- (A) The only intervening entity be-
ment interest exists even though the tween the physician and the entity fur-
entity furnishing DHS does not know, nishing DHS is his or her physician or-
or acts in reckless disregard or delib- ganization; and
erate ignorance of, the precise com- (B) The physician has an ownership
position of the unbroken chain or the or investment interest in the physician
specific terms of the ownership or in- organization.
vestment interests that form the links (iii) A physician (other than a physi-
in the chain. cian described in paragraph (c)(1)(ii)(B)
(iii) Notwithstanding anything in of this section) is permitted to ‘‘stand
this paragraph (b)(5), common owner- in the shoes’’ of his or her physician or-
ship or investment in an entity does ganization and have a direct compensa-
not, in and of itself, establish an indi- tion arrangement with an entity fur-
rect ownership or investment interest nishing DHS if the only intervening en-
by one common owner or investor in tity between the physician and the en-
another common owner or investor. tity furnishing DHS is his or her physi-
(iv) An indirect ownership or invest- cian organization.
ment interest requires an unbroken (2) An indirect compensation arrange-
chain of ownership interests between ment exists if—
the referring physician and the entity (i) Between the referring physician
furnishing DHS such that the referring (or a member of his or her immediate
physician has an indirect ownership or family) and the entity furnishing DHS
investment interest in the entity fur- there exists an unbroken chain of any
nishing DHS. number (but not fewer than one) of per-
(c) Compensation arrangement. A com- sons or entities that have financial re-
pensation arrangement is any arrange- lationships (as defined in paragraph (a)
ment involving remuneration, direct or of this section) between them (that is,
indirect, between a physician (or a each link in the chain has either an
member of a physician’s immediate ownership or investment interest or a
family) and an entity. An ‘‘under ar- compensation arrangement with the
rangements’’ contract between a hos- preceding link);
pital and an entity providing DHS (ii) The referring physician (or imme-
‘‘under arrangements’’ to the hospital diate family member) receives aggre-
creates a compensation arrangement gate compensation from the person or
for purposes of these regulations. A entity in the chain with which the phy-
compensation arrangement does not in- sician (or immediate family member)
clude the portion of any business ar- has a direct financial relationship that
rangement that consists solely of the varies with, or takes into account, the
remuneration described in section volume or value of referrals or other
1877(h)(1)(C) of the Act and in para- business generated by the referring
graphs (1) through (3) of the definition physician for the entity furnishing the
of the term ‘‘remuneration’’ at § 411.351. DHS, regardless of whether the indi-

(However, any other portion of the ar- vidual unit of compensation satisfies
466
the special rules on unit-based com- terms) as the physician organization.

pensation under paragraphs (d)(2) or For purposes of applying the excep-
(d)(3) of this section. If the financial re- tions in §§ 411.355 and 411.357 to arrange-
lationship between the physician (or ments in which a physician stands in
immediate family member) and the the shoes of his or her physician orga-
person or entity in the chain with nization, the ‘‘parties’’ to the arrange-
which the referring physician (or im- ments are considered to be the entity
mediate family member) has a direct furnishing DHS and the physician orga-
financial relationship is an ownership nization (including all members, em-
or investment interest, the determina- ployees, or independent contractor
tion whether the aggregate compensa- physicians).
tion varies with, or takes into account, (ii) The provisions of paragraphs
the volume or value of referrals or (c)(1)(ii) and (c)(2)(iv)(A) of this sec-
other business generated by the refer- tion—
ring physician for the entity furnishing (A) Need not apply during the origi-
the DHS will be measured by the non- nal term or current renewal term of an
ownership or noninvestment interest arrangement that satisfied the require-
closest to the referring physician (or ments of § 411.357(p) as of September 5,
immediate family member). (For exam- 2007 (see 42 CFR parts 400–413, revised
ple, if a referring physician has an own- as of October 1, 2007);
ership interest in company A, which (B) Do not apply to an arrangement
owns company B, which has a com- that satisfies the requirements of
pensation arrangement with company § 411.355(e); and
C, which has a compensation arrange- (C) Do not apply to a physician whose
ment with entity D that furnishes ownership or investment interest is tit-
DHS, we would look to the aggregate ular only. A titular ownership or in-
compensation between company B and vestment interest is an ownership or
company C for purposes of this para- investment interest that excludes the
graph (c)(2)(ii)); and ability or right to receive the financial
(iii) The entity furnishing DHS has benefits of ownership or investment,
actual knowledge of, or acts in reckless including, but not limited to, the dis-
disregard or deliberate ignorance of, tribution of profits, dividends, proceeds
the fact that the referring physician of sale, or similar returns on invest-
(or immediate family member) receives ment.
aggregate compensation that varies (iii) An arrangement structured to
with, or takes into account, the vol- comply with an exception in § 411.357
ume or value of referrals or other busi- (other than § 411.357(p)), but which
ness generated by the referring physi- would otherwise qualify as an indirect
cian for the entity furnishing the DHS. compensation arrangement under this
(iv)(A) For purposes of paragraph paragraph as of August 19, 2008, need
(c)(2)(i) of this section, except as pro- not be restructured to satisfy the re-
vided in paragraph (c)(3)(ii)(C) of this quirements of § 411.357(p) until the expi-
section, a physician is deemed to ration of the original term or current
‘‘stand in the shoes’’ of his or her phy- renewal term of the arrangement.
sician organization if the physician has (d) Special rules on compensation. The
an ownership or investment interest in following special rules apply only to
the physician organization. compensation under section 1877 of the
(B) For purposes of paragraph (c)(2)(i) Act and subpart J of this part:
of this section, a physician (other than (1) Compensation is considered ‘‘set
a physician described in paragraph in advance’’ if the aggregate compensa-
(c)(2)(iv)(A) of this section) is per- tion, a time-based or per-unit of serv-
mitted to ‘‘stand in the shoes’’ of his or ice-based (whether per-use or per-serv-
her physician organization. ice) amount, or a specific formula for
(3)(i) For purposes of paragraphs calculating the compensation is set in
(c)(1)(ii) and (c)(2)(iv), a physician who an agreement between the parties be-
‘‘stands in the shoes’’ of his or her phy- fore the furnishing of the items or serv-
sician organization is deemed to have ices for which the compensation is to
the same compensation arrangements be paid. The formula for determining

(with the same parties and on the same the compensation must be set forth in
467
§ 411.355 42 CFR Ch. IV (10–1–09 Edition)
sufficient detail so that it can be objec- tioner, or supplier is set forth in a

tively verified, and the formula may written agreement signed by the par-
not be changed or modified during the ties.
course of the agreement in any manner (B) The requirement to make refer-
that takes into account the volume or rals to a particular provider, practi-
value of referrals or other business gen- tioner, or supplier does not apply if the
erated by the referring physician. patient expresses a preference for a dif-
(2) Unit-based compensation (includ- ferent provider, practitioner, or sup-
ing time-based or per-unit of service- plier; the patient’s insurer determines
based compensation) is deemed not to the provider, practitioner, or supplier;
take into account ‘‘the volume or value or the referral is not in the patient’s
of referrals’’ if the compensation is fair best medical interests in the physi-
market value for services or items ac-
cian’s judgment.
tually provided and does not vary dur-
(v) The required referrals relate sole-
ing the course of the compensation ar-
rangement in any manner that takes ly to the physician’s services covered
into account referrals of DHS. by the scope of the employment or the
(3) Unit-based compensation (includ- contract, and the referral requirement
ing time-based or per-unit of service- is reasonably necessary to effectuate
based compensation) is deemed not to the legitimate business purposes of the
take into account ‘‘other business gen- compensation arrangement. In no
erated between the parties,’’ provided event may the physician be required to
that the compensation is fair market make referrals that relate to services
value for items and services actually that are not provided by the physician
provided and does not vary during the under the scope of his or her employ-
course of the compensation arrangement or contract.
ment in any manner that takes into [72 FR 51086, Sept. 5, 2007; 72 FR 68076, Dec. 4,
account referrals or other business gen- 2007, as amended at 73 FR 48751, Aug. 19, 2008;
erated by the referring physician, in- 73 FR 57543, Oct. 3, 2008]
cluding private pay health care busi-
ness (except for services personally § 411.355 General exceptions to the re-
performed by the referring physician, ferral prohibition related to both
which are not considered ‘‘other busi- ownership/investment and com-
ness generated’’ by the referring physi- pensation.
cian). The prohibition on referrals set forth
(4) A physician’s compensation from in § 411.353 does not apply to the fol-
a bona fide employer or under a man- lowing types of services:
aged care contract or other contract (a) Physician services. (1) Physician
for personal services may be condi- services as defined in § 410.20(a) of this
tioned on the physician’s referrals to a chapter that are furnished—
particular provider, practitioner, or
(i) Personally by another physician
supplier, provided that the compensa-
who is a member of the referring physi-
tion arrangement meets all of the fol-
cian’s group practice or is a physician
lowing conditions. The compensation
in the same group practice (as defined
arrangement:
(i) Is set in advance for the term of at § 411.351) as the referring physician;
the agreement. or
(ii) Is consistent with fair market (ii) Under the supervision of another
value for services performed (that is, physician who is a member of the refer-
the payment does not take into ac- ring physician’s group practice or is a
count the volume or value of antici- physician in the same group practice
pated or required referrals). (as defined at § 411.351) as the referring
(iii) Otherwise complies with an ap- physician, provided that the super-
plicable exception under § 411.355 or vision complies with all other applica-
§ 411.357. ble Medicare payment and coverage
(iv) Complies with both of the fol- rules for the physician services.
lowing conditions: (2) For purposes of paragraph (a) of
(A) The requirement to make refer- this section, ‘‘physician services’’ in-
rals to a particular provider, practi- clude only those ‘‘incident to’’ services
468
practice’s total revenues, and the allo- its staff may be imputed to the physi-
cated portion of those revenues to each cian if the physician directs the group
physician in the group practice con- practice, its members, or its staff to
stitutes 5 percent or less of his or her make the referral or if the physician
total compensation from the group. controls referrals made by his or her
(3) A productivity bonus must be cal- group practice, its members, or its
culated in a reasonable and verifiable staff.
manner that is not directly related to (b) Limitations on billing. An entity
the volume or value of the physician’s that furnishes DHS pursuant to a refer-
referrals of DHS. A productivity bonus ral that is prohibited by paragraph (a)
will be deemed not to relate directly to of this section may not present or
the volume or value of referrals of DHS cause to be presented a claim or bill to
if one of the following conditions is the Medicare program or to any indi-
met: vidual, third party payer, or other enti-
(i) The bonus is based on the physi- ty for the DHS performed pursuant to
cian’s total patient encounters or rel- the prohibited referral.
ative value units (RVUs). (The method- (c) Denial of payment for services fur-
ology for establishing RVUs is set forth nished under a prohibited referral. (1) Ex-
in § 414.22 of this chapter.) cept as provided in paragraph (e) of
(ii) The bonus is based on the alloca- this section, no Medicare payment may
tion of the physician’s compensation be made for a designated health service
attributable to services that are not that is furnished pursuant to a prohib-
DHS payable by any Federal health ited referral. The period during which
care program or private payer. referrals are prohibited is the period of
(iii) Revenues derived from DHS are disallowance. For purposes of this sec-
less than 5 percent of the group prac- tion, with respect to the following
tice’s total revenues, and the allocated types of noncompliance, the period of
portion of those revenues to each phy- disallowance begins at the time the fi-
sician in the group practice constitutes nancial relationship fails to satisfy the
5 percent or less of his or her total requirements of an applicable excep-
compensation from the group practice. tion and ends no later than—
(4) Supporting documentation (i) Where the noncompliance is unre-
verifying the method used to calculate lated to compensation, the date that
the profit share or productivity bonus the financial relationship satisfies all
under paragraphs (i)(2) and (i)(3) of this of the requirements of an applicable
section, and the resulting amount of exception;
compensation, must be made available (ii) Where the noncompliance is due
to the Secretary upon request. to the payment of excess compensa-
[72 FR 51084, Sept. 5, 2007] tion, the date on which all excess com-
pensation is returned by the party that
§ 411.353 Prohibition on certain refer- received it to the party that paid it and
rals by physicians and limitations the financial relationship satisfies all
on billing. of the requirements of an applicable
(a) Prohibition on referrals. Except as exception; or
provided in this subpart, a physician (iii) Where the noncompliance is due
who has a direct or indirect financial to the payment of compensation that is
relationship with an entity, or who has of an amount insufficient to satisfy the
an immediate family member who has requirements of an applicable excep-
a direct or indirect financial relation- tion, the date on which all additional
ship with the entity, may not make a required compensation is paid by the
referral to that entity for the fur- party that owes it to the party to
nishing of DHS for which payment oth- which it is owed and the financial rela-
erwise may be made under Medicare. A tionship satisfies all of the require-
physician’s prohibited financial rela- ments of an applicable exception.
tionship with an entity that furnishes (2) When payment for a designated
DHS is not imputed to his or her group health service is denied on the basis
practice or its members or its staff. that the service was furnished pursu-
However, a referral made by a physi- ant to a prohibited referral, and such

cian’s group practice, its members, or payment denial is appealed—
463
§ 411.353 42 CFR Ch. IV (10–1–09 Edition)
(i) The ultimate burden of proof (bur- (iii) The financial relationship does
den of persuasion) at each level of ap- not violate the anti-kickback statute
peal is on the entity submitting the (section 1128B(b) of the Act), and the
claim for payment to establish that the claim or bill otherwise complies with
service was not furnished pursuant to a all applicable Federal and State laws,
prohibited referral (and not on CMS or rules, and regulations.
its contractors to establish that the (2) Paragraph (f)(1) of this section ap-
service was furnished pursuant to a plies only to DHS furnished during the
prohibited referral); and period of time it takes the entity to
(ii) The burden of production on each rectify the noncompliance, which must
issue at each level of appeal is initially not exceed 90 consecutive calendar
on the claimant, but may shift to CMS days following the date on which the fi-
or its contractors during the course of nancial relationship became non-
the appellate proceeding, depending on compliant with an exception.
the evidence presented by the claim- (3) Paragraph (f)(1) may be used by an
ant. entity only once every 3 years with re-
(d) Refunds. An entity that collects spect to the same referring physician.
payment for a designated health serv- (4) Paragraph (f)(1) does not apply if
ice that was performed pursuant to a the exception with which the financial
prohibited referral must refund all col- relationship previously complied was
lected amounts on a timely basis, as § 411.357(k) or (m).
defined at § 1003.101 of this title. (g) Special rule for certain arrange-
ments involving temporary noncompliance
(e) Exception for certain entities. Pay-
with signature requirements. (1) An enti-
ment may be made to an entity that
ty may submit a claim or bill and pay-
submits a claim for a designated health
ment may be made to an entity that
service if—
submits a claim or bill for a designated
(1) The entity did not have actual health service if—
knowledge of, and did not act in reck- (i) The compensation arrangement
less disregard or deliberate ignorance between the entity and the referring
of, the identity of the physician who physician fully complied with an appli-
made the referral of the designated cable exception in § 411.355, § 411.356 or
health service to the entity; and § 411.357, except with respect to the sig-
(2) The claim otherwise complies nature requirement in § 411.357(a)(1),
with all applicable Federal and State § 411.357(b)(1), § 411.357(d)(1)(i),
laws, rules, and regulations. § 411.357(e)(1)(i), § 411.357(e)(4)(i),
(f) Exception for certain arrangements § 411.357(l)(1), § 411.357(p)(2), § 411.357(q)
involving temporary noncompliance. (1) (incorporating the requirement con-
Except as provided in paragraphs (f)(2), tained in § 1001.952(f)(4)),
(f)(3), and (f)(4) of this section, an enti- § 411.357(r)(2)(ii), § 411.357(t)(1)(ii) or
ty may submit a claim or bill and pay- (t)(2)(iii) (both incorporating the re-
ment may be made to an entity that quirement contained in
submits a claim or bill for a designated § 411.357(e)(1)(i)), § 411.357(v)(7)(i), or
health service if— § 411.357(w)(7)(i); and
(i) The financial relationship between (ii) The failure to comply with the
the entity and the referring physician signature requirement was—
fully complied with an applicable ex- (A) Inadvertent, and the parties ob-
ception under § 411.355, § 411.356, or tain the required signature(s) within 90
§ 411.357 for at least 180 consecutive cal- consecutive calendar days immediately
endar days immediately preceding the following the date on which the com-
date on which the financial relation- pensation arrangement becomes non-
ship became noncompliant with the ex- compliant (without regard to whether
ception; any referrals occur or compensation is
(ii) The financial relationship has paid during such 90-day period) and the
fallen out of compliance with the ex- compensation arrangement otherwise
ception for reasons beyond the control complies with all criteria of the appli-
of the entity, and the entity promptly cable exception; or
takes steps to rectify the noncompli- (B) Not inadvertent, and the parties
ance; and obtain the required signature(s) within
464
30 consecutive calendar days imme- revenue or a portion of that property

diately following the date on which the or revenue.
compensation arrangement becomes (2) An ownership or investment inter-
noncompliant (without regard to est in a subsidiary company is neither
whether any referrals occur or com- an ownership or investment interest in
pensation is paid during such 30-day pe- the parent company, nor in any other
riod) and the compensation arrange- subsidiary of the parent, unless the
ment otherwise complies with all cri- subsidiary company itself has an own-
teria of the applicable exception. ership or investment interest in the
(2) Paragraph (g)(1) of this section parent or such other subsidiaries. It
may be used by an entity only once may, however, be part of an indirect fi-
every 3 years with respect to the same nancial relationship.
referring physician. (3) Ownership and investment inter-
ests do not include, among other
FR 48751, Aug. 19, 2008; 73 FR 57543, Oct. 3, things—
2008] (i) An interest in an entity that
arises from a retirement plan offered
§ 411.354 Financial relationship, com- by that entity to the physician (or a
pensation, and ownership or invest- member of his or her immediate fam-
ment interest. ily) through the physician’s (or imme-
(a) Financial relationships. (1) Finan- diate family member’s) employment
cial relationship means— with that entity;
(i) A direct or indirect ownership or (ii) Stock options and convertible se-
investment interest (as defined in para- curities received as compensation until
graph (b) of this section) in any entity the stock options are exercised or the
that furnishes DHS; or convertible securities are converted to
(ii) A direct or indirect compensation equity (before this time the stock op-
arrangement (as defined in paragraph tions or convertible securities are com-
(c) of this section) with an entity that pensation arrangements as defined in
furnishes DHS. paragraph (c) of this section);
(2) Types of financial relationships. (i) (iii) An unsecured loan subordinated
A direct financial relationship exists if to a credit facility (which is a com-
remuneration passes between the refer- pensation arrangement as defined in
ring physician (or a member of his or paragraph (c) of this section);
her immediate family) and the entity (iv) An ‘‘under arrangements’’ con-
furnishing DHS without any inter- tract between a hospital and an entity
vening persons or entities between the owned by one or more physicians (or a
entity furnishing DHS and the refer- group of physicians) providing DHS
ring physician (or a member of his or ‘‘under arrangements’’ with the hos-
her immediate family). pital (such a contract is a compensa-
(ii) An indirect financial relationship tion arrangement as defined in para-
exists under the conditions described in graph (c) of this section); or
paragraphs (b)(5) and (c)(2) of this sec- (v) A security interest held by a phy-
tion. sician in equipment sold by the physi-
(b) Ownership or investment interest. cian to a hospital and financed through
An ownership or investment interest in a loan from the physician to the hos-
the entity may be through equity, pital (such an interest is a compensa-
debt, or other means, and includes an tion arrangement as defined in para-
interest in an entity that holds an own- graph (c) of this section).
ership or investment interest in any (4) An ownership or investment inter-
entity that furnishes DHS. est that meets an exception set forth in
(1) An ownership or investment inter- § 411.355 or § 411.356 need not also meet
est includes, but is not limited to, an exception for compensation arrange-
stock, stock options other than those ments set forth in § 411.357 with respect
described in § 411.354(b)(3)(ii), partner- to profit distributions, dividends, or in-
ship shares, limited liability company terest payments on secured obliga-
memberships, as well as loans, bonds, tions.
or other financial instruments that are (5)(i) An indirect ownership or invest-

secured with an entity’s property or ment interest exists if—
465
§ 411.352 42 CFR Ch. IV (10–1–09 Edition)
physician to satisfy a claim, submitted such date is no greater than the num-
on a fee-for-service basis, for the fur- ber of such investors as of such date;
nishing of health services by that phy- (3) For which the type of categories
sician to an individual who is covered described above is no different at any
by a policy with the insurer or by the time on or after such date than the
self-insured plan, if— type of such categories as of such date;
(i) The health services are not fur- (4) For which any increase in the
nished, and the payment is not made, number of beds occurs only in the fa-
under a contract or other arrangement cilities on the main campus of the hos-
between the insurer or the self-insured pital and does not exceed 50 percent of
plan (or a subcontractor of the insurer the number of beds in the hospital as of
or self-insured plan) and the physician; November 18, 2003, or 5 beds, whichever
(ii) The payment is made to the phy- is greater; and
sician on behalf of the covered indi- (5) That meets such other require-
vidual and would otherwise be made di- ments as the Secretary may specify.
rectly to the individual; and Transaction means an instance or
(iii) The amount of the payment is process of two or more persons or enti-
set in advance, does not exceed fair ties doing business. An isolated finan-
market value, and is not determined in cial transaction means one involving a
a manner that takes into account di- single payment between two or more
rectly or indirectly the volume or persons or entities or a transaction
value of any referrals. that involves integrally related install-
Rural area means an area that is not ment payments provided that—
an urban area as defined at (1) The total aggregate payment is
§ 412.62(f)(1)(ii) of this chapter. fixed before the first payment is made
Same building means a structure with, and does not take into account, di-
or combination of structures that rectly or indirectly, the volume or
share, a single street address as as- value of referrals or other business gen-
signed by the U.S. Postal Service, ex- erated by the referring physician; and
cluding all exterior spaces (for exam- (2) The payments are immediately
ple, lawns, courtyards, driveways, negotiable or are guaranteed by a third
parking lots) and interior loading party, or secured by a negotiable prom-
docks or parking garages. For purposes issory note, or subject to a similar
of this section, the ‘‘same building’’ mechanism to ensure payment even in
does not include a mobile vehicle, van, the event of default by the purchaser
or trailer. or obligated party.
Specialty hospital means a subsection [72 FR 51080, Sept. 5, 2007, as amended at 72
(d) hospital (as defined in section FR 66400, 66930, Nov. 27, 2007; 73 FR 48751,
1886(d)(1)(B) of the Act) that is pri- Aug. 19, 2008; 73 FR 69934, Nov. 19, 2008]
marily or exclusively engaged in the
care and treatment of one of the fol- § 411.352 Group practice.
lowing: For purposes of this subpart, a group
(1) Patients with a cardiac condition; practice is a physician practice that
(2) Patients with an orthopedic con- meets the following conditions:
dition; (a) Single legal entity. The group prac-
(3) Patients receiving a surgical pro- tice must consist of a single legal enti-
cedure; or ty operating primarily for the purpose
(4) Any other specialized category of of being a physician group practice in
services that the Secretary designates any organizational form recognized by
as inconsistent with the purpose of per- the State in which the group practice
mitting physician ownership and in- achieves its legal status, including, but
vestment interests in a hospital. A not limited to, a partnership, profes-
‘‘specialty hospital’’ does not include sional corporation, limited liability
any hospital— company, foundation, nonprofit cor-
(1) Determined by the Secretary to be poration, faculty practice plan, or
in operation before or under develop- similar association. The single legal
ment as of November 18, 2003; entity may be organized by any party
(2) For which the number of physi- or parties, including, but not limited
cian investors at any time on or after to, physicians, health care facilities, or
460
other persons or entities (including, group (that is, at least 75 percent of the
but not limited to, physicians individ- total patient care services of the group
ually incorporated as professional cor- practice members) must be furnished
porations). The single legal entity may through the group and billed under a
be organized or owned (in whole or in billing number assigned to the group,
part) by another medical practice, pro- and the amounts received must be
vided that the other medical practice treated as receipts of the group. Patient
is not an operating physician practice care services must be measured by one
(and regardless of whether the medical of the following:
practice meets the conditions for a (i) The total time each member
group practice under this section). For spends on patient care services docu-
purposes of this subpart, a single legal mented by any reasonable means (in-
entity does not include informal affili- cluding, but not limited to, time cards,
ations of physicians formed substan- appointment schedules, or personal
tially to share profits from referrals, or diaries). (For example, if a physician
separate group practices under com- practices 40 hours a week and spends 30
mon ownership or control through a hours a week on patient care services
physician practice management com- for a group practice, the physician has
pany, hospital, health system, or other spent 75 percent of his or her time pro-
entity or organization. A group prac- viding patient care services for the
tice that is otherwise a single legal en- group.)
tity may itself own subsidiary entities. (ii) Any alternative measure that is
A group practice operating in more reasonable, fixed in advance of the per-
than one State will be considered to be formance of the services being meas-
a single legal entity notwithstanding ured, uniformly applied over time,
that it is composed of multiple legal verifiable, and documented.
entities, provided that— (2) The data used to calculate compli-
(1) The States in which the group ance with this substantially all test and
practice is operating are contiguous related supportive documentation must
(although each State need not be con- be made available to the Secretary
tiguous to every other State); upon request.
(2) The legal entities are absolutely (3) The substantially all test set forth
identical as to ownership, governance, in paragraph (d)(1) of this section does
and operation; and not apply to any group practice that is
(3) Organization of the group practice located solely in a HPSA, as defined at
into multiple entities is necessary to § 411.351.
comply with jurisdictional licensing (4) For a group practice located out-
laws of the States in which the group side of a HPSA (as defined at § 411.351),
practice operates. any time spent by a group practice
(b) Physicians. The group practice member providing services in a HPSA
must have at least two physicians who should not be used to calculate wheth-
are members of the group (whether emer the group practice has met the sub-
ployees or direct or indirect owners), as stantially all test, regardless of whether
defined at § 411.351. the member’s time in the HPSA is
(c) Range of care. Each physician who spent in a group practice, clinic, or of-
is a member of the group, as defined at fice setting.
§ 411.351, must furnish substantially the (5) During the start up period (not to
full range of patient care services that exceed 12 months) that begins on the
the physician routinely furnishes, in- date of the initial formation of a new
cluding medical care, consultation, di- group practice, a group practice must
agnosis, and treatment, through the make a reasonable, good faith effort to
joint use of shared office space, facili- ensure that the group practice com-
ties, equipment, and personnel. plies with the substantially all test re-
(d) Services furnished by group practice quirement set forth in paragraph (d)(1)
members. (1) Except as otherwise proof this section as soon as practicable,
vided in paragraphs (d)(3), (d)(4), (d)(5), but no later than 12 months from the
and (d)(6) of this section, substantially date of the initial formation of the
all of the patient care services of the group practice. This paragraph (d)(5)
physicians who are members of the does not apply when an existing group
461
§ 411.352 42 CFR Ch. IV (10–1–09 Edition)
practice admits a new member or reor- (g) Volume or value of referrals. No

ganizes. physician who is a member of the
(6)(i) If the addition to an existing group practice directly or indirectly
group practice of a new member who receives compensation based on the
would be considered to have relocated volume or value of his or her referrals,
his or her medical practice under except as provided in § 411.352(i).
§ 411.357(e)(2) would result in the exist- (h) Physician-patient encounters. Mem-
ing group practice not meeting the sub- bers of the group must personally con-
stantially all test set forth in paragraph duct no less than 75 percent of the phy-
(d)(1) of this section, the group practice sician-patient encounters of the group
will have 12 months following the addi- practice.
tion of the new member to come back (i) Special rule for productivity bonuses
into full compliance, provided that— and profit shares. (1) A physician in the
(A) For the 12-month period the group practice may be paid a share of
group practice is fully compliant with overall profits of the group, provided
the substantially all test if the new that the share is not determined in any
member is not counted as a member of manner that is directly related to the
the group for purposes of § 411.352; and volume or value of referrals of DHS by
(B) The new member’s employment the physician. A physician in the group
with, or ownership interest in, the practice may be paid a productivity
group practice is documented in writ- bonus based on services that he or she
ing no later than the beginning of his has personally performed, or services
or her new employment, ownership, or ‘‘incident to’’ such personally per-
investment. formed services, or both, provided that
(ii) This paragraph (d)(6) does not the bonus is not determined in any
apply when an existing group practice manner that is directly related to the
reorganizes or admits a new member volume or value of referrals of DHS by
who is not relocating his or her med- the physician (except that the bonus
ical practice. may directly relate to the volume or
(e) Distribution of expenses and income. value of DHS referrals by the physician
The overhead expenses of, and income if the referrals are for services ‘‘inci-
from, the practice must be distributed dent to’’ the physician’s personally
according to methods that are deter- performed services).
mined before the receipt of payment (2) Overall profits means the group’s
for the services giving rise to the over- entire profits derived from DHS pay-
head expense or producing the income. able by Medicare or Medicaid or the
Nothing in this section prevents a profits derived from DHS payable by
group practice from adjusting its com- Medicare or Medicaid of any compo-
pensation methodology prospectively, nent of the group practice that consists
subject to restrictions on the distribu- of at least five physicians. Overall prof-
tion of revenue from DHS under its should be divided in a reasonable
§ 411.352(i). and verifiable manner that is not di-
(f) Unified business. (1) The group rectly related to the volume or value of
practice must be a unified business the physician’s referrals of DHS. The
having at least the following features: share of overall profits will be deemed
(i) Centralized decision-making by a not to relate directly to the volume or
body representative of the group prac- value of referrals if one of the following
tice that maintains effective control conditions is met:
over the group’s assets and liabilities (i) The group’s profits are divided per
(including, but not limited to, budgets, capita (for example, per member of the
compensation, and salaries); and group or per physician in the group).
(ii) Consolidated billing, accounting, (ii) Revenues derived from DHS are
and financial reporting. distributed based on the distribution of
(2) Location and specialty-based com- the group practice’s revenues attrib-
pensation practices are permitted with uted to services that are not DHS pay-
respect to revenues derived from serv- able by any Federal health care pro-
ices that are not DHS and may be per- gram or private payer.
mitted with respect to revenues de- (iii) Revenues derived from DHS con-
rived from DHS under § 411.352(i). stitute less than 5 percent of the group
462
practice’s total revenues, and the allo- its staff may be imputed to the physi-
cated portion of those revenues to each cian if the physician directs the group
physician in the group practice con- practice, its members, or its staff to
stitutes 5 percent or less of his or her make the referral or if the physician
total compensation from the group. controls referrals made by his or her
(3) A productivity bonus must be cal- group practice, its members, or its
culated in a reasonable and verifiable staff.
manner that is not directly related to (b) Limitations on billing. An entity
the volume or value of the physician’s that furnishes DHS pursuant to a refer-
referrals of DHS. A productivity bonus ral that is prohibited by paragraph (a)
will be deemed not to relate directly to of this section may not present or
the volume or value of referrals of DHS cause to be presented a claim or bill to
if one of the following conditions is the Medicare program or to any indi-
met: vidual, third party payer, or other enti-
(i) The bonus is based on the physi- ty for the DHS performed pursuant to
cian’s total patient encounters or rel- the prohibited referral.
ative value units (RVUs). (The method- (c) Denial of payment for services fur-
ology for establishing RVUs is set forth nished under a prohibited referral. (1) Ex-
in § 414.22 of this chapter.) cept as provided in paragraph (e) of
(ii) The bonus is based on the alloca- this section, no Medicare payment may
tion of the physician’s compensation be made for a designated health service
attributable to services that are not that is furnished pursuant to a prohib-
DHS payable by any Federal health ited referral. The period during which
care program or private payer. referrals are prohibited is the period of
(iii) Revenues derived from DHS are disallowance. For purposes of this sec-
less than 5 percent of the group prac- tion, with respect to the following
tice’s total revenues, and the allocated types of noncompliance, the period of
portion of those revenues to each phy- disallowance begins at the time the fi-
sician in the group practice constitutes nancial relationship fails to satisfy the
5 percent or less of his or her total requirements of an applicable excep-
compensation from the group practice. tion and ends no later than—
(4) Supporting documentation (i) Where the noncompliance is unre-
verifying the method used to calculate lated to compensation, the date that
the profit share or productivity bonus the financial relationship satisfies all
under paragraphs (i)(2) and (i)(3) of this of the requirements of an applicable
section, and the resulting amount of exception;
compensation, must be made available (ii) Where the noncompliance is due
to the Secretary upon request. to the payment of excess compensa-
[72 FR 51084, Sept. 5, 2007] tion, the date on which all excess com-
pensation is returned by the party that
§ 411.353 Prohibition on certain refer- received it to the party that paid it and
rals by physicians and limitations the financial relationship satisfies all
on billing. of the requirements of an applicable
(a) Prohibition on referrals. Except as exception; or
provided in this subpart, a physician (iii) Where the noncompliance is due
who has a direct or indirect financial to the payment of compensation that is
relationship with an entity, or who has of an amount insufficient to satisfy the
an immediate family member who has requirements of an applicable excep-
a direct or indirect financial relation- tion, the date on which all additional
ship with the entity, may not make a required compensation is paid by the
referral to that entity for the fur- party that owes it to the party to
nishing of DHS for which payment oth- which it is owed and the financial rela-
erwise may be made under Medicare. A tionship satisfies all of the require-
physician’s prohibited financial rela- ments of an applicable exception.
tionship with an entity that furnishes (2) When payment for a designated
DHS is not imputed to his or her group health service is denied on the basis
practice or its members or its staff. that the service was furnished pursu-
However, a referral made by a physi- ant to a prohibited referral, and such

cian’s group practice, its members, or payment denial is appealed—
463
§ 411.350 42 CFR Ch. IV (10–1–09 Edition)
provide the benefits to other similarly (c) This subpart requires, with some
situated individuals enrolled in the exceptions, that certain entities fur-
plan. nishing covered services under Medi-
(iv) The LGHP takes into account en- care report information concerning
titlement to Medicare in any other ownership, investment, or compensa-
way. tion arrangements in the form, in the
(v) There was failure to file a proper manner, and at the times specified by
claim for any reason other than phys- CMS.
ical or mental incapacity of the bene- (d) This subpart does not alter an in-
ficiary. dividual’s or entity’s obligations
(2) The LGHP, an employer or em- under—
ployee organization, or the beneficiary (1) The rules regarding reassignment
fails to furnish information that is re- of claims (§ 424.80);
quested by CMS and that is necessary (2) The rules regarding purchased di-
to determine whether the LGHP is pri- agnostic tests (§ 414.50);
mary to Medicare. (3) The rules regarding payment for
(d) Limit on secondary payments. The services and supplies incident to a phy-
provisions of § 411.172(e) also apply to sician’s professional services (§ 410.26);
services furnished to the disabled under or
this subpart. (4) Any other applicable Medicare
laws, rules, or regulations.
Subpart I [Reserved] [72 FR 51079, Sept. 5, 2007]
§ 411.351 Definitions.
Subpart J—Financial Relationships
Between Physicians and Enti- As used in this subpart, unless the
context indicates otherwise:
ties Furnishing Designated Centralized building means all or part
Health Services of a building, including, for purposes of
this subpart only, a mobile vehicle,
SOURCE: 69 FR 16126, Mar. 26, 2004, unless van, or trailer that is owned or leased
otherwise noted. on a full-time basis (that is, 24 hours
per day, 7 days per week, for a term of
§ 411.350 Scope of subpart. not less than 6 months) by a group
(a) This subpart implements section practice and that is used exclusively by
1877 of the Act, which generally pro- the group practice. Space in a building
hibits a physician from making a refer- or a mobile vehicle, van, or trailer that
ral under Medicare for designated is shared by more than one group prac-
health services to an entity with which tice, by a group practice and one or
the physician or a member of the phy- more solo practitioners, or by a group
sician’s immediate family has a finan- practice and another provider or sup-
cial relationship. plier (for example, a diagnostic imag-
(b) This subpart does not provide for ing facility) is not a centralized build-
exceptions or immunity from civil or ing for purposes of this subpart. This
criminal prosecution or other sanc- provision does not preclude a group
tions applicable under any State laws practice from providing services to
or under Federal law other than sec- other providers or suppliers (for exam-
tion 1877 of the Act. For example, al- ple, purchased diagnostic tests) in the
though a particular arrangement in- group practice’s centralized building. A
volving a physician’s financial rela- group practice may have more than
tionship with an entity may not pro- one centralized building.
hibit the physician from making refer- Clinical laboratory services means the
rals to the entity under this subpart, biological, microbiological, serological,
the arrangement may nevertheless vio- chemical, immunohematological,
late another provision of the Act or hematological, biophysical,
other laws administered by HHS, the cytological, pathological, or other ex-
Federal Trade Commission, the Securi- amination of materials derived from
ties and Exchange Commission, the In- the human body for the purpose of pro-
ternal Revenue Service, or any other viding information for the diagnosis,
Federal or State agency. prevention, or treatment of any disease
452
or impairment of, or the assessment of (vii) Prosthetics, orthotics, and pros-

the health of, human beings, including thetic devices and supplies.
procedures to determine, measure, or (viii) Home health services.
otherwise describe the presence or ab- (ix) Outpatient prescription drugs.
sence of various substances or orga- (x) Inpatient and outpatient hospital
nisms in the body, as specifically iden- services.
tified by the List of CPT/HCPCS Codes. (2) Except as otherwise noted in this
All services so identified on the List of subpart, the term ‘‘designated health
CPT/HCPCS Codes are clinical labora- services’’ or DHS means only DHS pay-
tory services for purposes of this sub- able, in whole or in part, by Medicare.
part. Any service not specifically iden- DHS do not include services that are
tified as a clinical laboratory service reimbursed by Medicare as part of a
on the List of CPT/HCPCS Codes is not composite rate (for example, SNF Part
a clinical laboratory service for pur- A payments or ASC services identified
poses of this subpart. at § 416.164(a)), except to the extent
Consultation means a professional that services listed in paragraphs (1)(i)
service furnished to a patient by a phy- through (1)(x) of this definition are
sician if the following conditions are themselves payable through a com-
satisfied: posite rate (for example, all services
(1) The physician’s opinion or advice provided as home health services or in-
regarding evaluation or management patient and outpatient hospital serv-
or both of a specific medical problem is ices are DHS).
requested by another physician.
Does not violate the anti-kickback stat-
(2) The request and need for the con-
ute, as used in this subpart only, means
sultation are documented in the pa-
that the particular arrangement—
tient’s medical record.
(1)(i) Meets a safe harbor under the
(3) After the consultation is provided,
anti-kickback statute, as set forth at
the physician prepares a written report
§ 1001.952 of this title, ‘‘Exceptions’’;
of his or her findings, which is provided
to the physician who requested the (ii) Has been specifically approved by
consultation. the OIG in a favorable advisory opinion
(4) With respect to radiation therapy issued to a party to the particular ar-
services provided by a radiation rangement (for example, the entity fur-
oncologist, a course of radiation treat- nishing DHS) with respect to the par-
ments over a period of time will be ticular arrangement (and not a similar
considered to be pursuant to a con- arrangement), provided that the ar-
sultation, provided that the radiation rangement is conducted in accordance
oncologist communicates with the re- with the facts certified by the request-
ferring physician on a regular basis ing party and the opinion is otherwise
about the patient’s course of treatment issued in accordance with part 1008 of
and progress. this title, ‘‘Advisory Opinions by the
Designated health services (DHS) OIG’’; or
means any of the following services (iii) Does not violate the anti-kick-
(other than those provided as emer- back provisions in section 1128B(b) of
gency physician services furnished out- the Act.
side of the U.S.), as they are defined in (2) For purposes of this definition, a
this section: favorable advisory opinion means an
(1)(i) Clinical laboratory services. opinion in which the OIG opines that—
(ii) Physical therapy, occupational (i) The party’s specific arrangement
therapy, and outpatient speech-lan- does not implicate the anti-kickback
guage pathology services. statute, does not constitute prohibited
(iii) Radiology and certain other im- remuneration, or fits in a safe harbor
aging services. under § 1001.952 of this title; or
(iv) Radiation therapy services and (ii) The party will not be subject to
supplies. any OIG sanctions arising under the
(v) Durable medical equipment and anti-kickback statute (for example,
supplies. under sections 1128A(a)(7) and 1128(b)(7)
(vi) Parenteral and enteral nutrients, of the Act) in connection with the par-
equipment, and supplies. ty’s specific arrangement.
453
§ 411.351 42 CFR Ch. IV (10–1–09 Edition)
Downstream contractor means a ‘‘first (2) A health plan, MCO, PSO, or IPA
tier contractor’’ as defined at that employs a supplier or operates a
§ 1001.952(t)(2)(iii) or a ‘‘downstream facility that could accept reassignment
contractor’’ as defined at from a supplier under § 424.80(b)(1) and
§ 1001.952(t)(2)(i). (b)(2) of this chapter, with respect to
Durable medical equipment (DME) and any DHS provided by that supplier.
supplies has the meaning given in sec- (3) For purposes of this subpart, ‘‘en-
tion 1861(n) of the Act and § 414.202 of tity’’ does not include a physician’s
this chapter. practice when it bills Medicare for the
Electronic health record means a re- technical component or professional
pository of consumer health status in- component of a diagnostic test for
formation in computer processable which the anti-markup provision is ap-
form used for clinical diagnosis and plicable in accordance with § 414.50 of
treatment for a broad array of clinical this chapter and section 30.2.9 of the
conditions. CMS Internet-only Manual, publication
Employee means any individual who, 100–04, Claims Processing Manual,
under the common law rules that apply Chapter 1 (general billing require-
in determining the employer-employee ments).
relationship (as applied for purposes of Fair market value means the value in
section 3121(d)(2) of the Internal Rev- arm’s-length transactions, consistent
enue Code of 1986), is considered to be with the general market value. ‘‘Gen-
employed by, or an employee of, an en- eral market value’’ means the price
tity. (Application of these common law that an asset would bring as the result
rules is discussed in 20 CFR 404.1007 and of bona fide bargaining between well-in-
26 CFR 31.3121(d)–1(c).) formed buyers and sellers who are not
Entity means— otherwise in a position to generate
(1) A physician’s sole practice or a business for the other party, or the
practice of multiple physicians or any compensation that would be included
other person, sole proprietorship, pub- in a service agreement as the result of
lic or private agency or trust, corpora- bona fide bargaining between well-in-
tion, partnership, limited liability formed parties to the agreement who
company, foundation, nonprofit cor- are not otherwise in a position to gen-
poration, or unincorporated associa- erate business for the other party, on
tion that furnishes DHS. An entity the date of acquisition of the asset or
does not include the referring physi- at the time of the service agreement.
cian himself or herself, but does in- Usually, the fair market price is the
clude his or her medical practice. A price at which bona fide sales have been
person or entity is considered to be fur- consummated for assets of like type,
nishing DHS if it— quality, and quantity in a particular
(i) Is the person or entity that has market at the time of acquisition, or
performed services that are billed as the compensation that has been in-
DHS; or cluded in bona fide service agreements
(ii) Is the person or entity that has with comparable terms at the time of
presented a claim to Medicare for the the agreement, where the price or com-
DHS, including the person or entity to pensation has not been determined in
which the right to payment for the any manner that takes into account
DHS has been reassigned in accordance the volume or value of anticipated or
with § 424.80(b)(1) (employer) or (b)(2) actual referrals. With respect to rent-
(payment under a contractual arrange- als and leases described in § 411.357(a),
ment) of this chapter (other than a (b), and (l) (as to equipment leases
health care delivery system that is a only), ‘‘fair market value’’ means the
health plan (as defined at § 1001.952(l) of value of rental property for general
this title), and other than any managed commercial purposes (not taking into
care organization (MCO), provider- account its intended use). In the case
sponsored organization (PSO), or inde- of a lease of space, this value may not
pendent practice association (IPA) be adjusted to reflect the additional
with which a health plan contracts for value the prospective lessee or lessor
services provided to plan enrollees). would attribute to the proximity or
454
convenience to the lessor when the les- chapter and include inpatient psy-
sor is a potential source of patient re- chiatric hospital services listed in sec-
ferrals to the lessee. For purposes of tion 1861(c) of the Act and inpatient
this definition, a rental payment does critical access hospital services, as de-
not take into account intended use if it fined in section 1861(mm)(2) of the Act.
takes into account costs incurred by ‘‘Inpatient hospital services’’ do not in-
the lessor in developing or upgrading clude emergency inpatient services
the property or maintaining the prop- provided by a hospital located outside
erty or its improvements. of the U.S. and covered under the au-
Home health services means the serv- thority in section 1814(f)(2) of the Act
ices described in section 1861(m) of the and part 424, subpart H of this chapter,
Act and part 409, subpart E of this or emergency inpatient services pro-
chapter. vided by a nonparticipating hospital
Hospital means any entity that quali-
within the U.S., as authorized by sec-
fies as a ‘‘hospital’’ under section
tion 1814(d) of the Act and described in
1861(e) of the Act, as a ‘‘psychiatric
part 424, subpart G of this chapter.
hospital’’ under section 1861(f) of the
‘‘Inpatient hospital services’’ also do
Act, or as a ‘‘critical access hospital’’
under section 1861(mm)(1) of the Act, not include dialysis furnished by a hos-
and refers to any separate legally orga- pital that is not certified to provide
nized operating entity plus any sub- end-stage renal dialysis (ESRD) serv-
sidiary, related entity, or other enti- ices under subpart U of part 405 of this
ties that perform services for the hos- chapter. ‘‘Inpatient hospital services’’
pital’s patients and for which the hos- include services that are furnished ei-
pital bills. However, a ‘‘hospital’’ does ther by the hospital directly or under
not include entities that perform serv- arrangements made by the hospital
ices for hospital patients ‘‘under ar- with others. ‘‘Inpatient hospital serv-
rangements’’ with the hospital. ices’’ do not include professional serv-
HPSA means, for purposes of this sub- ices performed by physicians, physician
part, an area designated as a health assistants, nurse practitioners, clinical
professional shortage area under sec- nurse specialists, certified nurse mid-
tion 332(a)(1)(A) of the Public Health wives, and certified registered nurse
Service Act for primary medical care anesthetists and qualified psycholo-
professionals (in accordance with the gists if Medicare reimburses the serv-
criteria specified in part 5 of this title). ices independently and not as part of
Immediate family member or member of the inpatient hospital service (even if
a physician’s immediate family means they are billed by a hospital under an
husband or wife; birth or adoptive par- assignment or reassignment).
ent, child, or sibling; stepparent, step- Interoperable means able to commu-
child, stepbrother, or stepsister; father- nicate and exchange data accurately,
in-law, mother-in-law, son-in-law, effectively, securely, and consistently
daughter-in-law, brother-in-law, or sis- with different information technology
ter-in-law; grandparent or grandchild;
systems, software applications, and
and spouse of a grandparent or grand-
networks, in various settings; and ex-
child.
change data such that the clinical or
‘‘Incident to’’ services or services ‘‘inci-
operational purpose and meaning of the
dent to’’ means those services and sup-
plies that meet the requirements of data are preserved and unaltered.
section 1861(s)(2)(A) of the Act, § 410.26 Laboratory means an entity fur-
of this chapter, and sections 60, 60.1, nishing biological, microbiological, se-
60.2, and 60.3 of the CMS Internet-only rological, chemical,
Manual, publication 100–02, Medicare immunohematological, hematological,
Benefit Policy Manual, Chapter 15 biophysical, cytological, pathological,
(covered medical and other health serv- or other examination of materials de-
ices), as amended or replaced from rived from the human body for the pur-
time to time. pose of providing information for the
Inpatient hospital services means those diagnosis, prevention, or treatment of
services defined in section 1861(b) of any disease or impairment of, or the

the Act and § 409.10(a) and (b) of this assessment of the health of, human
455
§ 411.351 42 CFR Ch. IV (10–1–09 Edition)
beings. These examinations also in- Act; outpatient services furnished by a

clude procedures to determine, meas- psychiatric hospital, as defined in sec-
ure, or otherwise describe the presence tion 1861(f) of the Act; and outpatient
or absence of various substances or or- critical access hospital services, as de-
ganisms in the body. Entities only col- fined in section 1861(mm)(3) of the Act.
lecting or preparing specimens (or ‘‘Outpatient hospital services’’ do not
both) or only serving as a mailing serv- include emergency services furnished
ice and not performing testing are not by nonparticipating hospitals and cov-
considered laboratories. ered under the conditions described in
List of CPT/HCPCS Codes means the section 1835(b) of the Act and subpart G
list of CPT and HCPCS codes that iden- of part 424 of this chapter. ‘‘Outpatient
tifies those items and services that are hospital services’’ include services that
DHS under section 1877 of the Act or are furnished either by the hospital di-
that may qualify for certain exceptions rectly or under arrangements made by
under section 1877 of the Act. It is up- the hospital with others. ‘‘Outpatient
dated annually, as published in the hospital services’’ do not include pro-
FEDERAL REGISTER, and is posted on fessional services performed by physi-
the CMS Web site at http:// cians, physician assistants, nurse prac-
www.cms.hhs.gov/PhysicianSelfReferral/ titioners, clinical nurse specialists,
11lListloflCodes.asp#TopOfPage. certified nurse midwives, certified reg-
Locum tenens physician means a phy- istered nurse anesthetists, and quali-
sician who substitutes (that is, ‘‘stands fied psychologists if Medicare reim-
in the shoes’’) in exigent circumstances burses the services independently and
for a physician, in accordance with ap- not as part of the outpatient hospital
plicable reassignment rules and regula- service (even if they are billed by a
tions, including section 30.2.11 of the hospital under an assignment or reas-
CMS Internet-only Manual, publication signment).
100–04, Claims Processing Manual, Outpatient prescription drugs means
Chapter 1 (general billing require- all drugs covered by Medicare Part B
ments), as amended or replaced from or D, except for those drugs that are
time to time. ‘‘covered ancillary services,’’ as defined
Member of the group or member of a at § 416.164(b) of this chapter, for which
group practice means, for purposes of separate payment is made to an ambu-
this subpart, a direct or indirect physi- latory surgical center.
cian owner of a group practice (includ- Parenteral and enteral nutrients, equip-
ing a physician whose interest is held ment, and supplies means the following
by his or her individual professional services (including all HCPCS level 2
corporation or by another entity), a codes for these services):
physician employee of the group prac- (1) Parenteral nutrients, equipment,
tice (including a physician employed and supplies, meaning those items and
by his or her individual professional supplies needed to provide nutriment
corporation that has an equity interest to a patient with permanent, severe pa-
in the group practice), a locum tenens thology of the alimentary tract that
physician (as defined in this section), does not allow absorption of sufficient
or an on-call physician while the physi- nutrients to maintain strength com-
cian is providing on-call services for mensurate with the patient’s general
members of the group practice. A phy- condition, as described in section 108.2
sician is a member of the group during of the National Coverage Determina-
the time he or she furnishes ‘‘patient tions Manual, as amended or replaced
care services’’ to the group as defined from time to time; and
in this section. An independent con- (2) Enteral nutrients, equipment, and
tractor or a leased employee is not a supplies, meaning items and supplies
member of the group (unless the leased needed to provide enteral nutrition to
employee meets the definition of an a patient with a functioning gastro-
‘‘employee’’ under this § 411.351). intestinal tract who, due to pathology
Outpatient hospital services means the to or nonfunction of the structures
therapeutic, diagnostic, and partial that normally permit food to reach the
hospitalization services listed under digestive tract, cannot maintain

sections 1861(s)(2)(B) and (s)(2)(C) of the weight and strength commensurate
456
with his or her general condition, as (iii) Establishment of a maintenance

described in section 108.2 of the Na- therapy program for an individual
tional Coverage Determinations Man- whose restoration potential has been
ual, as amended or replaced from time reached; however, maintenance ther-
to time. apy itself is not covered as part of
Patient care services means any these services.
task(s) performed by a physician in the (2) Occupational therapy services,
group practice that address the med- meaning those services described in
ical needs of specific patients or pa- section 1861(g) of the Act that are cov-
tients in general, regardless of whether ered under Medicare Part A or Part B,
they involve direct patient encounters regardless of who provides them, if the
or generally benefit a particular prac- services include—
tice. Patient care services can include, (i) Teaching of compensatory tech-
for example, the services of physicians niques to permit an individual with a
who do not directly treat patients, physical or cognitive impairment or
such as time spent by a physician con- limitation to engage in daily activi-
sulting with other physicians or re- ties;
viewing laboratory tests, or time spent (ii) Evaluation of an individual’s
training staff members, arranging for level of independent functioning;
equipment, or performing administra- (iii) Selection and teaching of task-
tive or management tasks. oriented therapeutic activities to re-
Physical therapy, occupational therapy, store sensory-integrative function; or
and outpatient speech-language pathol- (iv) Assessment of an individual’s vo-
ogy services means those particular cational potential, except when the as-
services so identified on the List of sessment is related solely to vocational
CPT/HCPCS Codes. All services so iden- rehabilitation.
tified on the List of CPT/HCPCS Codes (3) Outpatient speech-language pathol-
ogy services, meaning those services as
are physical therapy, occupational
described in section 1861(ll)(2) of the
therapy, and outpatient speech-lan-
Act that are for the diagnosis and
guage pathology services for purposes
treatment of speech, language, and
of this subpart. Any service not specifi-
cognitive disorders that include swal-
cally identified as physical therapy, oc-
lowing and other oral-motor dysfunc-
cupational therapy or outpatient
tions.
speech-language pathology on the List
Physician means a doctor of medicine
of CPT/HCPCS Codes is not a physical
or osteopathy, a doctor of dental sur-
therapy, occupational therapy, or out-
gery or dental medicine, a doctor of
patient speech-language pathology
podiatric medicine, a doctor of optom-
service for purposes of this subpart. etry, or a chiropractor, as defined in
The list of codes identifying physical section 1861(r) of the Act. A physician
therapy, occupational therapy, and and the professional corporation of
outpatient speech-language pathology which he or she is a sole owner are the
services for purposes of this regulation same for purposes of this subpart.
includes the following: Physician in the group practice means
(1) Physical therapy services, meaning a member of the group practice, as well
those outpatient physical therapy as an independent contractor physician
servicesdescribed in section 1861(p) of during the time the independent con-
the Act that are covered under Medi- tractor is furnishing patient care serv-
care Part A or Part B, regardless of ices (as defined in this section) for the
who provides them, if the services in- group practice under a contractual ar-
clude— rangement directly with the group
(i) Assessments, function tests, and practice to provide services to the
measurements of strength, balance, en- group practice’s patients in the group
durance, range of motion, and activi- practice’s facilities. The contract must
ties of daily living; contain the same restrictions on com-
(ii) Therapeutic exercises, massage, pensation that apply to members of the
and use of physical medicine modali- group practice under § 411.352(g) (or the
ties, assistive devices, and adaptive contract must satisfy the requirements
equipment; Or of the personal service arrangements
457
§ 411.351 42 CFR Ch. IV (10–1–09 Edition)
exception in § 411.357(d)), and the inde- (4) Prosthetic supplies, meaning sup-
pendent contractor’s arrangement with plies that are necessary for the effec-
the group practice must comply with tive use of a prosthetic device (includ-
the reassignment rules in § 424.80(b)(2) ing supplies directly related to colos-
of this chapter (see also section 30.2.11 tomy care).
of the CMS Internet-only Manual, pub- Radiation therapy services and supplies
lication 100-04, Claims Processing Man- means those particular services and
ual, Chapter 1 (general billing require- supplies, including (effective January
ments), as amended or replaced from 1, 2007) therapeutic nuclear medicine
time to time). Referrals from an inde- services and supplies, so identified on
pendent contractor who is a physician the List of CPT/HCPCS Codes. All serv-
in the group practice are subject to the ices and supplies so identified on the
prohibition on referrals in § 411.353(a), List of CPT/HCPCS Codes are radiation
and the group practice is subject to the therapy services and supplies for pur-
limitation on billing for those referrals poses of this subpart. Any service or
in § 411.353(b). supply not specifically identified as ra-
Physician incentive plan means any diation therapy services or supplies on
compensation arrangement between an the List of CPT/HCPCS Codes is not a
entity (or downstream contractor) and radiation therapy service or supply for
a physician or physician group that purposes of this subpart. The list of
may directly or indirectly have the ef- codes identifying radiation therapy
fect of reducing or limiting services services and supplies is based on sec-
furnished with respect to individuals tion 1861(s)(4) of the Act and § 410.35 of
enrolled with the entity. this chapter.
Physician organization means a physi- Radiology and certain other imaging
cian, a physician practice, or a group services means those particular services
practice that complies with the re- so identified on the List of CPT/HCPCS
Codes. All services identified on the
quirements of § 411.352.
List of CPT/HCPCS Codes are radiology
Plan of care means the establishment
and certain other imaging services for
by a physician of a course of diagnosis
purposes of this subpart. Any service
or treatment (or both) for a particular
not specifically identified as radiology
patient, including the ordering of serv-
and certain other imaging services on
ices.
the List of CPT/HCPCS Codes is not a
Professional courtesy means the provi- radiology or certain other imaging
sion of free or discounted health care service for purposes of this subpart.
items or services to a physician or his The list of codes identifying radiology
or her immediate family members or and certain other imaging services in-
office staff. cludes the professional and technical
Prosthetics, Orthotics, and Prosthetic components of any diagnostic test or
Devices and Supplies means the fol- procedure using x-rays, ultrasound,
lowing services (including all HCPCS computerized axial tomography, mag-
level 2 codes for these items and serv- netic resonance imaging, nuclear medi-
ices that are covered by Medicare): cine (effective January 1, 2007), or
(1) Orthotics, meaning leg, arm, back, other imaging services. All codes iden-
and neck braces, as listed in section tified as radiology and certain other
1861(s)(9) of the Act. imaging services are covered under sec-
(2) Prosthetics, meaning artificial tion 1861(s)(3) of the Act and §§ 410.32
legs, arms, and eyes, as described in and 410.34 of this chapter, but do not
section 1861(s)(9) of the Act. include—
(3) Prosthetic devices, meaning devices (1) X-ray, fluoroscopy, or ultrasound
(other than a dental device) listed in procedures that require the insertion of
section 1861(s)(8) of the Act that re- a needle, catheter, tube, or probe
place all or part of an internal body through the skin or into a body orifice;
organ, including colostomy bags, and (2) Radiology or certain other imag-
one pair of conventional eyeglasses or ing services that are integral to the
contact lenses furnished subsequent to performance of a medical procedure
each cataract surgery with insertion of that is not identified on the list of
an intraocular lens. CPT/HCPCS codes as a radiology or
458
certain other imaging service and is (2) Does not include a request by a
performed— pathologist for clinical diagnostic lab-
(i) Immediately prior to or during the oratory tests and pathological exam-
medical procedure; or ination services, by a radiologist for di-
(ii) Immediately following the med- agnostic radiology services, and by a
ical procedure when necessary to con- radiation oncologist for radiation ther-
firm placement of an item placed dur- apy or ancillary services necessary for,
ing the medical procedure. and integral to, the provision of radi-
(3) Radiology and certain other imag- ation therapy, if—
ing services that are ‘‘covered ancillary (i) The request results from a con-
services,’’ as defined at § 416.164(b), for sultation initiated by another physi-
which separate payment is made to an cian (whether the request for a con-
ASC. sultation was made to a particular
physician or to an entity with which
Referral—
the physician is affiliated); and
(1) Means either of the following:
(ii) The tests or services are fur-
(i) Except as provided in paragraph nished by or under the supervision of
(2) of this definition, the request by a the pathologist, radiologist, or radi-
physician for, or ordering of, or the ation oncologist, or under the super-
certifying or recertifying of the need vision of a pathologist, radiologist, or
for, any designated health service for radiation oncologist, respectively, in
which payment may be made under the same group practice as the patholo-
Medicare Part B, including a request gist, radiologist, or radiation
for a consultation with another physi- oncologist.
cian and any test or procedure ordered (3) Can be in any form, including, but
by or to be performed by (or under the not limited to, written, oral, or elec-
supervision of) that other physician, tronic.
but not including any designated Referring physician means a physician
health service personally performed or who makes a referral as defined in this
provided by the referring physician. A section or who directs another person
designated health service is not person- or entity to make a referral or who
ally performed or provided by the re- controls referrals made by another per-
ferring physician if it is performed or son or entity. A referring physician
provided by any other person, includ- and the professional corporation of
ing, but not limited to, the referring which he or she is a sole owner are the
physician’s employees, independent same for purposes of this subpart.
contractors, or group practice mem- Remuneration means any payment or
bers. other benefit made directly or indi-
(ii) Except as provided in paragraph rectly, overtly or covertly, in cash or
(2) of this definition, a request by a in kind, except that the following are
physician that includes the provision not considered remuneration for pur-
of any designated health service for poses of this section:
which payment may be made under (1) The forgiveness of amounts owed
Medicare, the establishment of a plan for inaccurate tests or procedures, mis-
of care by a physician that includes the takenly performed tests or procedures,
provision of such a designated health or the correction of minor billing er-
service, or the certifying or recerti- rors.
fying of the need for such a designated (2) The furnishing of items, devices,
health service, but not including any or supplies (not including surgical
designated health service personally items, devices, or supplies) that are
performed or provided by the referring used solely to collect, transport, proc-
physician. A designated health service ess, or store specimens for the entity
is not personally performed or provided furnishing the items, devices, or sup-
by the referring physician if it is per- plies or are used solely to order or com-
formed or provided by any other person municate the results of tests or proce-
including, but not limited to, the refer- dures for the entity.
ring physician’s employees, inde- (3) A payment made by an insurer or
pendent contractors, or group practice a self-insured plan (or a subcontractor

members. of the insurer or self-insured plan) to a
459
§ 411.352 42 CFR Ch. IV (10–1–09 Edition)
physician to satisfy a claim, submitted such date is no greater than the num-
on a fee-for-service basis, for the fur- ber of such investors as of such date;
nishing of health services by that phy- (3) For which the type of categories
sician to an individual who is covered described above is no different at any
by a policy with the insurer or by the time on or after such date than the
self-insured plan, if— type of such categories as of such date;
(i) The health services are not fur- (4) For which any increase in the
nished, and the payment is not made, number of beds occurs only in the fa-
under a contract or other arrangement cilities on the main campus of the hos-
between the insurer or the self-insured pital and does not exceed 50 percent of
plan (or a subcontractor of the insurer the number of beds in the hospital as of
or self-insured plan) and the physician; November 18, 2003, or 5 beds, whichever
(ii) The payment is made to the phy- is greater; and
sician on behalf of the covered indi- (5) That meets such other require-
vidual and would otherwise be made di- ments as the Secretary may specify.
rectly to the individual; and Transaction means an instance or
(iii) The amount of the payment is process of two or more persons or enti-
set in advance, does not exceed fair ties doing business. An isolated finan-
market value, and is not determined in cial transaction means one involving a
a manner that takes into account di- single payment between two or more
rectly or indirectly the volume or persons or entities or a transaction
value of any referrals. that involves integrally related install-
Rural area means an area that is not ment payments provided that—
an urban area as defined at (1) The total aggregate payment is
§ 412.62(f)(1)(ii) of this chapter. fixed before the first payment is made
Same building means a structure with, and does not take into account, di-
or combination of structures that rectly or indirectly, the volume or
share, a single street address as as- value of referrals or other business gen-
signed by the U.S. Postal Service, ex- erated by the referring physician; and
cluding all exterior spaces (for exam- (2) The payments are immediately
ple, lawns, courtyards, driveways, negotiable or are guaranteed by a third
parking lots) and interior loading party, or secured by a negotiable prom-
docks or parking garages. For purposes issory note, or subject to a similar
of this section, the ‘‘same building’’ mechanism to ensure payment even in
does not include a mobile vehicle, van, the event of default by the purchaser
or trailer. or obligated party.
Specialty hospital means a subsection [72 FR 51080, Sept. 5, 2007, as amended at 72
(d) hospital (as defined in section FR 66400, 66930, Nov. 27, 2007; 73 FR 48751,
1886(d)(1)(B) of the Act) that is pri- Aug. 19, 2008; 73 FR 69934, Nov. 19, 2008]
marily or exclusively engaged in the
care and treatment of one of the fol- § 411.352 Group practice.
lowing: For purposes of this subpart, a group
(1) Patients with a cardiac condition; practice is a physician practice that
(2) Patients with an orthopedic con- meets the following conditions:
dition; (a) Single legal entity. The group prac-
(3) Patients receiving a surgical pro- tice must consist of a single legal enti-
cedure; or ty operating primarily for the purpose
(4) Any other specialized category of of being a physician group practice in
services that the Secretary designates any organizational form recognized by
as inconsistent with the purpose of per- the State in which the group practice
mitting physician ownership and in- achieves its legal status, including, but
vestment interests in a hospital. A not limited to, a partnership, profes-
‘‘specialty hospital’’ does not include sional corporation, limited liability
any hospital— company, foundation, nonprofit cor-
(1) Determined by the Secretary to be poration, faculty practice plan, or
in operation before or under develop- similar association. The single legal
ment as of November 18, 2003; entity may be organized by any party
(2) For which the number of physi- or parties, including, but not limited
cian investors at any time on or after to, physicians, health care facilities, or
460
§ 411.350 42 CFR Ch. IV (10–1–09 Edition)
452
(i) The gross amount payable by to be the provider charges. The Medi-
Medicare minus the Medicare deduct- care secondary payment is the lowest
ible: $850¥$520=$330. of the following:
(ii) The gross amount payable by (i) The gross amount payable by
Medicare minus the primary payment: Medicare minus the Medicare inpatient
$850¥$450=$400. deductible: $3,500¥$520=$2,980.
(iii) The provider’s charges minus the (ii) The gross amount payable by
primary payment: $750¥$450=$300. Medicare minus the primary payment:
(iv) The provider’s charges minus the $3,500¥$2,900=$600.
Medicare deductible: $750¥$520=$230. (iii) The provider’s charge minus the
Medicare’s secondary payment is $230, primary payment: $3,000¥$2,900=$100.
and the combined payment made by (iv) The provider’s charges minus the
the primary payer and Medicare on be- Medicare inpatient deductible:
half of the beneficiary is $680. The hos-
$3,000¥$520=$2,480. The Medicare sec-
pital may bill the beneficiary $70 (the
ondary payment is $100. When Medicare
$520 deductible minus the $450 primary
is the secondary payer, the combined
payment). This fully discharges the
payment made by the primary payer
beneficiary’s deductible obligation.
and Medicare on behalf of the bene-
(3) An ESRD beneficiary received 8
ficiary is $3,000. The beneficiary has no
dialysis treatments for which a facility
liability for Medicare-covered services
charged $160 per treatment for a total
since the primary payment satisfied
of $1,280. No part of the beneficiary’s
the $520 deductible.
$75 Part B deductible had been met.
The primary payer paid $1,024 for Medi- [54 FR 41734, Oct. 11, 1989, as amended at 55
care-covered services. The composite FR 1820, Jan. 19, 1990; 60 FR 45362, Aug. 31,
rate per dialysis treatment at this fa- 1995; 71 FR 9470, Feb. 24, 2006]
cility is $131 or $1,048 for 8 treatments.
As secondary payer, Medicare pays the § 411.35 Limitations on charges to a
lowest of the following: beneficiary or other party when a
workers’ compensation plan, a no-
(i) The gross amount payable by fault insurer, or an employer group
Medicare minus the applicable Medi- health plan is primary payer.
care deductible and coinsurance:
$1,048¥$75¥$194.60=$778.40. (The coin- (a) Definition. As used in this section
surance is calculated as follows: $1,048 Medicare-covered services means services
composite rate¥$75 for which Medicare benefits are pay-
deductible=$973×.20=$194.60). able or would be payable except for the
(ii) The gross amount payable by Medicare deductible and coinsurance
Medicare minus the primary payment: provisions and the amounts payable by
$1,048¥$1,024=$24. the primary payer.
(iii) The provider’s charges minus the (b) Applicability. This section applies
primary payment: $1,280¥$1,024=$256. when a workers’ compensation plan, a
(iv) The provider’s charge minus the no-fault insurer or an employer group
Medicare deductible and coinsurance: health plan is primary to Medicare.
$1,280¥$75¥$194.60=1010.40. Medicare (c) Basic rule. Except as provided in
pays $24. The beneficiary’s Medicare paragraph (d) of this section, the
deductible and coinsurance were met amounts the provider or supplier may
by the primary payment. collect or seek to collect, for the Medi-
(4) A hospital furnished 5 days of in- care-covered services from the bene-
patient care in 1987 to a Medicare beneficiary or any entity other than the
ficiary. The provider’s charges for workers’ compensation plan, the no-
Medicare-covered services were $4,000 fault insurer, or the employer plan and
and the gross amount payable was Medicare, are limited to the following:
$3,500. The provider agreed to accept (1) The amount paid or payable by
$3,000 from the primary payer as pay- the primary payer to the beneficiary. If
ment in full. The primary payer paid this amount exceeds the amount pay-
$2,900 due to a deductible requirement able by Medicare (without regard to de-
under the primary plan. Medicare con- ductible or coinsurance), the provider
siders the amount the provider is obli- or supplier may retain the primary
gated to accept as full payment ($3,000) payment in full without violating the
427
§ 411.37 42 CFR Ch. IV (10–1–09 Edition)
428
§ 411.33 42 CFR Ch. IV (10–1–09 Edition)
§ 411.33 Amount of Medicare sec- minus the applicable Medicare deduct-

ondary payment. ible and coinsurance amounts.
(a) Services for which CMS pays on a (2) The gross amount payable by
Medicare fee schedule or reasonable Medicare, minus the amount paid by
charge basis. The Medicare secondary the primary payer.
payment is the lowest of the following: (3) The provider’s charges (or the
(1) The actual charge by the supplier amount the provider is obligated to ac-
(or the amount the supplier is obli- cept as payment in full, if that is less
gated to accept as payment in full if than the charges), minus the amount
that is less than the charges) minus payable by the primary payer.
the amount paid by the primary payer. (4) The provider’s charges (or the
(2) The amount that Medicare would amount the provider is obligated to ac-
pay if the services were not covered by cept as payment in full if that is less
a primary payer. than the charges), minus the applicable
(3) The higher of the Medicare fee Medicare deductible and coinsurance
schedule, Medicare reasonable charge, amounts.
or other amount which would be pay- (f) Examples: (1) A hospital furnished
able under Medicare (without regard to 7 days of inpatient hospital care in 1987
any applicable Medicare deductible or to a Medicare beneficiary. The pro-
coinsurance amounts) or the primary vider’s charges for Medicare-covered
payer’s allowable charge (without re- services totaled $2,800. The primary
gard to any deductible or co-insurance payer paid $2,360. No part of the Medi-
imposed by the policy or plan) minus care inpatient hospital deductible of
the amount actually paid by the pri- $520 had been met. If the gross amount
mary payer. payable by Medicare in this case is
(b) Example: An individual received $2,700, then as secondary payer, Medi-
treatment from a physician for which care pays the lowest of the following
the physician charged $175. The pri- amounts:
mary payer allowed $150 of the charge (i) The gross amount payable by
and paid 80 percent of this amount or Medicare minus the Medicare inpatient
$120. The Medicare fee schedule for this hospital deductible: $2,700¥$520=$2,180.
treatment is $125. The individual’s Part (ii) The gross amount payable by
B deductible had been met. As sec- Medicare minus the primary payment:
ondary payer, Medicare pays the lowest $2,700¥$2,360=$340.
of the following amounts: (iii) The provider’s charges minus the
(1) Excess of actual charge minus the primary payment: $2,800¥$2,360=$440.
primary payment: $175¥120=$55. (iv) The provider’s charges minus the
(2) Amount Medicare would pay if the Medicare deductible: $2,800¥$520=$2,280.
services were not covered by a primary Medicare’s secondary payment is $340
payer: .80×$125=$100. and the combined payment made by
(3) Primary payer’s allowable charge the primary payer and Medicare on be-
without regard to its coinsurance half of the beneficiary is $2,700. The
(since that amount is higher than the $520 deductible was satisfied by the pri-
Medicare fee schedule in this case) mary payment so that the beneficiary
minus amount paid by the primary incurred no out-of-pocket expenses.
payer: $150¥120=$30. (2) A hospital furnished 1 day of inpa-
The Medicare payment is $30. tient hospital care in 1987 to a Medi-
(c)–(d) [Reserved] care beneficiary. The provider’s
(e) Services reimbursed on a basis other charges for Medicare-covered services
than fee schedule, reasonable charge, or totalled $750. The primary payer paid
monthly capitation rate. The Medicare $450. No part of the Medicare inpatient
secondary payment is the lowest of the hospital deductible had been met pre-
following: viously. The primary payment is cred-
(1) The gross amount payable by ited toward that deductible. If the
Medicare (that is, the amount payable gross amount payable by Medicare in
without considering the effect of the this case is $850, then as secondary
Medicare deductible and coinsurance or payer, Medicare pays the lowest of the
the payment by the primary payer), following amounts:
426
(i) The gross amount payable by to be the provider charges. The Medi-
Medicare minus the Medicare deduct- care secondary payment is the lowest
ible: $850¥$520=$330. of the following:
(ii) The gross amount payable by (i) The gross amount payable by
Medicare minus the primary payment: Medicare minus the Medicare inpatient
$850¥$450=$400. deductible: $3,500¥$520=$2,980.
(iii) The provider’s charges minus the (ii) The gross amount payable by
primary payment: $750¥$450=$300. Medicare minus the primary payment:
(iv) The provider’s charges minus the $3,500¥$2,900=$600.
Medicare deductible: $750¥$520=$230. (iii) The provider’s charge minus the
Medicare’s secondary payment is $230, primary payment: $3,000¥$2,900=$100.
and the combined payment made by (iv) The provider’s charges minus the
the primary payer and Medicare on be- Medicare inpatient deductible:
half of the beneficiary is $680. The hos-
$3,000¥$520=$2,480. The Medicare sec-
pital may bill the beneficiary $70 (the
ondary payment is $100. When Medicare
$520 deductible minus the $450 primary
is the secondary payer, the combined
payment). This fully discharges the
payment made by the primary payer
beneficiary’s deductible obligation.
and Medicare on behalf of the bene-
(3) An ESRD beneficiary received 8
ficiary is $3,000. The beneficiary has no
dialysis treatments for which a facility
liability for Medicare-covered services
charged $160 per treatment for a total
since the primary payment satisfied
of $1,280. No part of the beneficiary’s
the $520 deductible.
$75 Part B deductible had been met.
The primary payer paid $1,024 for Medi- [54 FR 41734, Oct. 11, 1989, as amended at 55
care-covered services. The composite FR 1820, Jan. 19, 1990; 60 FR 45362, Aug. 31,
rate per dialysis treatment at this fa- 1995; 71 FR 9470, Feb. 24, 2006]
cility is $131 or $1,048 for 8 treatments.
As secondary payer, Medicare pays the § 411.35 Limitations on charges to a
lowest of the following: beneficiary or other party when a
workers’ compensation plan, a no-
(i) The gross amount payable by fault insurer, or an employer group
Medicare minus the applicable Medi- health plan is primary payer.
care deductible and coinsurance:
$1,048¥$75¥$194.60=$778.40. (The coin- (a) Definition. As used in this section
surance is calculated as follows: $1,048 Medicare-covered services means services
composite rate¥$75 for which Medicare benefits are pay-
deductible=$973×.20=$194.60). able or would be payable except for the
(ii) The gross amount payable by Medicare deductible and coinsurance
Medicare minus the primary payment: provisions and the amounts payable by
$1,048¥$1,024=$24. the primary payer.
(iii) The provider’s charges minus the (b) Applicability. This section applies
primary payment: $1,280¥$1,024=$256. when a workers’ compensation plan, a
(iv) The provider’s charge minus the no-fault insurer or an employer group
Medicare deductible and coinsurance: health plan is primary to Medicare.
$1,280¥$75¥$194.60=1010.40. Medicare (c) Basic rule. Except as provided in
pays $24. The beneficiary’s Medicare paragraph (d) of this section, the
deductible and coinsurance were met amounts the provider or supplier may
by the primary payment. collect or seek to collect, for the Medi-
(4) A hospital furnished 5 days of in- care-covered services from the bene-
patient care in 1987 to a Medicare beneficiary or any entity other than the
ficiary. The provider’s charges for workers’ compensation plan, the no-
Medicare-covered services were $4,000 fault insurer, or the employer plan and
and the gross amount payable was Medicare, are limited to the following:
$3,500. The provider agreed to accept (1) The amount paid or payable by
$3,000 from the primary payer as pay- the primary payer to the beneficiary. If
ment in full. The primary payer paid this amount exceeds the amount pay-
$2,900 due to a deductible requirement able by Medicare (without regard to de-
under the primary plan. Medicare con- ductible or coinsurance), the provider
siders the amount the provider is obli- or supplier may retain the primary
gated to accept as full payment ($3,000) payment in full without violating the
427
(c) The primary payer must provide capitation or fee schedule rate, does
additional information to the des- not affect the amount that a primary
ignated entity or entities as the des- payer may pay.
ignated entity or entities may require (b) With respect to workers’ com-
this information to update CMS’ sys- pensation plans, no-fault insurers, and
tem of records. employer group health plans, a pro-
[54 FR 41734, Oct. 11, 1989; as amended at 55 vider or supplier may bill its full
FR 1820, Jan. 19, 1990; 73 FR 9684, Feb. 22, charges and expect those charges to be
2008] paid unless there are limits imposed by
§ 411.26 Subrogation and right to in- laws other than title XVIII of the Act
tervene. or by agreements with the primary
payer.
(a) Subrogation. With respect to serv-
ices for which Medicare paid, CMS is § 411.32 Basis for Medicare secondary
subrogated to any individual, provider, payments.
supplier, physician, private insurer,
State agency, attorney, or any other (a) Basic rules. (1) Medicare benefits
entity entitled to payment by a pri- are secondary to benefits payable by a
mary payer. primary payer even if State law or the
(b) Right to intervene. CMS may join primary payer states that its benefits
or intervene in any action related to are secondary to Medicare benefits or
the events that gave rise to the need otherwise limits its payments to Medi-
for services for which Medicare paid. care beneficiaries.
(2) Except as provided in paragraph
§ 411.28 Waiver of recovery and com-
promise of claims. (b) of this section, Medicare makes sec-
ondary payments, within the limits
(a) CMS may waive recovery, in specified in paragraph (c) of this sec-
whole or in part, if the probability of tion and in § 411.33, to supplement the
recovery, or the amount involved, does
primary payment if that payment is
not warrant pursuit of the claim.
less than the charges for the services
(b) General rules applicable to com-
promise of claims are set forth in sub- and, in the case of services paid on
part F of part 401 and § 405.376 of this other than a reasonable charge basis,
chapter. less than the gross amount payable by
(c) Other rules pertinent to recovery Medicare under § 411.33(e).
are contained in subpart C of part 405 (b) Exception. Medicare does not
of this chapter. make a secondary payment if the pro-
vider or supplier is either obligated to
[54 FR 41734, Oct. 11, 1989, as amended at 61
FR 63749, Dec. 2, 1996] accept, or voluntarily accepts, as full
payment, a primary payment that is
§ 411.30 Effect of primary payment on less than its charges.
benefit utilization and deductibles. (c) General limitation: Failure to file a
(a) Benefit utilization. Inpatient psy- proper claim. When a provider or sup-
chiatric hospital and SNF care that is plier, or a beneficiary who is not phys-
paid for by a primary payer is not ically or mentally incapacitated, re-
counted against the number of inpa- ceives a reduced primary payment be-
tient care days available to the bene- cause of failure to file a proper claim,
ficiary under Medicare Part A. the Medicare secondary payment may
(b) Deductibles. Expenses for Medicare not exceed the amount that would have
covered services that are paid for by been payable under § 411.33 if the pri-
primary payers are credited toward the mary payer had paid on the basis of a
Medicare Part A and Part B proper claim.
deductibles.
The provider, supplier, or beneficiary
§ 411.31 Authority to bill primary pay- must inform CMS that a reduced pay-
ers for full charges. ment was made, and the amount that
(a) The fact that Medicare payments would have been paid if a proper claim
are limited to the DRG amount, or the had been filed.

reasonable charge, reasonable cost,
425
payer.
deductibles.

425
payer.
deductibles.

425
payer.
deductibles.

425
payer.
deductibles.

425
§ 411.25 42 CFR Ch. IV (10–1–09 Edition)
primary payer must reimburse Medi- regarding coverage that is primary to

care even though it has already reim- Medicare.
bursed the beneficiary or other party. (m) Interest charges. (1) With respect
(2) The provisions of paragraph (i)(1) to recovery of payments for items and
of this section also apply if a primary services furnished before October 31,
payer makes its payment to an entity 1994, CMS charges interest, exercising
other than Medicare when it is, or common law authority in accordance
should be, aware that Medicare has with 45 CFR 30.13, consistent with the
made a conditional primary payment. Federal Claims Collection Act (31
(3) In situations that involve procure- U.S.C. 3711).
ment costs, the rule of § 411.37(b) ap- (2) In addition to its common law au-
plies. thority with respect to recovery of
(j) Recovery against Medicaid agency. payments for items and services fur-
If a primary payment is made to a nished on or after October 31, 1994, CMS
State Medicaid agency and that agency charges interest in accordance with
does not reimburse Medicare, CMS may section 1862(b)(2)(B)(i) of the Act.
reduce any Federal funds due the Med- Under that provision—
icaid agency (under title XIX of the
(i) CMS may charge interest if reim-
Act) by an amount equal to the Medi-
bursement is not made to the appro-
care payment or the primary payment,
priate trust fund before the expiration
whichever is less.
of the 60-day period that begins on the
(k) Recovery against Medicare con-
date on which notice or other informa-
tractor. If a Medicare contractor, in-
tion is received by CMS that payment
cluding an intermediary or carrier,
also insures, underwrites, or admin- has been or could be made under a pri-
isters as a third party administrator, a mary plan;
program or plan that is primary to (ii) Interest may accrue from the
Medicare, and does not reimburse date when that notice or other infor-
Medicare, CMS may offset the amount mation is received by CMS, is charged
owed against any funds due the inter- until reimbursement is made, and is
mediary or carrier under title XVIII of applied for full 30-day periods; and
the Act or due the contractor under (iii) The rate of interest is that pro-
the contract. vided at § 405.378(d) of this chapter.
(l) Recovery when there is failure to file [54 FR 41734, Oct. 11, 1989, as amended at 55
a proper claim—(1) Basic rule. If Medi- FR 1820, Jan. 19, 1990; 60 FR 45361, 45362, Aug.
care makes a conditional payment with 31, 1995; 69 FR 45607, July 30, 2004; 71 FR 9470,
respect to services for which the bene- Feb. 24, 2006]
ficiary or provider or supplier has not
filed a proper claim with a primary § 411.25 Primary payer’s notice of pri-
payer, and Medicare is unable to re- mary payment responsibility.
cover from the primary payer, Medi- (a) If it is demonstrated to a primary
care may recover from the beneficiary payer that CMS has made a Medicare
or provider or supplier that was respon- primary payment for services for which
sible for the failure to file a proper
the primary payer has made or should
claim.
have made primary payment, it must
(2) Exceptions: (i) This rule does not
provide notice about primary payment
apply in the case of liability insurance
responsibility and information about
nor when failure to file a proper claim
the underlying MSP situation to the
is due to mental or physical incapacity
of the beneficiary. entity or entities designated by CMS to
receive and process that information.
(ii) CMS will not recover from pro-
viders or suppliers that are in compli- (b) The notice must describe the spe-
ance with the requirements of § 489.20 cific situation and the circumstances
of this chapter and can show that the (including the particular type of insur-
reason they failed to file a proper ance coverage as specified in § 411.20(a))
claim is that the beneficiary, or some- and, if appropriate, the time period
one acting on his or her behalf, failed during which the insurer is primary to
to give, or gave erroneous, information Medicare.
424
payer.
deductibles.

425
in a claim against the primary payer or full primary payment that the primary
the primary payer’s insured; or payer has paid or will make, or, in the
(3) By other means, including but not case of a primary payment recipient,
limited to a settlement, award, or con- the amount of the primary payment.
tractual obligation. (2) If it is necessary for CMS to take
(c) The primary payer must make legal action to recover from the pri-
payment to either of the following: mary payer, CMS may recover twice
(1) To the entity designated to re- the amount specified in paragraph
ceive repayments if the demonstration (c)(1)(i) of this section.
of primary payer responsibilities is (d) Methods of recovery. CMS may re-
other than receipt of a recovery de- cover by direct collection or by offset
mand letter from CMS or designated against any monies CMS owes the enti-
contractor.
ty responsible for refunding the condi-
(2) As directed in a recovery demand
tional payment.
letter.
(e) Recovery from primary payers. CMS
[71 FR 9470, Feb. 24, 2006, as amended at 73 has a direct right of action to recover
FR 9684, Feb. 22, 2008] from any primary payer.
§ 411.23 Beneficiary’s cooperation. (f) Claims filing requirements. (1) CMS
may recover without regard to any
(a) If CMS takes action to recover claims filing requirements that the in-
conditional payments, the beneficiary surance program or plan imposes on
must cooperate in the action. the beneficiary or other claimant such
(b) If CMS’s recovery action is unsuc- as a time limit for filing a claim or a
cessful because the beneficiary does time limit for notifying the plan or
not cooperate, CMS may recover from program about the need for or receipt
the beneficiary. of services.
§ 411.24 Recovery of conditional pay- (2) However, CMS will not recover its
ments. payment for particular services in the
If a Medicare conditional payment is face of a claims filing requirement un-
made, the following rules apply: less it has filed a claim for recovery by
(a) Release of information. The filing the end of the year following the year
of a Medicare claim by on or behalf of in which the Medicare intermediary or
the beneficiary constitutes an express carrier that paid the claim has notice
authorization for any entity, including that the third party is a primary plan
State Medicaid and workers’ com- to Medicare for those particular serv-
pensation agencies, and data deposi- ices. (A notice received during the last
tories, that possesses information per- three months of a year is considered re-
tinent to the Medicare claim to release ceived during the following year.)
that information to CMS. This infor- (g) Recovery from parties that receive
mation will be used only for Medicare primary payments. CMS has a right of
claims processing and for coordination action to recover its payments from
of benefits purposes. any entity, including a beneficiary,
(b) Right to initiate recovery. CMS may provider, supplier, physician, attorney,
initiate recovery as soon as it learns State agency or private insurer that
that payment has been made or could has received a primary payment.
be made under workers’ compensation, (h) Reimbursement to Medicare. If the
any liability or no-fault insurance, or beneficiary or other party receives a
an employer group health plan. primary payment, the beneficiary or
(c) Amount of recovery. (1) If it is not other party must reimburse Medicare
necessary for CMS to take legal action within 60 days.
to recover, CMS recovers the lesser of (i) Special rules. (1) In the case of li-
the following: ability insurance settlements and dis-
(i) The amount of the Medicare pri- puted claims under employer group
mary payment. health plans, workers’ compensation
(ii) The full primary payment insurance or plan, and no-fault insur-
amount that the primary payer is obli- ance, the following rule applies: If
gated to pay under this part without Medicare is not reimbursed as required
regard to any payment, other than a by paragraph (h) of this section, the
423
§ 411.25 42 CFR Ch. IV (10–1–09 Edition)
primary payer must reimburse Medi- regarding coverage that is primary to

care even though it has already reim- Medicare.
bursed the beneficiary or other party. (m) Interest charges. (1) With respect
(2) The provisions of paragraph (i)(1) to recovery of payments for items and
of this section also apply if a primary services furnished before October 31,
payer makes its payment to an entity 1994, CMS charges interest, exercising
other than Medicare when it is, or common law authority in accordance
should be, aware that Medicare has with 45 CFR 30.13, consistent with the
made a conditional primary payment. Federal Claims Collection Act (31
(3) In situations that involve procure- U.S.C. 3711).
ment costs, the rule of § 411.37(b) ap- (2) In addition to its common law au-
plies. thority with respect to recovery of
(j) Recovery against Medicaid agency. payments for items and services fur-
If a primary payment is made to a nished on or after October 31, 1994, CMS
State Medicaid agency and that agency charges interest in accordance with
does not reimburse Medicare, CMS may section 1862(b)(2)(B)(i) of the Act.
reduce any Federal funds due the Med- Under that provision—
icaid agency (under title XIX of the
(i) CMS may charge interest if reim-
Act) by an amount equal to the Medi-
bursement is not made to the appro-
care payment or the primary payment,
priate trust fund before the expiration
whichever is less.
of the 60-day period that begins on the
(k) Recovery against Medicare con-
date on which notice or other informa-
tractor. If a Medicare contractor, in-
tion is received by CMS that payment
cluding an intermediary or carrier,
also insures, underwrites, or admin- has been or could be made under a pri-
isters as a third party administrator, a mary plan;
program or plan that is primary to (ii) Interest may accrue from the
Medicare, and does not reimburse date when that notice or other infor-
Medicare, CMS may offset the amount mation is received by CMS, is charged
owed against any funds due the inter- until reimbursement is made, and is
mediary or carrier under title XVIII of applied for full 30-day periods; and
the Act or due the contractor under (iii) The rate of interest is that pro-
the contract. vided at § 405.378(d) of this chapter.
(l) Recovery when there is failure to file [54 FR 41734, Oct. 11, 1989, as amended at 55
a proper claim—(1) Basic rule. If Medi- FR 1820, Jan. 19, 1990; 60 FR 45361, 45362, Aug.
care makes a conditional payment with 31, 1995; 69 FR 45607, July 30, 2004; 71 FR 9470,
respect to services for which the bene- Feb. 24, 2006]
ficiary or provider or supplier has not
filed a proper claim with a primary § 411.25 Primary payer’s notice of pri-
payer, and Medicare is unable to re- mary payment responsibility.
cover from the primary payer, Medi- (a) If it is demonstrated to a primary
care may recover from the beneficiary payer that CMS has made a Medicare
or provider or supplier that was respon- primary payment for services for which
sible for the failure to file a proper
the primary payer has made or should
claim.
have made primary payment, it must
(2) Exceptions: (i) This rule does not
provide notice about primary payment
apply in the case of liability insurance
responsibility and information about
nor when failure to file a proper claim
the underlying MSP situation to the
is due to mental or physical incapacity
of the beneficiary. entity or entities designated by CMS to
receive and process that information.
(ii) CMS will not recover from pro-
viders or suppliers that are in compli- (b) The notice must describe the spe-
ance with the requirements of § 489.20 cific situation and the circumstances
of this chapter and can show that the (including the particular type of insur-
reason they failed to file a proper ance coverage as specified in § 411.20(a))
claim is that the beneficiary, or some- and, if appropriate, the time period
one acting on his or her behalf, failed during which the insurer is primary to
to give, or gave erroneous, information Medicare.
424
contractor.
tional payment.
letter.
423
§ 411.21 42 CFR Ch. IV (10–1–09 Edition)
by virtue of his or her current employ- tribute to group health plans or large
ment status or the current employ- group health plans.
ment status of a family member. Primary payment means, when used in
(2) Section 1862(b)(2)(A)(ii) of the Act the context in which Medicare is the
precludes Medicare payment for serv- secondary payer, payment by a pri-
ices to the extent that payment has mary payer for services that are also
been made or can reasonably be ex- covered under Medicare.
pected to be made under any of the fol- Primary plan means, when used in the
lowing: context in which Medicare is the sec-
(i) Workers’ compensation. ondary payer, a group health plan or
(ii) Liability insurance. large group health plan, a workers’
(iii) No-fault insurance. compensation law or plan, an auto-
(b) Scope. This subpart sets forth gen- mobile or liability insurance policy or
eral rules that apply to the types of in- plan (including a self-insured plan), or
surance specified in paragraph (a) of no-fault insurance.
this section. Other general rules that Prompt or promptly, when used in con-
apply to group health plans are set nection with primary payments, except
forth in subpart E of this part. as provided in § 411.50, for payments by
[60 FR 45361, Aug. 31, 1995, as amended at 71 liability insurers, means payment
FR 9470, Feb. 24, 2006] within 120 days after receipt of the
claim.
§ 411.21 Definitions. Proper claim means a claim that is
In this subpart B and in subparts C filed timely and meets all other claim
through H of this part, unless the con- filing requirements specified by the
text indicates otherwise— plan, program, or insurer.
Conditional payment means a Medi- Secondary, when used to characterize
care payment for services for which an- Medicare benefits, means that those
other payer is responsible, made either benefits are payable only to the extent
on the bases set forth in subparts C that payment has not been made and
through H of this part, or because the cannot reasonably be expected to be
intermediary or carrier did not know made under other coverage that is pri-
that the other coverage existed. mary to Medicare.
Coverage or covered services, when Secondary payments means payments
used in connection with primary pay- made for Medicare covered services or
ments, means services for which a pri- portions of services that are not pay-
mary payer would pay if a proper claim able under other coverage that is pri-
were filed. mary to Medicare.
Monthly capitation payment means a [54 FR 41734, Oct. 11, 1989, as amended at 60
comprehensive monthly payment that FR 45361, Aug. 31, 1995; 71 FR 9470, Feb. 24,
covers all physician services associated 2006]
with the continuing medical manage-
ment of a maintenance dialysis patient § 411.22 Reimbursement obligations of
who dialyses at home or as an out- primary payers and entities that re-
patient in an approved ESRD facility. ceived payment from primary pay-
Plan means any arrangement, oral or ers.
written, by one or more entities, to (a) A primary payer, and an entity
provide health benefits or medical care that receives payment from a primary
or assume legal liability for injury or payer, must reimburse CMS for any
illness. payment if it is demonstrated that the
Primary payer means, when used in primary payer has or had a responsi-
the context in which Medicare is the bility to make payment.
secondary payer, any entity that is or (b) A primary payer’s responsibility
was required or responsible to make for payment may be demonstrated by—
payment with respect to an item or (1) A judgment;
service (or any portion thereof) under a (2) A payment conditioned upon the
primary plan. These entities include, recipient’s compromise, waiver, or re-
but are not limited to, insurers or self- lease (whether or not there is a deter-
insurers, third party administrators, mination or admission of liability) of

and all employers that sponsor or con- payment for items or services included
422
contractor.
tional payment.
letter.
423
§ 411.21 42 CFR Ch. IV (10–1–09 Edition)
claim.

422
§ 411.200 Basis. of ESRD, the coordination of benefits

(a) This subpart is based on certain rules of subpart F of this part apply.
provisions of section 1862(b) of the Act, § 411.206 Basis for Medicare primary
which impose specific requirements payments and limits on secondary
and limitations with respect to— payments.
(1) Individuals who are entitled to
Medicare on the basis of disability; and (a) General rule. CMS makes Medicare
(2) Large group health plans (LGHPs) primary payments for services fur-
that cover those individuals. nished to disabled beneficiaries covered
(b) Under these provisions, the LGHP under the LGHP by virtue of their own
may not take into account the Medi- or a family member’s current employ-
care entitlement of a disabled indi- ment status if the services are—
vidual who is covered (or seeks to be (1) Furnished to Medicare bene-
covered) under the plan by virtue of his ficiaries who have declined to enroll in
or her own current employment status the GHP;
or that of a member of his or her fam- (2) Not covered under the plan for the
ily. (§ 411.108 gives examples of actions disabled individual or similarly situ-
that constitute taking into account.) ated individuals;
(3) Covered under the plan but not
§ 411.201 Definitions. available to particular disabled indi-
As used in this subpart— viduals because they have exhausted
Entitled to Medicare on the basis of dis- their benefits under the plan;
ability means entitled or deemed enti- (4) Furnished to individuals whose
tled on the basis of entitlement to so- COBRA continuation coverage has been
cial security disability benefits or rail- terminated because of the individual’s
road retirement disability benefits. Medicare entitlement; or
(§ 406.12 of this chapter explains the re- (5) Covered under COBRA continu-
quirements an individual must meet in ation coverage notwithstanding the in-
order to be entitled or deemed to be en- dividual’s Medicare entitlement.
titled to Medicare on the basis of dis- (b) Conditional primary payments:
ability.) Basic rule. Except as provided in para-
Family member means a person who is graph (c) of this section, CMS may
enrolled in an LGHP based on another make a conditional Medicare primary
person’s enrollment; for example, the payment for any of the following rea-
enrollment of the named insured indi- sons:
vidual. Family members may include a (1) The beneficiary, the provider, or
spouse (including a divorced or com- the supplier that has accepted assign-
mon-law spouse), a natural, adopted, ment has filed a proper claim with the
foster, or stepchild, a parent, or a sib- LGHP and the LGHP has denied the
ling. claim in whole or in part.
(2) The beneficiary, because of phys-
§ 411.204 Medicare benefits secondary ical or mental incapacity, failed to file
to LGHP benefits. a proper claim.
(a) Medicare benefits are secondary (c) Conditional primary payments: Ex-
to benefits payable by an LGHP for ceptions. CMS does not make condi-
services furnished during any month in tional Medicare primary payments if—
which the individual— (1) The LGHP denies the claim in
(1) Is entitled to Medicare Part A whole or in part for one of the fol-
benefits under § 406.12 of this chapter; lowing reasons:
(2) Is covered under an LGHP; and (i) It is alleged that the LGHP is sec-
(3) Has LGHP coverage by virtue of ondary to Medicare.
his or her own or a family member’s (ii) The LGHP limits its payments
current employment status. when the individual is entitled to
(b) Individuals entitled to Medicare on Medicare.
the basis of disability who are also eligible (iii) The LGHP does not provide the
for, or entitled to, Medicare on the basis benefits to individuals who are entitled
of ESRD. If a disabled individual is, or to Medicare on the basis of disability
could upon filing an application be- and covered under the plan by virtue of
come, entitled to Medicare on the basis current employment status but does
451
§ 411.350 42 CFR Ch. IV (10–1–09 Edition)
452

451

451
§ 411.175 42 CFR Ch. IV (10–1–09 Edition)
(e) Secondary payments. Medicare exhausted their benefits under the

pays secondary benefits, within the plan;
limitations specified in §§ 411.32 and (4) Furnished to individuals whose
411.33, to supplement the primary bene- COBRA continuation coverage has been
fits paid by the group health plan if terminated because of the individual’s
that plan pays only a portion of the Medicare entitlement; or
charge for the services. (5) Covered under COBRA continu-
(f) Disabled aged individuals who are ation coverage notwithstanding the in-
considered employed. (1) For services dividual’s Medicare entitlement.
furnished on or after November 12, 1985, (b) Conditional Medicare payments:
and before July 17, 1987, a disabled, Basic rule. Except as provided in para-
nonworking individual age 65 or older graph (c) of this section, Medicare may
was considered employed if he or she— make a conditional primary payment
(i) Was receiving, from an employer, if—
disability payments that were subject (1) The beneficiary, the provider, or
to tax under the Federal Insurance the supplier that has accepted assign-
Contributions Act (FICA); and ment has filed a proper claim under the
(ii) For the month before the month group health plan and the plan has de-
of attainment of age 65, was not enti- nied the claim in whole or in part; or
tled to disability benefits under title II (2) The beneficiary, because of phys-
of the Act and 20 CFR 404.315 of the ical or mental incapacity, failed to file
SSA regulations. proper claim.
(2) For services furnished on or after (c) Conditional primary payments: Ex-
July 17, 1987, an individual is consid- ception. Medicare does not make condi-
ered employed if he or she receives, tional primary payments under either
from an employer, disability benefits of the following circumstances:
that are subject to tax under FICA, (1) The claim is denied for one of the
even if he or she was entitled to Social following reasons:
Security disability benefits before at- (i) It is alleged that the group health
taining age 65. plan is secondary to Medicare.
(g) Individuals entitled to Medicare on (ii) The plan limits its payments
the basis of age who are also eligible for when the individual is entitled to
or entitled to Medicare on the basis of Medicare.
ESRD. If an aged individual is, or could (iii) The plan covers the services for
upon filing an application become, en- individuals or spouses who are enrolled
titled to Medicare on the basis of in the plan by virtue of current em-
ESRD, the coordination of benefits ployment status and are under age 65
rules of subpart F of this part apply. but not for individuals and spouses who
[54 FR 41734, Oct. 11, 1989, as amended at 55 are enrolled on the same basis but are
FR 1820, Jan. 19, 1990. Redesignated and age 65 or older.
amended at 60 FR 45362, 45370, Aug. 31, 1995; (iv) Failure to file a proper claim if
60 FR 53877, Oct. 18, 1995] that failure is for any reason other
than physical or mental incapacity of
§ 411.175 Basis for Medicare primary the beneficiary.
payments. (2) The group health plan fails to fur-
(a) General rule. CMS makes Medicare nish information requested by CMS and
primary payments for covered services necessary to determine whether the
that are— employer plan is primary to Medicare.
(1) Furnished to Medicare bene- [54 FR 41734, Oct. 11, 1989. Redesignated and
ficiaries who have declined to enroll in amended at 60 FR 45362, 45371, Aug. 31, 1995]
the GHP;
(2) Not covered by the plan for any
individuals or spouses who are enrolled Subpart H—Special Rules: Dis-
by virtue of the individual’s current abled Beneficiaries Who Are
employment status; Also Covered Under Large
(3) Covered under the plan but not Group Health Plans
available to particular individuals or
spouses enrolled by virtue of current SOURCE: 60 FR 45371, Aug. 31, 1995, unless
employment status because they have otherwise noted.
450

451
(xv) Those radioisotope services iden- treatment or care, nutrition or hydra-

tified, as of July 1, 1999, by HCPCS tion or to the provision of a service for
codes 79030–79440. the purpose of alleviating pain or dis-
(xvi) Those customized prosthetic de- comfort, even if the use may increase
vices (including artificial limbs and the risk of death, so long as the service
their components) identified, as of July is not furnished for the specific purpose
1, 1999, by HCPCS codes L5050–L5340; of causing death.
L5500–L5611; L5613–L5986; L5988; L6050– (r) A home health service (including
L6370; L6400–6880; L6920–L7274; and medical supplies described in section
L7362–L7366, which are delivered for a 1861(m)(5) of the Act, but excluding du-
resident’s use during a stay in the SNF rable medical equipment to the extent
and intended to be used by the resident provided for in such section) as defined
after discharge from the SNF. in section 1861(m) of the Act furnished
(3) SNF resident defined. For purposes to an individual who is under a plan of
of this paragraph, a beneficiary who is care of an HHA, unless that HHA has
admitted to a Medicare-participating submitted a claim for payment for such
SNF is considered to be a resident of services.
the SNF for the duration of the bene- (s) Unless § 414.404(d) or § 414.408(e)(2)
ficiary’s covered Part A stay. In addi- of this subchapter applies, Medicare
tion, for purposes of the services de- does not make payment if an item or
scribed in paragraph (p)(1)(i) of this service that is included in a competi-
section, a beneficiary who is admitted tive bidding program (as described in
to a Medicare-participating SNF is Part 414, Subpart F of this subchapter)
considered to be a resident of the SNF is furnished by a supplier other than a
regardless of whether the beneficiary is contract supplier (as defined in § 414.402
in a covered Part A stay. Whenever the of this subchapter).
beneficiary leaves the facility, the
[54 FR 41734, Oct. 11, 1989; 55 FR 1820, Jan. 19,
beneficiary’s status as an SNF resident 1990]
for purposes of this paragraph (along
with the SNF’s responsibility to fur- EDITORIAL NOTE: For FEDERAL REGISTER ci-
nish or make arrangements for the tations affecting § 411.15, see the List of CFR
Sections Affected, which appears in the
services described in paragraph (p)(1) of Finding Aids section of the printed volume
this section) ends when one of the fol- and on GPO Access.
lowing events occurs—
(i) The beneficiary is admitted as an
inpatient to a Medicare-participating Subpart B—Insurance Coverage
hospital or CAH, or as a resident to an- That Limits Medicare Pay-
other SNF; ment: General Provisions
(ii) The beneficiary receives services
from a Medicare-participating home § 411.20 Basis and scope.
health agency under a plan of care; (a) Statutory basis. (1) Section
(iii) The beneficiary receives out- 1862(b)(2)(A)(i) of the Act precludes
patient services from a Medicare-par- Medicare payment for services to the
ticipating hospital or CAH (but only extent that payment has been made or
with respect to those services that are can reasonably be expected to be made
beyond the general scope of SNF com- under a group health plan with respect
prehensive care plans, as required to—
under § 483.20 of this chapter); or (i) A beneficiary entitled to Medicare
(iv) The beneficiary is formally dis- on the basis of ESRD during the first 18
charged (or otherwise departs) from the months of that entitlement;
SNF, unless the beneficiary is re- (ii) A beneficiary who is age 65 or
admitted (or returns) to that or an- over, entitled to Medicare on the basis
other SNF by midnight of the day of of age, and covered under the plan by
departure. virtue of his or her current employ-
(q) Assisted suicide. Any health care ment status or the current employ-
service used for the purpose of causing, ment status of a spouse of any age; or
or assisting to cause, the death of any (iii) A beneficiary who is under age
individual. This does not pertain to the 65, entitled to Medicare on the basis of
withholding or withdrawing of medical disability, and covered under the plan
421
§ 411.21 42 CFR Ch. IV (10–1–09 Edition)
claim.

422
§ 411.1 42 CFR Ch. IV (10–1–09 Edition)
411.353 Prohibition on certain referrals by SOURCE: 54 FR 41734, Oct. 11, 1989, unless
physicians and limitations on billing. otherwise noted.
411.354 Financial relationship, compensa-
EDITORIAL NOTE: Nomenclature changes to
tion, and ownership or investment inter-
part 411 appear at 71 FR 9471, Feb. 24, 2006
est.
411.355 General exceptions to the referral
prohibition related to both ownership/in- Subpart A—General Exclusions
vestment and compensation. and Exclusion of Particular
411.356 Exceptions to the referral prohibi-
tion related to ownership or investment
Services
interests.
§ 411.1 Basis and scope.
tion related to compensation arrange- (a) Statutory basis. Sections 1814(a)
ments. and 1835(a) of the Act require that a
411.361 Reporting requirements. physician certify or recertify a pa-
tient’s need for home health services
Subpart K—Payment for Certain Excluded
but, in general, prohibit a physician
Services
from certifying or recertifying the
411.370 Advisory opinions relating to physi- need for services if the services will be
cian referrals. furnished by an HHA in which the phy-
411.372 Procedure for submitting a request. sician has a significant ownership in-
411.373 Certification. terest, or with which the physician has
411.375 Fees for the cost of advisory opin- a significant financial or contractual
ions.
relationship. Sections 1814(c), 1835(d),
411.377 Expert opinions from outside
sources. and 1862 of the Act exclude from Medi-
411.378 Withdrawing a request. care payment certain specified serv-
411.379 When CMS accepts a request. ices. The Act provides special rules for
411.380 When CMS issues a formal advisory payment of services furnished by the
opinion. following: Federal providers or agen-
411.382 CMS’s right to rescind advisory cies (sections 1814(c) and 1835(d)); hos-
opinions. pitals and physicians outside of the
411.384 Disclosing advisory opinions and
U.S. (sections 1814(f) and 1862(a)(4)); and
supporting information.
411.386 CMS’s advisory opinions as exclu- hospitals and SNFs of the Indian
sive. Health Service (section 1880 of the
411.387 Parties affected by advisory opin- Act). Section 1877 of the Act sets forth
ions. limitations on referrals and payment
411.388 When advisory opinions are not ad- for designated health services fur-
missible evidence. nished by entities with which the refer-
411.389 Range of the advisory opinion. ring physician (or an immediate family
member of the referring physician) has
a financial relationship.
Services
(b) Scope. This subpart identifies:
411.400 Payment for custodial care and serv- (1) The particular types of services
ices not reasonable and necessary. that are excluded;
411.402 Indemnification of beneficiary. (2) The circumstances under which
411.404 Criteria for determining that a bene- Medicare denies payment for certain
ficiary knew that services were excluded
from coverage as custodial care or as not
services that are usually covered; and
reasonable and necessary. (3) The circumstances under which
411.406 Criteria for determining that a pro- Medicare pays for services usually ex-
vider, practitioner, or supplier knew that cluded from payment.
services were excluded from coverage as
custodial care or as not reasonable and [54 FR 41734, Oct. 11, 1989, as amended at 60
necessary. FR 41978, Aug. 14, 1995; 60 FR 45361, Aug. 31,
411.408 Refunds of amounts collected for 1995; 66 FR 952, Jan. 4, 2001]
physician services not reasonable and
necessary, payment not accepted on an § 411.2 Conclusive effect of QIO deter-
assignment-related basis. minations on payment of claims.
AUTHORITY: Secs. 1102, 1860D–1 through If a utilization and quality control
quality improvement organization
1860D–42, 1871, and 1877 of the Social Security

Act (42 U.S.C. 1302, 1395w–101 through 1395w– (QIO) has assumed review responsi-
152, 1395hh, and 1395nn). bility, in accordance with part 466 of
414

Federal agency.
for the following:

title XVIII.
415
§ 411.175 42 CFR Ch. IV (10–1–09 Edition)

the GHP;
450
each working day in each of 20 or more (2) Is entitled to Medicare Part A

calendar weeks in the current calendar benefits under § 406.10 of this chapter;
year or the preceding calendar year. and
(ii) The plan may not take into ac- (3) Meets one of the following condi-
count the Medicare entitlement of— tions:
(A) An individual age 65 or older who (i) Is covered under a GHP of an em-
is covered or seeks to be covered under ployer that has at least 20 employees
the plan by virtue of current employ- (including a multi-employer plan in
ment status; or which at least one of the participating
(B) The spouse, including divorced or employers meets that condition), and
common-law spouse age 65 or older of coverage under the plan is by virtue of
an individual (of any age) who is cov- the individual’s current employment
ered or seeks to be covered by virtue of status.
current employment status. (Section (ii) Is the aged spouse (including a di-
411.108 gives examples of actions that vorced or common-law spouse) of an in-
constitute ‘‘taking into account.’’) dividual (of any age) who is covered
(iii) Regardless of whether entitled to under a GHP described in paragraph
Medicare, employees and spouses age 65 (a)(3)(i) of this section by virtue of the
or older, including divorced or com- individual’s current employment sta-
mon-law spouses of employees of any tus.
age, are entitled to the same plan bene- (b) Special rule for multi-employer
fits under the same conditions as em- plans. The requirements and limita-
ployees and spouses under age 65. tions of paragraph (a) of this section
(b) [Reserved] and of (a)(2)(iii) of § 411.170 do not apply
(c) Determination of ‘‘aged’’. (1) An in- with respect to individuals enrolled in
dividual attains a particular age on the a multi-employer plan if—
day preceding the anniversary of his or (1) The individuals are covered by
her birth. virtue of current employment status
(2) The period during which an indi- with an employer that has fewer than
vidual is considered to be ‘‘aged’’ be- 20 employees; and
gins on the first day of the month in (2) The plan requests an exception
which that individual attains age 65. and identifies the individuals for whom
(3) For services furnished before May it requests the exception as meeting
1986, the period during which an indi- the conditions specified in paragraph
vidual is considered ‘‘aged’’ ends as fol- (b)(1) of this section.
lows: (c) Refusal to accept group health plan
(i) For services furnished before July coverage. An employee or spouse may
18, 1984, it ends on the last day of the refuse the health plan offered by the
month in which the individual attains employer. If the employee or spouse re-
age 70. fuses the plan—
(ii) For services furnished between (1) Medicare is primary payer for
July 18, 1984 and April 30, 1986, it ends that individual; and
on the last day of the month before the (2) The plan may not offer that indi-
month the individual attains age 70. vidual coverage complementary to
(4) For services furnished on or after Medicare.
May 1, 1986, the period has no upper age (d) Reemployed retiree or annuitant. A
limit. reemployed retiree or annuitant who is
[54 FR 41734, Oct. 11, 1989. Redesignated and covered by a GHP and who performs
amended at 60 FR 45362, 45370, Aug. 31, 1995] sufficient services to qualify for cov-
erage on that basis (that is, other em-
§ 411.172 Medicare benefits secondary ployees in the same category are pro-
to group health plan benefits. vided health benefits) is considered
(a) Conditions that the individual must covered ‘‘by reason of current employ-
meet. Medicare Part A and Part B bene- ment status’’ even if:
fits are secondary to benefits payable (1) The employer provides the same
by a GHP for services furnished during GHP coverage to retirees; or
any month in which the individual— (2) The premiums for the plan are
(1) Is aged; paid from a retirement or pension fund.
449
§ 411.175 42 CFR Ch. IV (10–1–09 Edition)

the GHP;
450
§ 411.165 42 CFR Ch. IV (10–1–09 Edition)
to age-based entitlement, with the re- § 411.165 Basis for conditional Medi-
tirement plan continuing to pay pri- care payments.
mary benefits through June 1995, the (a) General rule. Except as specified in
18th month of ESRD-based entitle- paragraph (b) of this section, the Medi-
ment. Thereafter, Medicare becomes care intermediary or carrier may make
the primary payer. a conditional payment if—
(5) (Rule (b)(3).) Mrs. E retired at age (1) The beneficiary, the provider, or
62 and maintained GHP coverage as a the supplier that has accepted assign-
retiree. In July 1994, she simulta- ment files a proper claim under the
neously became eligible for Medicare group health plan and the plan denies
based on ESRD (maintenance dialysis the claim in whole or in part; or
began in April 1994) and entitled based (2) The beneficiary, because of phys-
on age. The retirement plan must pay ical or mental incapacity, fails to file a
benefits primary to Medicare from proper claim.
July 1994 through December 1995, the (b) Exception. Medicare does not
first 18 months of ESRD-based eligi- make conditional primary payments
bility. Thereafter, Medicare becomes under either of the following cir-
the primary payer.
cumstances:
(6) (Rule (b)(3).) Mr. F, who is 67
(1) The claim is denied for one of the
years of age, is working and has GHP
following reasons:
coverage because of his employment
(i) It is alleged that the group health
status, subsequently develops ESRD,
plan is secondary to Medicare.
and begins a course of maintenance di-
(ii) The group health plan limits its
alysis in October 1994. He becomes eli-
payments when the individual is enti-
gible for Medicare based on ESRD ef-
tled to Medicare.
fective January 1, 1995. Under the
(iii) Failure to file a proper claim if
working aged provision, the plan con-
that failure is for any reason other
tinues to pay primary to Medicare
than the physical or mental incapacity
through December 1994. On January 1,
of the beneficiary.
1995, the working aged provision ceases
(2) The group health plan fails to fur-
to apply and the ESRD MSP provision
nish information requested by CMS and
takes effect. In September 1995, Mr. F
necessary to determine whether the
retires. The GHP must ignore Mr. F’s
employer plan is primary to Medicare.
retirement status and continue to pay
primary to Medicare through June [57 FR 36015, Aug. 12, 1992. Redesignated and
1996, the end of the 18-month coordina- amended at 60 FR 45362, 45370, Aug. 31, 1995;
tion period. 60 FR 53877, Oct. 18, 1995]
(7) (Rule (b)(4).) Mrs. G, who is 67
years of age, is retired. She has GHP Subpart G—Special Rules: Aged
retirement coverage through her Beneficiaries and Spouses
former employer. Her plan permissibly Who Are Also Covered Under
took into account her age-based Medi- Group Health Plans
care entitlement when she retired and
is paying benefits secondary to Medi- § 411.170 General provisions.
care. Mrs. G subsequently develops (a) Basis. (1) This subpart is based on
ESRD and begins a course of mainte- certain provisions of section 1862(b) of
nance dialysis in October 1995. She the Act, which impose specific require-
automatically becomes eligible for ments and limitations with respect
Medicare based on ESRD effective Jan- to—
uary 1, 1996. The plan continues to be (i) Individuals who are entitled to
secondary on the basis of Mrs. G’s age- Medicare on the basis of age; and
based entitlement as long as the plan (ii) GHPs of at least one employer of
does not differentiate in the services it 20 or more employees that cover those
provides to Mrs. G and does not do any- individuals.
thing else that would constitute ‘‘tak- (2) Under these provisions, the fol-
ing into account’’ her ESRD-based eli- lowing rules apply:
gibility. (i) An employer is considered to em-
[60 FR 45369, Aug. 31, 1995; 60 FR 53876, Oct. ploy 20 or more employees if the em-
18, 1995] ployer has 20 or more employees for
448
each working day in each of 20 or more (2) Is entitled to Medicare Part A

calendar weeks in the current calendar benefits under § 406.10 of this chapter;
year or the preceding calendar year. and
(ii) The plan may not take into ac- (3) Meets one of the following condi-
count the Medicare entitlement of— tions:
(A) An individual age 65 or older who (i) Is covered under a GHP of an em-
is covered or seeks to be covered under ployer that has at least 20 employees
the plan by virtue of current employ- (including a multi-employer plan in
ment status; or which at least one of the participating
(B) The spouse, including divorced or employers meets that condition), and
common-law spouse age 65 or older of coverage under the plan is by virtue of
an individual (of any age) who is cov- the individual’s current employment
ered or seeks to be covered by virtue of status.
current employment status. (Section (ii) Is the aged spouse (including a di-
411.108 gives examples of actions that vorced or common-law spouse) of an in-
constitute ‘‘taking into account.’’) dividual (of any age) who is covered
(iii) Regardless of whether entitled to under a GHP described in paragraph
Medicare, employees and spouses age 65 (a)(3)(i) of this section by virtue of the
or older, including divorced or com- individual’s current employment sta-
mon-law spouses of employees of any tus.
age, are entitled to the same plan bene- (b) Special rule for multi-employer
fits under the same conditions as em- plans. The requirements and limita-
ployees and spouses under age 65. tions of paragraph (a) of this section
(b) [Reserved] and of (a)(2)(iii) of § 411.170 do not apply
(c) Determination of ‘‘aged’’. (1) An in- with respect to individuals enrolled in
dividual attains a particular age on the a multi-employer plan if—
day preceding the anniversary of his or (1) The individuals are covered by
her birth. virtue of current employment status
(2) The period during which an indi- with an employer that has fewer than
vidual is considered to be ‘‘aged’’ be- 20 employees; and
gins on the first day of the month in (2) The plan requests an exception
which that individual attains age 65. and identifies the individuals for whom
(3) For services furnished before May it requests the exception as meeting
1986, the period during which an indi- the conditions specified in paragraph
vidual is considered ‘‘aged’’ ends as fol- (b)(1) of this section.
lows: (c) Refusal to accept group health plan
(i) For services furnished before July coverage. An employee or spouse may
18, 1984, it ends on the last day of the refuse the health plan offered by the
month in which the individual attains employer. If the employee or spouse re-
age 70. fuses the plan—
(ii) For services furnished between (1) Medicare is primary payer for
July 18, 1984 and April 30, 1986, it ends that individual; and
on the last day of the month before the (2) The plan may not offer that indi-
month the individual attains age 70. vidual coverage complementary to
(4) For services furnished on or after Medicare.
May 1, 1986, the period has no upper age (d) Reemployed retiree or annuitant. A
limit. reemployed retiree or annuitant who is
[54 FR 41734, Oct. 11, 1989. Redesignated and covered by a GHP and who performs
amended at 60 FR 45362, 45370, Aug. 31, 1995] sufficient services to qualify for cov-
erage on that basis (that is, other em-
§ 411.172 Medicare benefits secondary ployees in the same category are pro-
to group health plan benefits. vided health benefits) is considered
(a) Conditions that the individual must covered ‘‘by reason of current employ-
meet. Medicare Part A and Part B bene- ment status’’ even if:
fits are secondary to benefits payable (1) The employer provides the same
by a GHP for services furnished during GHP coverage to retirees; or
any month in which the individual— (2) The premiums for the plan are
(1) Is aged; paid from a retirement or pension fund.
449
§ 411.165 42 CFR Ch. IV (10–1–09 Edition)
the primary payer.
cumstances:
(6) (Rule (b)(3).) Mr. F, who is 67
following reasons:
tled to Medicare.
of the beneficiary.
(7) (Rule (b)(4).) Mrs. G, who is 67
448
§ 411.163 42 CFR Ch. IV (10–1–09 Edition)
(7) An individual began a regular applies only to items and services fur-
course of dialysis on December 10, 1990. nished before October 1, 1998.
He does not initiate a course of self-di- (10) An individual becomes entitled
alysis training nor does he receive a to Medicare on August 1, 1997. Medicare
kidney transplant. He decides to delay is secondary payer from August 1, 1997,
his enrollment in Medicare because his through September 30, 1998, a period of
employer group health plan pays 14 months. Medicare becomes primary
charges in full and he does not wish to payer on October 1, 1998, because the
incur part B premiums at this time. coordination period has expired.
However, in March 1992, he files for (e) [Reserved]
part A and part B Medicare entitle- (f) Determinations for subsequent peri-
ment, and stipulates that he wants his ods of ESRD eligibility. If an individual
Medicare entitlement to be effective has more than one period of eligibility
March 1, 1992 (one year later than he based on ESRD, a coordination period
could have become entitled). Since this will be determined for each period of
individual could have been entitled to eligibility in accordance with this sec-
Medicare as early as March 1, 1991, tion.
Medicare is secondary payer only from [57 FR 36015, Aug. 12, 1992; 57 FR 45113, Sept.
March 1, 1992, through August 1992, a 30, 1992. Redesignated and amended at 60 FR
period of 6 months. 45362, 45368, Aug. 31, 1995]
(While Medicare is secondary payer for
§ 411.163 Coordination of benefits:
only the last 6 months of this period, Dual entitlement situations.
the Medicare program is effectively
secondary payer for the full coordina- (a) Basic rule. Coordination of bene-
tion period, due to the fact that the in- fits is governed by this section if an in-
dividual delayed his Medicare enroll- dividual is eligible for or entitled to
ment on account of his employer plan Medicare on the basis of ESRD and also
coverage and Medicare made no pay- entitled on the basis of age or dis-
ments at all during the deferred pe- ability.
riod.) (b) Specific rules. 1 (1) Coordination pe-
riod ended before August 1993. If the first
(8) The same facts exist as in the ex-
18 months of ESRD-based eligibility or
ample under paragraph (d)(7) of this
entitlement ended before August 1993,
section, except that the individual de-
Medicare was primary payer from the
fers Medicare entitlement beyond Au-
first month of dual eligibility or enti-
gust 1992. (For purposes of this exam-
tlement, regardless of when dual eligi-
ple, Medicare entitlement is not retro-
bility or entitlement began.
active, but rather takes effect after (2) First month of ESRD-based eligi-
August 1992.) There would be no period bility or entitlement and first month of
during which Medicare is secondary dual eligibility/entitlement after February
payer in this situation. This is because 1992 and before August 10, 1993. Except
Medicare entitlement does not begin as provided in paragraph (b)(4) of this
until after the 18-month period expires section, if the first month of ESRD-
as specified in paragraph (c)(3)(ii) of based eligibility or entitlement and
this section. Medicare would become
primary payer as of the effective date
1 A lawsuit was filed in United States Dis-
of Medicare entitlement. The employer
trict Court for the District of Columbia on
plan is required to pay primary from May 5, 1995 (National Medical Care, Inc. v.
December 1, 1990, through August 1992, Shalala, Civil Action No. 95–0860), chal-
a total of 21 months. lenging the implementation of one aspect of
(9) An individual becomes entitled to the OBRA ’93 provisions with respect to
Medicare on December 1, 1997. The em- group health plan retirement coverage. The
ployer plan is primary payer, and Medi- court issued a preliminary injunction order
care is secondary payer, from Decem- on June 6, 1995, which enjoins the Secretary
from applying the rule contained in
ber 1, 1997, through November 30, 1998, § 411.163(b)(4) for items and services furnished
a period of 12 months. Medicare be- between August 10, 1993 and April 24, 1995,
comes primary payer on December 1,
pending the court’s decision on the merits.

1998, because the extension of the co- CMS will modify the rules, if required, based
ordination period from 12 to 18 months on the final ruling by the court.
446
first month of dual eligibility/entitle- not differentiate in the services cov-

ment were after February 1992 and be- ered and the payments made between
fore August 10, 1993, Medicare— persons who have ESRD and those who
(i) Is primary payer from the first do not.
month of dual eligibility/entitlement (c) Examples. (1) (Rule (b)(1).) Mr. A,
through August 9, 1993; who is covered by a GHP, became enti-
(ii) Is secondary payer from August tled to Medicare on the basis of ESRD
10, 1993, through the 18th month of in January 1992. On December 20, 1992,
ESRD-based eligibility or entitlement; Mr. A attained age 65 and became enti-
and tled on the basis of age. Since prior law
(iii) Again becomes primary payer was still in effect (OBRA ’93 amend-
after the 18th month of ESRD-based ment was effective in August 1993),
eligibility or entitlement.
Medicare became primary payer as of
(3) First month of ESRD-based eligi-
December 1992, when dual entitlement
bility or entitlement after February 1992
began.
and first month of dual eligibility/entitle-
ment after August 9, 1993. Except as pro- (2) (Rule (b)(2).) Miss B, who has GHP
vided in paragraph (b)(4) of this sec- coverage, became entitled to Medicare
tion, if the first month of ESRD-based on the basis of ESRD in July 1992, and
eligibility or entitlement is after Feb- also entitled on the basis of disability
ruary 1992, and the first month of dual in June 1993. Medicare was primary
eligibility/entitlement is after August payer from June 1993 through August 9,
9, 1993, the rules of § 411.162(b) and (c) 1993, because the plan permissibly took
apply; that is, Medicare— into account the ESRD-based entitle-
(i) Is secondary payer during the first ment (ESRD was not the ‘‘sole’’ basis
18 months of ESRD-based eligibility or of Medicare entitlement); secondary
entitlement; and payer from August 10, 1993, through De-
(ii) Becomes primary after the 18th cember 1993, the 18th month of ESRD-
month of ESRD-based eligibility or en- based entitlement (the plan is no
titlement. longer permitted to take into account
(4) Medicare continues to be primary ESRD-based entitlement that is not
after an aged or disabled beneficiary be- the ‘‘sole’’ basis of Medicare entitle-
comes eligible on the basis of ESRD. (i) ment); and again became primary
Applicability of the rule. Medicare re- payer beginning January 1994.
mains the primary payer when an indi- (3) (Rule (b)(3).) Mr. C, who is 67 years
vidual becomes eligible for Medicare old and entitled to Medicare on the
based on ESRD if all of the following basis of age, has GHP coverage by vir-
conditions are met: tue of current employment status. Mr.
(A) The individual is already entitled C is diagnosed as having ESRD and be-
on the basis of age or disability when gins a course of maintenance dialysis
he or she becomes eligible on the basis
on June 27, 1993. Effective September 1,
of ESRD.
1993, Mr. C. is eligible for Medicare on
(B) The MSP prohibition against
the basis of ESRD. Medicare, which
‘‘taking into account’’ age-based or dis-
ability-based entitlement does not was secondary because Mr. C’s GHP
apply because plan coverage was not coverage was by virtue of current em-
‘‘by virtue of current employment sta- ployment, continues to be secondary
tus’’ or the employer had fewer than 20 payer through February 1995, the 18th
employees (in the case of the aged) or month of ESRD-based eligibility, and
fewer than 100 employees (in the case becomes primary payer beginning
of the disabled). March 1995.
(C) The plan is paying secondary to (4) (Rule (b)(3).) Mr. D retired at age
Medicare because the plan had justifi- 62 and maintained GHP coverage as a
ably taken into account the age-based retiree. In January 1994, at the age of
or disability-based entitlement. 64, Mr. D became entitled to Medicare
(ii) Effect of the rule. The plan may based on ESRD. Seven months into the
continue to pay benefits secondary to 18-month coordination period (July
Medicare under paragraph (b)(4)(i) of 1994) Mr. D turned age 65. The coordi-
this section. However, the plan may nation period continues without regard
447
§ 411.165 42 CFR Ch. IV (10–1–09 Edition)
the primary payer.
cumstances:
(6) (Rule (b)(3).) Mr. F, who is 67
following reasons:
tled to Medicare.
of the beneficiary.
(7) (Rule (b)(4).) Mrs. G, who is 67
448
§ 411.162 42 CFR Ch. IV (10–1–09 Edition)
in order to comply with the nondifferentia- (D) Furnished to individuals whose
tion provision. COBRA continuation coverage has been
[60 FR 45368, Aug. 31, 1995] terminated because of the individual’s
Medicare entitlement.
§ 411.162 Medicare benefits secondary (ii) Secondary payments, within the
to group health plan benefits. limits specified in §§ 411.32 and 411.33, to
(a) General provisions—(1) Basic rule. supplement the amount paid by the
Except as provided in § 411.163 (with re- GHP if that plan pays only a portion of
spect to certain individuals who are the charge for the services.
also entitled on the basis of age or dis- (b) Beginning of coordination period.
ability), Medicare is secondary to any (1) For individuals who start a course
GHP (including a retirement plan), of maintenance dialysis or who receive
with respect to benefits that are pay- a kidney transplant before December
able to an individual who is entitled to 1989, the coordination period begins
Medicare on the basis of ESRD, for with the earlier of—
services furnished during any coordina- (i) The month in which the individual
tion period determined in accordance initiated a regular course of renal di-
with paragraphs (b) and (c) of this sec- alysis; or
tion. (No Medicare benefits are payable (ii) In the case of an individual who
on behalf of an individual who is eligi- received a kidney transplant, the first
ble but not yet entitled.) month in which the individual became
(2) Medicare benefits secondary without entitled to Medicare, or, if earlier, the
regard to size of employer and bene- first month for which the individual
ficiary’s employment status. The size of would have been entitled to Medicare
employer and employment status re- benefits if he or she had filed an appli-
quirements of the MSP provisions for cation for such benefits.
the aged and disabled do not apply with (2) For individuals other than those
respect to ESRD beneficiaries. specified in paragraph (b)(1) of this sec-
(3) COBRA continuation coverage. tion, the coordination period begins
Medicare is secondary payer for bene- with the earlier of—
fits that a GHP— (i) The first month in which the indi-
(i) Is required to keep in effect under vidual becomes entitled to Medicare
COBRA continuation requirements (as part A on the basis of ESRD; or
explained in the footnote to (ii) The first month the individual
§ 411.161(a)(3)), even after the individual would have become entitled to Medi-
becomes entitled to Medicare; or care part A on the basis of ESRD if he
(ii) Voluntarily keeps in effect after or she had filed an application for such
the individual becomes entitled to benefits.
Medicare on the basis of ESRD, even (c) End of coordination period. (1) For
though not obligated to do so under the individuals who start a regular course
COBRA provisions. of renal dialysis or who receive a kid-
(4) Medicare payments during the co- ney transplant before December 1989,
ordination period. During the coordina- the coordination period ends with the
tion period, CMS makes Medicare pay- earlier of the end of the 12th month of
ments as follows: dialysis or the end of the 12th month of
(i) Primary payments only for Medi- a transplant. The 12th month of dialy-
care covered services that are— sis may be any time from the 9th
(A) Furnished to Medicare bene- month through the 12th month of
ficiaries who have declined to enroll in Medicare entitlement, depending on
the GHP; the extent to which the individual was
(B) Not covered under the plan; 1 subject to a waiting period before be-
(C) Covered under the plan but not coming entitled to Medicare.
available to particular enrollees be- (2) The coordination period for the
cause they have exhausted their bene- following individuals ends with the ear-
fits; or lier of the 12th month of eligibility or
the 12th month of entitlement to Medi-
care part A:
1 CMS does not pay if noncoverage of serv-
ices constitutes differentiation as prohibited (i) Individuals, other than those spec-
by § 411.161(b). ified in paragraph (c)(1) of this section,
444
who became entitled to Medicare part vidual began dialysis before December
A solely on the basis of ESRD during 1989, the 12-month period began with
December 1989 and January 1990. the first month of dialysis, November
(ii) Individuals, other than those 1989, and ended October 31, 1990. The co-
specified in paragraph (c)(1) of this sec- ordination period in this case is 9
tion, who could have become entitled months, February 1990 through October
to Medicare Part A solely on the basis 1990.
of ESRD during December 1989 and (2) An individual began dialysis on
January 1990 if they had filed an appli- January 29, 1990. He did not initiate a
cation. course in self-dialysis training nor did
(iii) Individuals who become entitled he receive a kidney transplant during
to Medicare part A on the basis of the first 3 calendar months of dialysis.
ESRD after September 1997. Thus, he became entitled to Medicare
(iv) Individuals who can become enti- on April 1, 1990. Since the individual
tled to Medicare part A on the basis of began dialysis after November 1989, and
ESRD after September 1997. became entitled to Medicare after Jan-
(3) The coordination period for the uary 1990, the coordination period
following individuals ends with the ear- began with the first month of entitle-
lier of the end of the 18th month of eli- ment, April 1990, and ended September
gibility or the 18th month of entitle- 30, 1991, the end of the 18th month of
ment to Medicare part A: entitlement.
(i) Individuals, other than those spec- (3) An individual began a regular
ified in paragraph (c)(1) of this section, course of maintenance dialysis on Feb-
who become entitled to Medicare part ruary 10, 1990. He did not initiate a
A on the basis of ESRD from February course of self-dialysis training nor did
1990 through April 1997. he receive a kidney transplant during
(ii) Individuals, other than those the first 3 calendar months of dialysis.
specified in paragraph (c)(1) of this sec- Thus, he became entitled to Medicare
tion, who could become entitled to on May 1, 1990. Medicare is secondary
Medicare part A on the basis of ESRD payer from May 1, 1990 through October
from February 1990 through April 1997 1991, a total of 18 months.
if they would file an application. (4) The same facts exist as in the ex-
(4) The coordination periods for the ample under paragraph (d)(3), except
following individuals ends September that the individual began a course of
30, 1998: self-dialysis training during the first 3
(i) Individuals who become entitled calendar months of dialysis. Thus, the
to Medicare part A on the basis of effective date of his Medicare entitle-
ESRD from May 1997, through Sep- ment is February 1, 1990, and Medicare
tember 1997. is secondary payer from February 1,
(ii) Individuals who could become en- 1990 through July 1991, a total of 18
titled to Medicare part A on the basis months.
of ESRD from May 1997, through Sep- (5) An individual began dialysis on
tember 1997, if they would file an appli- September 15, 1990. He did not initiate
cation. a course of self-dialysis training nor
(d) Examples. Based on the rules spec- did he receive a kidney transplant dur-
ified in paragraphs (b) and (c) of this ing the first 3 calendar months of di-
section and the rules specified in alysis. Thus, he became entitled to
§ 406.13 of this subchapter, the following Medicare effective December 1, 1990.
examples illustrate how to determine, Medicare is secondary payer from De-
in different situations, the number of cember 1, 1990 through May 1992, a
months during which Medicare is sec- total of 18 months.
ondary payer. (6) An individual began dialysis on
(1) An individual began dialysis on November 17, 1990. He initiates a course
November 4, 1989. He did not initiate a of self-dialysis training in January
course in self-dialysis training nor did 1991, and thus becomes entitled to
he receive a kidney transplant during Medicare effective November 1, 1990.
the first 3 calendar months of dialysis. Medicare is secondary payer from No-
Thus, he became entitled to Medicare vember 1, 1990, through April 1992, a

on February 1, 1990. Since this indi- total of 18 months.
445
§ 411.163 42 CFR Ch. IV (10–1–09 Edition)
(7) An individual began a regular applies only to items and services fur-
course of dialysis on December 10, 1990. nished before October 1, 1998.
He does not initiate a course of self-di- (10) An individual becomes entitled
alysis training nor does he receive a to Medicare on August 1, 1997. Medicare
kidney transplant. He decides to delay is secondary payer from August 1, 1997,
his enrollment in Medicare because his through September 30, 1998, a period of
employer group health plan pays 14 months. Medicare becomes primary
charges in full and he does not wish to payer on October 1, 1998, because the
incur part B premiums at this time. coordination period has expired.
However, in March 1992, he files for (e) [Reserved]
part A and part B Medicare entitle- (f) Determinations for subsequent peri-
ment, and stipulates that he wants his ods of ESRD eligibility. If an individual
Medicare entitlement to be effective has more than one period of eligibility
March 1, 1992 (one year later than he based on ESRD, a coordination period
could have become entitled). Since this will be determined for each period of
individual could have been entitled to eligibility in accordance with this sec-
Medicare as early as March 1, 1991, tion.
Medicare is secondary payer only from [57 FR 36015, Aug. 12, 1992; 57 FR 45113, Sept.
March 1, 1992, through August 1992, a 30, 1992. Redesignated and amended at 60 FR
period of 6 months. 45362, 45368, Aug. 31, 1995]
(While Medicare is secondary payer for
§ 411.163 Coordination of benefits:
only the last 6 months of this period, Dual entitlement situations.
the Medicare program is effectively
secondary payer for the full coordina- (a) Basic rule. Coordination of bene-
tion period, due to the fact that the in- fits is governed by this section if an in-
dividual delayed his Medicare enroll- dividual is eligible for or entitled to
ment on account of his employer plan Medicare on the basis of ESRD and also
coverage and Medicare made no pay- entitled on the basis of age or dis-
ments at all during the deferred pe- ability.
riod.) (b) Specific rules. 1 (1) Coordination pe-
riod ended before August 1993. If the first
(8) The same facts exist as in the ex-
18 months of ESRD-based eligibility or
ample under paragraph (d)(7) of this
entitlement ended before August 1993,
section, except that the individual de-
Medicare was primary payer from the
fers Medicare entitlement beyond Au-
first month of dual eligibility or enti-
gust 1992. (For purposes of this exam-
tlement, regardless of when dual eligi-
ple, Medicare entitlement is not retro-
bility or entitlement began.
active, but rather takes effect after (2) First month of ESRD-based eligi-
August 1992.) There would be no period bility or entitlement and first month of
during which Medicare is secondary dual eligibility/entitlement after February
payer in this situation. This is because 1992 and before August 10, 1993. Except
Medicare entitlement does not begin as provided in paragraph (b)(4) of this
until after the 18-month period expires section, if the first month of ESRD-
as specified in paragraph (c)(3)(ii) of based eligibility or entitlement and
this section. Medicare would become
primary payer as of the effective date
1 A lawsuit was filed in United States Dis-
of Medicare entitlement. The employer
trict Court for the District of Columbia on
plan is required to pay primary from May 5, 1995 (National Medical Care, Inc. v.
December 1, 1990, through August 1992, Shalala, Civil Action No. 95–0860), chal-
a total of 21 months. lenging the implementation of one aspect of
(9) An individual becomes entitled to the OBRA ’93 provisions with respect to
Medicare on December 1, 1997. The em- group health plan retirement coverage. The
ployer plan is primary payer, and Medi- court issued a preliminary injunction order
care is secondary payer, from Decem- on June 6, 1995, which enjoins the Secretary
from applying the rule contained in
ber 1, 1997, through November 30, 1998, § 411.163(b)(4) for items and services furnished
a period of 12 months. Medicare be- between August 10, 1993 and April 24, 1995,
comes primary payer on December 1,
pending the court’s decision on the merits.

1998, because the extension of the co- CMS will modify the rules, if required, based
ordination period from 12 to 18 months on the final ruling by the court.
446
§ 411.126 42 CFR Ch. IV (10–1–09 Edition)
new issues or to consider the applica- Subpart F—Special Rules: Individ-

bility of laws or regulations other than uals Eligible or Entitled on the
those considered during the hearing.
(ii) The hearing officer takes the ac-
Basis of ESRD, Who Are Also
tion in accordance with the Adminis- Covered Under Group Health
trator’s instructions in the remand no- Plans
tice and again issues a decision.
(iii) The Administrator may review § 411.160 Scope.
or decline to review the hearing offi- This subpart sets forth special rules
cer’s remand decision in accordance that apply to individuals who are eligi-
with the procedures set forth in this ble for, or entitled to, Medicare on the
section. basis of ESRD. (Section 406.13 of this
(i) Finality of decision. The Adminis- chapter contains the rules for eligi-
trator’s review decision, or the hearing bility and entitlement based on ESRD.)
officer’s decision following remand, is
the final Departmental decision and is [60 FR 45367, Aug. 31, 1995]
binding on all parties unless the Ad-
ministrator chooses to review the deci- § 411.161 Prohibition against taking
sion in accordance with this section, or into account Medicare eligibility or
the decision is reopened in accordance entitlement or differentiating bene-
fits.
with § 411.126.
(a) Taking into account—(1) Basic rule.
§ 411.126 Reopening of determinations A GHP may not take into account that
and decisions. an individual is eligible for or entitled
(a) A determination that a GHP or to Medicare benefits on the basis of
LGHP is a nonconforming GHP or the ESRD during the coordination period
decision or revised decision of a hear- specified in § 411.162(b) and (c). Exam-
ing officer or of the CMS Adminis- ples of actions that constitute taking
trator may be reopened within 12 into account Medicare entitlement are
months from the date on the notice of listed in § 411.108(a).
determination or decision or revised (2) Applicability. This prohibition ap-
decision, for any reason by the entity
plies for ESRD-based Medicare eligi-
that issued the determination or deci-
bility to the same extent as for ESRD-
sion.
(b) The decision to reopen or not to based Medicare entitlement. An indi-
reopen is not appealable. vidual who has ESRD but who has not
filed an application for entitlement to
§ 411.130 Referral to Internal Revenue Medicare on that basis is eligible for
Service (IRS). Medicare based on ESRD for purposes
(a) CMS responsibility. After CMS de- of paragraphs (b)(2) and (c)(2) through
termines that a plan has been a non- (c)(4) of § 411.162 if the individual meets
conforming GHP in a particular year, the other requirements of § 406.13 of
it refers its determination to the IRS, this chapter.
but only after the parties have ex- (3) Relation to COBRA continuation
hausted all CMS appeal rights with re- coverage. This rule does not prohibit
spect to the determination. the termination of GHP coverage under
(b) IRS responsibility. The IRS admin- title X of COBRA when termination of
isters section 5000 of the IRC, which that coverage is expressly permitted,
imposes a tax on employers (other than upon entitlement to Medicare, under 26
governmental entities) and employee U.S.C. 4980B(f)(2)(B)(iv); 29 U.S.C.
organizations that contribute to a non- 1162.(2)(D); or 42 U.S.C. 300bb–2.(2)(D).1
conforming GHP. The tax is equal to 25
percent of the employer’s or employee 1 COBRA requires that certain group health
organization’s expenses, incurred dur-
plans offer continuation of plan coverage for
ing the calendar year in which the plan 18 to 36 months after the occurrence of cer-
is a nonconforming GHP, for each GHP, tain ‘‘qualifying events,’’ including loss of
both conforming and nonconforming,
employment or reduction of employment

to which the employer or employee or- hours. Those are events that otherwise would
ganization contributes. result in loss of group health plan coverage
442
(Situations in which Medicare is sec- (v) Failure to cover routine mainte-

ondary to COBRA continuation cov- nance dialysis or kidney transplants,
erage are set forth in § 411.162(a)(3).) when a plan covers other dialysis serv-
(b) Nondifferentiation. (1) A GHP may ices or other organ transplants.
not differentiate in the benefits it pro- (c) Uniform Limitations on particular
vides between individuals who have services permissible. A plan is not pro-
ESRD and others enrolled in the plan, hibited from limiting covered utiliza-
on the basis of the existence of ESRD, tion of a particular service as long as
or the need for renal dialysis, or in any the limitation applies uniformly to all
other manner. plan enrollees. For instance, if a plan
(2) GHP actions that constitute dif- limits its coverage of renal dialysis
ferentiation in plan benefits (and that sessions to 30 per year for all plan en-
may also constitute ‘‘taking into ac- rollees, the plan would not be differen-
count’’ Medicare eligibility or entitle- tiating in the benefits it provides be-
ment) include, but are not limited to tween plan enrollees who have ESRD
the following: and those who do not.
(i) Terminating coverage of individ- (d) Benefits secondary to Medicare. (1)
uals with ESRD, when there is no basis The prohibition against differentiation
for such termination unrelated to of benefits does not preclude a plan
ESRD (such as failure to pay plan pre- from paying benefits secondary to
miums) that would result in termi- Medicare after the expiration of the co-
nation for individuals who do not have ordination period described in
ESRD. § 411.162(b) and (c), but a plan may not
(ii) Imposing on persons who have otherwise differentiate, as described in
ESRD, but not on others enrolled in paragraph (b) of this section, in the
the plan, benefit limitations such as
benefits it provides.
less comprehensive health plan cov-
(2) Example—
erage, reductions in benefits, exclu-
sions of benefits, a higher deductible or Mr. Smith works for employer A, and he
coinsurance, a longer waiting period, a and his wife are covered through employer
lower annual or lifetime benefit limit, A’s GHP (Plan A). Neither is eligible for
or more restrictive preexisting illness Medicare nor has ESRD. Mrs. Smith works
limitations. for employer B, and is also covered by em-
ployer B’s plan (Plan B). Plan A is more
(iii) Charging individuals with ESRD
comprehensive than Plan B and covers cer-
higher premiums. tain items and services which Plan B does
(iv) Paying providers and suppliers not cover, such as prescription drugs. If Mrs.
less for services furnished to individ- Smith obtains a medical service, Plan B pays
uals who have ESRD than for the same primary and Plan A pays secondary. That is,
services furnished to those who do not Plan A covers Plan B copayment amounts
have ESRD, such as paying 80 percent and items and services that Plan A covers
of the Medicare rate for renal dialysis but that Plan B does not.
on behalf of a plan enrollee who has Mr. Jones also works for employer A, and
ESRD and the usual, reasonable and he and his wife are covered by Plan A. Mrs.
Jones does not have other GHP coverage.
customary charge for renal dialysis on Mrs. Jones develops ESRD and becomes enti-
behalf of an enrollee who does not have tled to Medicare on that basis. Plan A pays
ESRD. primary to Medicare during the first 18
months of Medicare entitlement based on
unless the individual is given the oppor- ESRD. When Medicare becomes the primary
tunity to elect, and does so elect, to con- payer, the plan converts Mrs. Jones’ cov-
tinue plan coverage at his or her own ex- erage to a Medicare supplement policy. That
pense. With one exception, the COBRA policy pays Medicare deductible and coinsur-
amendments expressly permit termination of ance amounts but does not pay for items and
continuation coverage upon entitlement to services not covered by Medicare, which plan
Medicare. The exception is that the plan A would have covered. That conversion is
may not terminate continuation coverage of impermissible because the plan is providing
an individual (and his or her qualified de- a lower level of coverage for Mrs. Jones, who
pendents) if the individual retires on or be- has ESRD, than it provides for Mrs. Smith,
fore the date the employer substantially who does not. In other words, if Plan A pays
eliminates regular plan coverage by filing secondary to primary payers other than
for Chapter 11 bankruptcy (26 U.S.C. Medicare, it must provide the same level of
4980B(g)(1)(D) and 29 U.S.C. 1167.(3)(C)). secondary benefits when Medicare is primary
443
§ 411.162 42 CFR Ch. IV (10–1–09 Edition)
in order to comply with the nondifferentia- (D) Furnished to individuals whose
tion provision. COBRA continuation coverage has been
[60 FR 45368, Aug. 31, 1995] terminated because of the individual’s
Medicare entitlement.
§ 411.162 Medicare benefits secondary (ii) Secondary payments, within the
to group health plan benefits. limits specified in §§ 411.32 and 411.33, to
(a) General provisions—(1) Basic rule. supplement the amount paid by the
Except as provided in § 411.163 (with re- GHP if that plan pays only a portion of
spect to certain individuals who are the charge for the services.
also entitled on the basis of age or dis- (b) Beginning of coordination period.
ability), Medicare is secondary to any (1) For individuals who start a course
GHP (including a retirement plan), of maintenance dialysis or who receive
with respect to benefits that are pay- a kidney transplant before December
able to an individual who is entitled to 1989, the coordination period begins
Medicare on the basis of ESRD, for with the earlier of—
services furnished during any coordina- (i) The month in which the individual
tion period determined in accordance initiated a regular course of renal di-
with paragraphs (b) and (c) of this sec- alysis; or
tion. (No Medicare benefits are payable (ii) In the case of an individual who
on behalf of an individual who is eligi- received a kidney transplant, the first
ble but not yet entitled.) month in which the individual became
(2) Medicare benefits secondary without entitled to Medicare, or, if earlier, the
regard to size of employer and bene- first month for which the individual
ficiary’s employment status. The size of would have been entitled to Medicare
employer and employment status re- benefits if he or she had filed an appli-
quirements of the MSP provisions for cation for such benefits.
the aged and disabled do not apply with (2) For individuals other than those
respect to ESRD beneficiaries. specified in paragraph (b)(1) of this sec-
(3) COBRA continuation coverage. tion, the coordination period begins
Medicare is secondary payer for bene- with the earlier of—
fits that a GHP— (i) The first month in which the indi-
(i) Is required to keep in effect under vidual becomes entitled to Medicare
COBRA continuation requirements (as part A on the basis of ESRD; or
explained in the footnote to (ii) The first month the individual
§ 411.161(a)(3)), even after the individual would have become entitled to Medi-
becomes entitled to Medicare; or care part A on the basis of ESRD if he
(ii) Voluntarily keeps in effect after or she had filed an application for such
the individual becomes entitled to benefits.
Medicare on the basis of ESRD, even (c) End of coordination period. (1) For
though not obligated to do so under the individuals who start a regular course
COBRA provisions. of renal dialysis or who receive a kid-
(4) Medicare payments during the co- ney transplant before December 1989,
ordination period. During the coordina- the coordination period ends with the
tion period, CMS makes Medicare pay- earlier of the end of the 12th month of
ments as follows: dialysis or the end of the 12th month of
(i) Primary payments only for Medi- a transplant. The 12th month of dialy-
care covered services that are— sis may be any time from the 9th
(A) Furnished to Medicare bene- month through the 12th month of
ficiaries who have declined to enroll in Medicare entitlement, depending on
the GHP; the extent to which the individual was
(B) Not covered under the plan; 1 subject to a waiting period before be-
(C) Covered under the plan but not coming entitled to Medicare.
available to particular enrollees be- (2) The coordination period for the
cause they have exhausted their bene- following individuals ends with the ear-
fits; or lier of the 12th month of eligibility or
the 12th month of entitlement to Medi-
care part A:
1 CMS does not pay if noncoverage of serv-
ices constitutes differentiation as prohibited (i) Individuals, other than those spec-
by § 411.161(b). ified in paragraph (c)(1) of this section,
444
§ 411.126 42 CFR Ch. IV (10–1–09 Edition)

fits.
with § 411.126.
sion.

442
(4) Father-in-law, mother-in-law, son- (1) Examinations performed for a pur-

in-law, daughter-in-law, brother-in- pose other than treatment or diagnosis
law, or sister-in-law. of a specific illness, symptoms, com-
(5) Grandparent or grandchild. plaint, or injury, except for screening
(6) Spouse of grandparent or grand- mammography, colorectal cancer
child. screening tests, screening pelvic
Member of the household means any exams, prostate cancer screening tests,
person sharing a common abode as part glaucoma screening exams, ultrasound
of a single family unit, including do- screening for abdominal aortic aneu-
mestic employees and others who live rysms (AAA), cardiovascular disease
together as part of a family unit, but screening tests, diabetes screening
not including a mere roomer or board- tests, a screening electrocardiogram,
er. initial preventive physical examina-
Professional corporation means a cor- tions that meet the criteria specified
poration that is completely owned by in paragraphs (k)(6) through (k)(15) of
one or more physicians and is operated this section, or additional preventive
for the purpose of conducting the prac- services that meet the criteria in
tice of medicine, osteopathy dentistry, § 410.64 of this chapter.
podiatry, optometry, or chiropractic, (2) Examinations required by insur-
or is owned by other health care profes- ance companies, business establish-
sionals as authorized by State law. ments, government agencies, or other
(c) Applicability of the exclusion. The third parties.
exclusion applies to the following (b) Low vision aid exclusion—(1) Scope.
charges in the specified circumstances: The scope of the eyeglass exclusion en-
compasses all devices irrespective of
(1) Physicians’ services. (i) Charges for
their size, form, or technological fea-
physicians’ services furnished by an
tures that use one or more lens to aid
immediate relative of the beneficiary
vision or provide magnification of im-
or member of the beneficiary’s house-
ages for impaired vision.
hold, even if the bill or claim is sub-
(2) Exceptions. (i) Post-surgical pros-
mitted by another individual or by an
thetic lenses customarily used during
entity such as a partnership or a pro-
convalescence for eye surgery in which
fessional corporation.
the lens of the eye was removed (for ex-
(ii) Charges for services furnished in-
ample, cataract surgery).
cident to a physician’s professional
(ii) Prosthetic intraocular lenses and
services (for example by the physi-
one pair of conventional eyeglasses or
cian’s nurse or technician), only if the
contact lenses furnished subsequent to
physician who ordered or supervised
each cataract surgery with insertion of
the services has an excluded relation-
an intraocular lens.
ship to the beneficiary.
(iii) Prosthetic lenses used by Medi-
(2) Services other than physicians’ serv- care beneficiaries who are lacking the
ices. (i) Charges imposed by an individ- natural lens of the eye and who were
ually owned provider or supplier if the not furnished with an intraocular lens.
owner has an excluded relationship to (c) Eye examinations for the purpose
the beneficiary; and of prescribing, fitting, or changing eye-
(ii) Charges imposed by a partnership glasses or contact lenses for refractive
if any of the partners has an excluded error only and procedures performed in
relationship to the beneficiary. the course of any eye examination to
(d) Exception to the exclusion. The ex- determine the refractive state of the
clusion does not apply to charges im- eyes, without regard to the reason for
posed by a corporation other than a the performance of the refractive pro-
professional corporation. cedures. Refractive procedures are ex-
cluded even when performed in connec-
§ 411.15 Particular services excluded tion with otherwise covered diagnosis
from coverage.
or treatment of illness or injury.
The following services are excluded (d) Hearing aids or examination for
from coverage: the purpose of prescribing, fitting, or
(a) Routine physical checkups such changing hearing aids.

as: (e) Immunizations, except for—
417
§ 411.15 42 CFR Ch. IV (10–1–09 Edition)
(1) Vaccinations or inoculations di- (k) Any services that are not reasonable
rectly related to the treatment of an and necessary for one of the following
injury or direct exposure such as purposes:
antirabies treatment, tetanus anti- (1) For the diagnosis or treatment of
toxin or booster vaccine, botulin anti- illness or injury or to improve the
toxin, antivenom sera, or immune glob- functioning of a malformed body mem-
ulin; ber.
(2) Pneumococcal vaccinations that (2) In the case of hospice services, for
are reasonable and necessary for the the palliation or management of ter-
prevention of illness; minal illness, as provided in part 418 of
(3) Hepatitis B vaccinations that are this chapter.
reasonable and necessary for the pre- (3) In the case of pneumococcal vac-
vention of illness for those individuals, cine for the prevention of illness.
as defined in § 410.63(a) of this chapter, (4) In the case of the patient outcome
who are at high or intermediate risk of assessment program established under
contracting hepatitis B; and section 1875(c) of the Act, for carrying
(4) Influenza vaccinations that are out the purpose of that section.
reasonable and necessary for the pre- (5) In the case of hepatitis B vaccine,
vention of illness. for the prevention of illness for those
(f) Orthopedic shoes or other sup- individuals at high or intermediate
portive devices for the feet, except when risk of contracting hepatitis B. (Sec-
shoes are integral parts of leg braces. tion 410.63(a) of this chapter sets forth
(g) Custodial care, except as necessary criteria for identifying those individ-
for the palliation or management of uals.)
terminal illness, as provided in part 418 (6) In the case of screening mammog-
of this chapter. (Custodial care is any raphy, for the purpose of early detec-
care that does not meet the require- tion of breast cancer subject to the
ments for coverage as SNF care as set conditions and limitations specified in
forth in §§ 409.31 through 409.35 of this § 410.34 of this chapter.
chapter.) (7) In the case of colorectal cancer
(h) Cosmetic surgery and related serv- screening tests, for the purpose of early
ices, except as required for the prompt detection of colorectal cancer subject
repair of accidental injury or to im- to the conditions and limitations speci-
prove the functioning of a malformed fied in § 410.37 of this chapter.
body member. (8) In the case of screening pelvic ex-
(i) Dental services in connection with aminations, for the purpose of early de-
the care, treatment, filling, removal, tection of cervical or vaginal cancer
or replacement of teeth, or structures subject to the conditions and limita-
directly supporting the teeth, except for tions specified in § 410.56 of this chap-
inpatient hospital services in connec- ter.
tion with such dental procedures when (9) In the case of prostate cancer
hospitalization is required because of— screening tests, for the purpose of early
(1) The individual’s underlying med- detection of prostate cancer, subject to
ical condition and clinical status; or the conditions and limitations speci-
(2) The severity of the dental proce- fied in § 410.39 of this chapter.
dures. 1 (10) In the case of screening exams
(j) Personal comfort services, except as for glaucoma, for the purpose of early
necessary for the palliation or manage- detection of glaucoma, subject to the
ment of terminal illness as provided in conditions and limitations specified in
part 418 of this chapter. The use of a § 410.23 of this chapter.
television set or a telephone are exam- (11) In the case of initial preventive
ples of personal comfort services. physical examinations, with the goal of
health promotion and disease preven-
1 Before July 1981, inpatient hospital care
tion, subject to the conditions and lim-
in connection with dental procedures was
itations specified in § 410.16 of this
chapter.
covered only when required by the patient’s

underlying medical condition and clinical (12) In the case of ultrasound screen-
status. ing for abdominal aortic aneurysms,
418
with the goal of early detection of ab- (B) As initial diagnostic services (re-
dominal aortic aneurysms, subject to gardless of the resulting diagnosis) in
the conditions and limitation specified connection with a specific symptom or
in § 410.19 of this chapter. complaint that might arise from a con-
(13) In the case of cardiovascular dis- dition whose treatment would be cov-
ease screening tests for the early detec- ered.
tion of cardiovascular disease or abnor- (m) Services to hospital patients—(1)
malities associated with an elevated Basic rule. Except as provided in para-
risk for that disease, subject to the graph (m)(3) of this section, any service
conditions specified in § 410.17 of this furnished to an inpatient of a hospital
chapter. or to a hospital outpatient (as defined
(14) In the case of diabetes screening in § 410.2 of this chapter) during an en-
tests furnished to an individual at risk counter (as defined in § 410.2 of this
for diabetes for the purpose of the early chapter) by an entity other than the
detection of that disease, subject to the hospital unless the hospital has an ar-
conditions specified in § 410.18 of this rangement (as defined in § 409.3 of this
chapter. chapter) with that entity to furnish
(15) In the case of additional preven- that particular service to the hospital’s
tive services not otherwise described in patients. As used in this paragraph
this title, subject to the conditions and (m)(1), the term ‘‘hospital’’ includes a
limitation specified in § 410.64 of this CAH.
chapter. (2) Scope of exclusion. Services subject
(l) Foot care—(1) Basic rule. Except as to exclusion from coverage under the
provided in paragraph (l)(2) of this sec- provisions of this paragraph (m) in-
tion, any services furnished in connec- clude, but are not limited to, clinical
tion with the following: laboratory services; pacemakers and
(i) Routine foot care, such as the cut- other prostheses and prosthetic devices
ting or removal of corns, or calluses, (other than dental) that replace all or
the trimming of nails, routine hygienic part of an internal body organ (for ex-
care (preventive maintenance care or- ample, intraocular lenses); artificial
dinarily within the realm of self care), limbs, knees, and hips; equipment and
and any service performed in the ab- supplies covered under the prosthetic
sence of localized illness, injury, or device benefits; and services incident
symptoms involving the feet. to a physician service.
(ii) The evaluation or treatment of (3) Exceptions. The following services
subluxations of the feet regardless of un- are not excluded from coverage:
derlying pathology. (Subluxations are (i) Physicians’ services that meet the
structural misalignments of the joints, criteria of § 415.102(a) of this chapter for
other than fractures or complete dis- payment on a reasonable charge or fee
locations, that require treatment only schedule basis.
by nonsurgical methods. (ii) Physician assistant services, as
(iii) The evaluation or treatment of flat- defined in section 1861(s)(2)(K)(i) of the
tened arches (including the prescription Act, that are furnished after December
of supportive devices) regardless of the 31, 1990.
underlying pathology. (iii) Nurse practitioner and clinical
(2) Exceptions. (i) Treatment of warts nurse specialist services, as defined in
is not excluded. section 1861(s)(2)(K)(ii) of the Act.
(ii) Treatment of mycotic toenails (iv) Certified nurse-midwife services,
may be covered if it is furnished no as defined in section 1861(ff) of the Act,
more often than every 60 days or the that are furnished after December 31,
billing physician documents the need 1990.
for more frequent treatment. (v) Qualified psychologist services, as
(iii) The services listed in paragraph defined in section 1861(ii) of the Act,
(l)(1) of this section are not excluded if that are furnished after December 31,
they are furnished— 1990.
(A) As an incident to, at the same (vi) Services of an anesthetist, as de-
time as, or as a necessary integral part fined in § 410.69 of this chapter.
of a primary covered procedure per- (n) Certain services of an assistant-at-

formed on the foot; or surgery. (1) Services of an assistant-at-
419
§ 411.15 42 CFR Ch. IV (10–1–09 Edition)
surgery in a cataract operation (includ- sistant who meets the applicable defi-
ing subsequent insertion of an intra- nition in section 1861(aa)(5) of the Act.
ocular lens) unless, before the surgery (iii) Services performed by a nurse
is performed, the appropriate QIO or a practitioner or clinical nurse specialist
carrier has approved the use of such an who meets the applicable definition in
assistant in the surgical procedure section 1861(aa)(5) of the Act and is
based on the existence of a compli- working in collaboration (as defined in
cating medical condition. section 1861(aa)(6) of the Act) with a
(2) Services on an assistant-at-sur- physician.
gery in a surgical procedure (or class of (iv) Services performed by a certified
surgical procedures) for which assist- nurse-midwife, as defined in section
ants-at-surgery on average are used in 1861(gg) of the Act.
fewer than 5 percent of such procedures
(v) Services performed by a qualified
nationally.
psychologist, as defined in section
(o) Experimental or investigational
1861(ii) of the Act.
devices, except for certain devices.
(1) Categorized by the FDA as a non- (vi) Services performed by a certified
experimental/investigational (Category registered nurse anesthetist, as defined
B) device defined in § 405.201(b) of this in section 1861(bb) of the Act.
chapter; and (vii) Dialysis services and supplies, as
(2) Furnished in accordance with the defined in section 1861(s)(2)(F) of the
FDA-approved protocols governing Act, and those ambulance services that
clinical trials. are furnished in conjunction with
(p) Services furnished to SNF resi- them.
dents—(1) Basic rule. Except as provided (viii) Erythropoietin (EPO) for dialy-
in paragraph (p)(2) of this section, any sis patients, as defined in section
service furnished to a resident of an 1861(s)(2)(O) of the Act.
SNF during a covered Part A stay by (ix) Hospice care, as defined in sec-
an entity other than the SNF, unless tion 1861(dd) of the Act.
the SNF has an arrangement (as de- (x) An ambulance trip that initially
fined in § 409.3 of this chapter) with conveys an individual to the SNF to be
that entity to furnish that particular admitted as a resident, or that conveys
service to the SNF’s residents. Services an individual from the SNF in connec-
subject to exclusion under this para- tion with one of the circumstances
graph include, but are not limited to— specified in paragraphs (p)(3)(i) through
(i) Any physical, occupational, or (p)(3)(iv) of this section as ending the
speech-language therapy services, re- individual’s status as an SNF resident.
gardless of whether the services are (xi) The transportation costs of elec-
furnished by (or under the supervision trocardiogram equipment (HCPCS code
of) a physician or other health care R0076), but only with respect to those
professional, and regardless of whether
electrocardiogram test services fur-
the resident who receives the services
nished during 1998.
is in a covered Part A stay; and
(ii) Services furnished as an incident (xii) Services described in subpara-
to the professional services of a physi- graphs (p)(2)(i) through (vi) of this sec-
cian or other health care professional tion when furnished via telehealth
specified in paragraph (p)(2) of this sec- under section 1834(m)(4)(C)(ii)(VII) of
tion. the Act.
(2) Exceptions. The following services (xiii) Those chemotherapy items
are not excluded from coverage, pro- identified, as of July 1, 1999, by HCPCS
vided that the claim for payment in- codes J9000–J9020; J9040–J9151; J9170–
cludes the SNF’s Medicare provider J9185; J9200–J9201; J9206–J9208; J9211;
number in accordance with § 424.32(a)(5) J9230–J9245; and J9265–J9600; and, as of
of this chapter: January 1, 2004, by HCPCS codes A9522,
(i) Physicians’ services that meet the A9523, A9533, and A9534.
criteria of § 415.102(a) of this chapter for (xiv) Those chemotherapy adminis-
payment on a fee schedule basis. tration services identified, as of July 1,
(ii) Services performed under a physi- 1999, by HCPCS codes 36260–36262; 36489;
cian’s supervision by a physician as- 36530–36535; 36640; 36823; and 96405–96542.
420
(xv) Those radioisotope services iden- treatment or care, nutrition or hydra-

tified, as of July 1, 1999, by HCPCS tion or to the provision of a service for
codes 79030–79440. the purpose of alleviating pain or dis-
(xvi) Those customized prosthetic de- comfort, even if the use may increase
vices (including artificial limbs and the risk of death, so long as the service
their components) identified, as of July is not furnished for the specific purpose
1, 1999, by HCPCS codes L5050–L5340; of causing death.
L5500–L5611; L5613–L5986; L5988; L6050– (r) A home health service (including
L6370; L6400–6880; L6920–L7274; and medical supplies described in section
L7362–L7366, which are delivered for a 1861(m)(5) of the Act, but excluding du-
resident’s use during a stay in the SNF rable medical equipment to the extent
and intended to be used by the resident provided for in such section) as defined
after discharge from the SNF. in section 1861(m) of the Act furnished
(3) SNF resident defined. For purposes to an individual who is under a plan of
of this paragraph, a beneficiary who is care of an HHA, unless that HHA has
admitted to a Medicare-participating submitted a claim for payment for such
SNF is considered to be a resident of services.
the SNF for the duration of the bene- (s) Unless § 414.404(d) or § 414.408(e)(2)
ficiary’s covered Part A stay. In addi- of this subchapter applies, Medicare
tion, for purposes of the services de- does not make payment if an item or
scribed in paragraph (p)(1)(i) of this service that is included in a competi-
section, a beneficiary who is admitted tive bidding program (as described in
to a Medicare-participating SNF is Part 414, Subpart F of this subchapter)
considered to be a resident of the SNF is furnished by a supplier other than a
regardless of whether the beneficiary is contract supplier (as defined in § 414.402
in a covered Part A stay. Whenever the of this subchapter).
beneficiary leaves the facility, the
[54 FR 41734, Oct. 11, 1989; 55 FR 1820, Jan. 19,
beneficiary’s status as an SNF resident 1990]
for purposes of this paragraph (along
with the SNF’s responsibility to fur- EDITORIAL NOTE: For FEDERAL REGISTER ci-
nish or make arrangements for the tations affecting § 411.15, see the List of CFR
Sections Affected, which appears in the
services described in paragraph (p)(1) of Finding Aids section of the printed volume
this section) ends when one of the fol- and on GPO Access.
lowing events occurs—
(i) The beneficiary is admitted as an
inpatient to a Medicare-participating Subpart B—Insurance Coverage
hospital or CAH, or as a resident to an- That Limits Medicare Pay-
other SNF; ment: General Provisions
(ii) The beneficiary receives services
from a Medicare-participating home § 411.20 Basis and scope.
health agency under a plan of care; (a) Statutory basis. (1) Section
(iii) The beneficiary receives out- 1862(b)(2)(A)(i) of the Act precludes
patient services from a Medicare-par- Medicare payment for services to the
ticipating hospital or CAH (but only extent that payment has been made or
with respect to those services that are can reasonably be expected to be made
beyond the general scope of SNF com- under a group health plan with respect
prehensive care plans, as required to—
under § 483.20 of this chapter); or (i) A beneficiary entitled to Medicare
(iv) The beneficiary is formally dis- on the basis of ESRD during the first 18
charged (or otherwise departs) from the months of that entitlement;
SNF, unless the beneficiary is re- (ii) A beneficiary who is age 65 or
admitted (or returns) to that or an- over, entitled to Medicare on the basis
other SNF by midnight of the day of of age, and covered under the plan by
departure. virtue of his or her current employ-
(q) Assisted suicide. Any health care ment status or the current employ-
service used for the purpose of causing, ment status of a spouse of any age; or
or assisting to cause, the death of any (iii) A beneficiary who is under age
individual. This does not pertain to the 65, entitled to Medicare on the basis of
withholding or withdrawing of medical disability, and covered under the plan
421
§ 411.126 42 CFR Ch. IV (10–1–09 Edition)

fits.
with § 411.126.
sion.

442
§ 411.126 42 CFR Ch. IV (10–1–09 Edition)

fits.
with § 411.126.
sion.

442
§ 411.122 42 CFR Ch. IV (10–1–09 Edition)
the testimony of witnesses, and evi- cases. It is made available to the par-
dence that would be inadmissible in a ties upon request. The record is not
court of law. closed until a decision has been issued.
(2) Evidence may be received at any (i) Sources of hearing officer’s author-
time before the conclusion of the hear- ity. In the conduct of the hearing, the
ing. hearing officer complies with all the
(3) The hearing officer gives the par- provisions of title XVIII of the Act and
ties opportunity for submission and implementing regulations, as well as
consideration of evidence and argu- with CMS Rulings issued under § 401.108
ments and, in ruling on the admissi- of this chapter. The hearing officer
bility of evidence, excludes irrelevant, gives great weight to interpretive
immaterial, or unduly repetitious evi- rules, general statements of policy, and
dence. rules of agency organization, proce-
(4) The hearing officer’s ruling on ad- dure, or practice established by CMS.
missibility of evidence is final and not
subject to further review. § 411.122 Hearing officer’s decision.
(f) Subpoenas. (1) The hearing officer (a) Timing. (1) If the decision is based
may, either on his or her own motion on a review of the record, the hearing
or upon the request of any party, issue officer mails the decision to all known
subpoenas for either or both of the fol- parties within 120 days from the date of
lowing if they are reasonably necessary receipt of the request for hearing.
for full presentation of the case: (2) If the decision is based on an oral
(i) The attendance and testimony of hearing, the hearing officer mails the
witnesses. decision to all known parties within 120
(ii) The production of books, records, days from the conclusion of the hear-
correspondence, papers, or other docu- ing.
ments that are relevant and material (b) Basis, content, and distribution of
to any matter at issue. hearing decision. (1) The written deci-
(2) A party that wishes the issuance sion is based on substantial evidence
of a subpoena must, at least 10 days be- and contains findings of fact, a state-
fore the date fixed for the hearing, file ment of reasons, and conclusions of
with the hearing officer a written re- law.
quest that identifies the witnesses or (2) The hearing officer mails a copy
documents to be produced and de- of the decision to each of the parties,
scribes the address or location in suffi- by certified mail, return receipt re-
cient detail to permit the witnesses or quested, and includes a notice that the
documents to be found. administrator may review the hearing
(3) The request for a subpoena must decision at the request of a party or on
state the pertinent facts that the party his or her own motion.
expects to establish by the witnesses or (c) Effect of hearing decision. The
documents and whether those facts hearing officer’s decision is the final
could be established by other evidence Departmental decision and is binding
without the use of a subpoena. upon all parties unless the Adminis-
(4) The hearing officer issues the sub- trator chooses to review that decision
poenas at his or her discretion, and in accordance with § 411.124 or it is re-
CMS assumes the cost of the issuance opened by the hearing officer in ac-
and the fees and mileage of any subpoe- cordance with § 411.126.
naed witness, in accordance with sec-
tion 205(d) of the Act (42 U.S.C. 405(d)). § 411.124 Administrator’s review of
(g) Witnesses. Witnesses at the hear- hearing decision.
ing testify under oath or affirmation, (a) Request for review. A party’s re-
unless excused by the hearing officer quest for review of a hearing officer’s
for cause. The hearing officer may ex- decision must be in writing (not in fac-
amine the witnesses and shall allow simile or other electronic medium) and
the parties to examine and cross-exam- must be received by the Administrator
ine witnesses. within 25 days from the date on the de-
(h) Record of hearing. A complete cision.
record of the proceedings at the hear- (b) Office of the Attorney Advisor re-
ing is made and transcribed in all sponsibility. The Office of the Attorney
440
Advisor examines the hearing officer’s (iii) Supporting reasons for the pro-
decision, the requests made by any of posed findings and exceptions.
the parties or CMS, and any submis- (iv) A rebuttal to another party’s re-
sion made in accordance with the pro- quest for review or to other submis-
visions of this section in order to assist sions already filed with the Adminis-
the Administrator in deciding whether trator.
to review the decision. (2) The submissions must be limited
(c) Administrator’s discretion. The Ad- to the issues the Administrator has de-
ministrator may— cided to review and confined to the
(1) Review or decline to review the record established by the hearing offi-
hearing officer’s decision; cer.
(2) Exercise this discretion on his or (3) All communications from the par-
her own motion or in response to a re- ties concerning a hearing officer’s deci-
quest from any of the parties; and sion being reviewed by the Adminis-
(3) Delegate review responsibility to trator must be in writing (not in fac-
the Deputy Administrator. (As used in simile or other electronic medium) and
this section, the term ‘‘Administrator’’ must include a certification that cop-
includes ‘‘Deputy Administrator’’ if re- ies have been sent to all other parties.
view responsibility has been dele- (4) The Administrator does not con-
gated.) sider any communication that does not
(d) Basis for decision to review. In de- meet the requirements of this para-
ciding whether to review a hearing offi- graph.
cer’s decision, the Administrator con- (g) Administrator’s review decision. (1)
siders— The Administrator bases his or her de-
(1) Whether the decision— cision on the following:
(i) Is based on a correct interpreta- (i) The entire record developed by the
tion of law, regulation, or CMS Ruling; hearing officer.
(ii) Is supported by substantial evi-
(ii) Any materials submitted in con-
dence;
nection with the hearing or under para-
(iii) Presents a significant policy
graph (f) of this section.
issue having a basis in law and regula-
(iii) Generally known facts not sub-
tions;
ject to reasonable dispute.
(iv) Requires clarification, amplifi-
cation, or an alternative legal basis for (2) The Administrator mails copies of
the decision; and the review decision to all parties with-
(v) Is within the authority provided in 120 days from the date of the hearing
by statute, regulation, or CMS Ruling; officer’s decision.
and (3) The Administrator’s review deci-
(2) Whether review may lead to the sion may affirm, reverse, or modify the
issuance of a CMS Ruling or other di- hearing decision or may remand the
rective needed to clarify a statute or case to the hearing officer.
regulation. (h) Basis and effect of remand—(1)
(e) Notice of decision to review or not to Basis. The bases for remand do not in-
review. (1) The Administrator gives all clude the following:
parties prompt written notice of his or (i) Evidence that existed at the time
her decision to review or not to review. of the hearing and that was known or
(2) The notice of a decision to review could reasonably have been expected to
identifies the specific issues the Ad- be known.
ministrator will consider. (ii) A court case that was either not
(f) Response to notice of decision to re- available at the time of the hearing or
view. (1) Within 20 days from the date was decided after the hearing.
on a notice of the Administrator’s deci- (iii) Change of the parties’ represen-
sion to review a hearing officer’s deci- tation.
sion, any of the parties may file with (iv) An alternative legal basis for an
the Administrator any or all of the fol- issue in dispute.
lowing: (2) Effect of remand. (i) The Adminis-
(i) Proposed findings and conclusions. trator may instruct the hearing officer
(ii) Supporting views or exceptions to to take further action with respect to

the hearing officer’s decision. the development of additional facts or
441
§ 411.126 42 CFR Ch. IV (10–1–09 Edition)

fits.
with § 411.126.
sion.

442
§ 411.122 42 CFR Ch. IV (10–1–09 Edition)
440
from the date of its notice, the determination of nonconformance is binding
mination is binding on all parties un- upon all parties unless it is reopened in
less it is reopened in accordance with accordance with § 411.126.
§ 411.126. (3) If more than one party requests a
(2) The notice also states that the hearing the hearing officer conducts a
plan must, within 30 days from the single hearing in which all parties may
date on its notice, submit to CMS the participate.
names and addresses of all employers (4) On the record review. Ordinarily,
and employee organizations that con- the hearing officer makes a decision
tributed to the plan during the cal- based upon review of the data and doc-
endar year for which CMS has deter- uments on which CMS based its deter-
mined nonconformance. mination of nonconformance and any
(b) Notice to contributing employers and
other documentation submitted by any
employee organizations. CMS mails writ-
of the parties within 65 days from the
ten notice of the determination, in-
date on the notice.
cluding all the information specified in
paragraph (a)(1) of this section, to all (5) Oral hearing. The hearing officer
contributing employers and employee may provide for an oral hearing either
organizations already known to CMS on his or her own motion or in response
or identified by the plan in accordance to a party’s request if the party dem-
with paragraph (a)(2) of this section. onstrates to the hearing officer’s satis-
Employers and employee organizations faction that an oral hearing is nec-
have 65 days from the date of their no- essary. Within 30 days of receipt of the
tice to request a hearing. request, the hearing officer gives all
known parties written notice of the re-
§ 411.120 Appeals. quest and whether the request for oral
(a) Parties to the determination. The hearing is granted.
parties to the determination are CMS, (b) Notice of time and place of oral
the GHP or LGHP for which CMS de- hearing. If the hearing officer provides
termined nonconformance, and any em- an oral hearing, he or she gives all
ployers or employee organizations that known parties written notice of the
contributed to the plan during the cal- time and place of the hearing at least
endar year for which CMS determined 30 days before the scheduled date.
nonconformance. (c) Prehearing discovery. (1) The hear-
(b) Request for hearing. (1) A party’s ing officer may permit prehearing dis-
request for hearing must be in writing covery if it is requested by a party at
(not in facsimile or other electronic least 10 days before the scheduled date
medium) and in the manner stipulated of the hearing.
in the notice of nonconformance; it (2) If the hearing officer approves the
must be filed within 65 days from the request, he or she—
date on the notice. (i) Provides a reasonable time for in-
(2) The request may include rationale spection and reproduction of docu-
showing why the parties believe that ments; and
CMS’s determination is incorrect and
(ii) In ruling on discovery matters, is
supporting documentation.
guided by the Federal Rules of Civil
(3) A request is considered filed on
the date it is received by the appro- Procedure. (28 U.S.C.A. Rules 26–37)
priate office, as shown by the receipt (3) The hearing officer’s orders on all
date stamped on the request. discovery matters are final.
(d) Conduct of hearing. The hearing
§ 411.121 Hearing procedures. officer determines the conduct of the
(a) Nature of hearing. (1) If any of the hearing, including the order in which
parties requests a hearing within 65 the evidence and the allegations are
days from the date on the notice of the presented.
determination of nonconformance, the (e) Evidence at hearing. (1) The hear-
CMS Administrator appoints a hearing ing officer inquires into the matters at
officer. issue and may receive from all parties
(2) If no party files a request within documentary and other evidence that
the 65-day period, the initial deter- is pertinent and material, including
439
§ 411.122 42 CFR Ch. IV (10–1–09 Edition)
440
date on the notice.
439
§ 411.9 42 CFR Ch. IV (10–1–09 Edition)
ance benefits.
ices.
416
(4) Father-in-law, mother-in-law, son- (1) Examinations performed for a pur-

in-law, daughter-in-law, brother-in- pose other than treatment or diagnosis
law, or sister-in-law. of a specific illness, symptoms, com-
(5) Grandparent or grandchild. plaint, or injury, except for screening
(6) Spouse of grandparent or grand- mammography, colorectal cancer
child. screening tests, screening pelvic
Member of the household means any exams, prostate cancer screening tests,
person sharing a common abode as part glaucoma screening exams, ultrasound
of a single family unit, including do- screening for abdominal aortic aneu-
mestic employees and others who live rysms (AAA), cardiovascular disease
together as part of a family unit, but screening tests, diabetes screening
not including a mere roomer or board- tests, a screening electrocardiogram,
er. initial preventive physical examina-
Professional corporation means a cor- tions that meet the criteria specified
poration that is completely owned by in paragraphs (k)(6) through (k)(15) of
one or more physicians and is operated this section, or additional preventive
for the purpose of conducting the prac- services that meet the criteria in
tice of medicine, osteopathy dentistry, § 410.64 of this chapter.
podiatry, optometry, or chiropractic, (2) Examinations required by insur-
or is owned by other health care profes- ance companies, business establish-
sionals as authorized by State law. ments, government agencies, or other
(c) Applicability of the exclusion. The third parties.
exclusion applies to the following (b) Low vision aid exclusion—(1) Scope.
charges in the specified circumstances: The scope of the eyeglass exclusion en-
compasses all devices irrespective of
(1) Physicians’ services. (i) Charges for
their size, form, or technological fea-
physicians’ services furnished by an
tures that use one or more lens to aid
immediate relative of the beneficiary
vision or provide magnification of im-
or member of the beneficiary’s house-
ages for impaired vision.
hold, even if the bill or claim is sub-
(2) Exceptions. (i) Post-surgical pros-
mitted by another individual or by an
thetic lenses customarily used during
entity such as a partnership or a pro-
convalescence for eye surgery in which
fessional corporation.
the lens of the eye was removed (for ex-
(ii) Charges for services furnished in-
ample, cataract surgery).
cident to a physician’s professional
(ii) Prosthetic intraocular lenses and
services (for example by the physi-
one pair of conventional eyeglasses or
cian’s nurse or technician), only if the
contact lenses furnished subsequent to
physician who ordered or supervised
each cataract surgery with insertion of
the services has an excluded relation-
an intraocular lens.
ship to the beneficiary.
(iii) Prosthetic lenses used by Medi-
(2) Services other than physicians’ serv- care beneficiaries who are lacking the
ices. (i) Charges imposed by an individ- natural lens of the eye and who were
ually owned provider or supplier if the not furnished with an intraocular lens.
owner has an excluded relationship to (c) Eye examinations for the purpose
the beneficiary; and of prescribing, fitting, or changing eye-
(ii) Charges imposed by a partnership glasses or contact lenses for refractive
if any of the partners has an excluded error only and procedures performed in
relationship to the beneficiary. the course of any eye examination to
(d) Exception to the exclusion. The ex- determine the refractive state of the
clusion does not apply to charges im- eyes, without regard to the reason for
posed by a corporation other than a the performance of the refractive pro-
professional corporation. cedures. Refractive procedures are ex-
cluded even when performed in connec-
§ 411.15 Particular services excluded tion with otherwise covered diagnosis
from coverage.
or treatment of illness or injury.
The following services are excluded (d) Hearing aids or examination for
from coverage: the purpose of prescribing, fitting, or
(a) Routine physical checkups such changing hearing aids.

as: (e) Immunizations, except for—
417
§ 411.112 42 CFR Ch. IV (10–1–09 Edition)
that, at any time during a calendar that it has complied with the MSP pro-
year, fails to comply with any of the hibitions and requirements set forth in
following statutory provisions: § 411.110, CMS may make a determina-
(1) The prohibition against taking tion of nonconformance for both the
into account that a beneficiary who is year in which the services were fur-
covered or seeks to be covered under nished and the year in which the re-
the plan is entitled to Medicare on the quest for information was made.
basis of ESRD, age, or disability, or eli-
gible on the basis of ESRD. § 411.114 Determination of non-
(2) The nondifferentiation clause for conformance.
individuals with ESRD. (a) Starting dates for determination of
(3) The equal benefits clause for the nonconformance. CMS’s authority to de-
working aged. termine nonconformance of GHPs be-
(4) The obligation to refund condi- gins on the following dates:
tional Medicare primary payments. (1) On January 1, 1987 for MSP provi-
(c) CMS may make a determination sions that affect the disabled.
of nonconformance for a GHP or LGHP (2) On December 20, 1989 for MSP pro-
that fails to respond to a request for visions that affect ESRD beneficiaries
information, or to provide correct in- and the working aged.
formation, either voluntarily or in re- (3) On August 10, 1993 for failure to
sponse to a CMS request, on the plan’s refund mistaken Medicare primary
primary payment obligation with repayments.
spect to a given beneficiary, if that
(b) Special rule for failure to repay. A
failure contributes to either or both of
GHP that fails to comply with § 411.110
the following:
(a)(1), (a)(2), or (a)(3) in a particular
(1) Medicare erroneously making a
year is nonconforming for that year. If,
primary payment.
in a subsequent year, that plan fails to
(2) A delay or foreclosure of CMS’s
repay the resulting mistaken primary
ability to recover an erroneous pri-
payments (in accordance with
mary payment.
§ 411.110(a)(4)), the plan is also noncon-
§ 411.112 Documentation of conform- forming for the subsequent year. For
ance. example, if a plan paid secondary for
the working aged in 1991, that plan was
(a) Acceptable documentation. CMS
nonconforming for 1991. If in 1994 CMS
may require a GHP or LGHP to dem-
identifies mistaken primary payments
onstrate that it has complied with the
attributable to the 1991 violation, and
Medicare secondary payer provisions
the plan refuses to repay, it is also
and to submit supporting documenta-
nonconforming for 1994.
tion by an official authorized to act on
behalf of the entity, under penalty of § 411.115 Notice of determination of
perjury. The following are examples of nonconformance.
documentation that may be acceptable:
(1) A copy of the employer’s plan or (a) Notice to the GHP or LGHP. (1) If
policy that specifies the services cov- CMS determines that a GHP or an
ered, conditions of coverage, benefit LGHP is nonconforming with respect
levels and limitations with respect to to a particular calendar year, CMS
persons entitled to Medicare on the mails to the plan written notice of the
basis of ESRD, age, or disability as following:
compared to the provisions applicable (i) The determination.
to other enrollees and potential enroll- (ii) The basis for the determination.
ees. (iii) The right of the parties to re-
(2) An explanation of the plan’s alle- quest a hearing.
gation that it does not owe CMS any (iv) An explanation of the procedure
amount CMS claims the plan owes as for requesting a hearing.
repayment for conditional or mistaken (v) The tax that may be assessed by
Medicare primary payments. the IRS in accordance with section 5000
(b) Lack of acceptable documentation. of the IRC.
If a GHP or LGHP fails to provide ac- (vi) The fact that if none of the par-
ceptable evidence or documentation ties requests a hearing within 65 days
438
date on the notice.
439
§ 411.112 42 CFR Ch. IV (10–1–09 Edition)
the following:
primary payment.
mary payment.
438
§ 411.112 42 CFR Ch. IV (10–1–09 Edition)
the following:
primary payment.
mary payment.
438
or disability (or eligible on the basis of first for services furnished to Medicare
ESRD) include, but are not limited to, beneficiaries without stipulating that
the following: such action may be taken only when
(1) Failure to pay primary benefits as Medicare is the primary payer.
required by subparts F, G, and H of this (11) Refusing to enroll an individual
part 411. for whom Medicare would be secondary
(2) Offering coverage that is sec- payer, when enrollment is available to
ondary to Medicare to individuals enti- similarly situated individuals for
tled to Medicare. whom Medicare would not be secondary
(3) Terminating coverage because the payer.
individual has become entitled to (b) Permissible actions. (1) If a GHP or
Medicare, except as permitted under LGHP makes benefit distinctions
COBRA continuation coverage provi- among various categories of individ-
sions (26 U.S.C. 4980B(f)(2)(B)(iv); 29 uals (distinctions unrelated to the fact
U.S.C. 1162.(2)(D); and 42 U.S.C. 300bb– that the individual is disabled, based,
2.(2)(D)). for instance, on length of time em-
(4) In the case of a LGHP, denying or ployed, occupation, or marital status),
terminating coverage because an indi- the GHP or LGHP may make the same
vidual is entitled to Medicare on the distinctions among the same cat-
basis of disability without denying or egories of individuals entitled to Medi-
terminating coverage for similarly sit- care whose plan coverage is based on
uated individuals who are not entitled current employment status. For exam-
to Medicare on the basis of disability. ple, if a GHP or LGHP does not offer
(5) Imposing limitations on benefits coverage to employees who have
for a Medicare entitled individual that worked less than one year and who are
do not apply to others enrolled in the not entitled to Medicare on the basis of
plan, such as providing less comprehen- disability or age, the GHP or LGHP is
sive health care coverage, excluding not required to offer coverage to em-
benefits, reducing benefits, charging ployees who have worked less than one
higher deductibles or coinsurance, pro- year and who are entitled to Medicare
viding for lower annual or lifetime ben- on the basis of disability or age.
efit limits, or more restrictive pre-ex- (2) A GHP or LGHP may pay benefits
isting illness limitations. secondary to Medicare for an aged or
(6) Charging a Medicare entitled indi- disabled beneficiary who has current
vidual higher premiums. employment status if the plan coverage
(7) Requiring a Medicare entitled in- is COBRA continuation coverage be-
dividual to wait longer for coverage to cause of reduced hours of work. Medi-
begin. care is primary payer for this bene-
(8) Paying providers and suppliers ficiary because, although he or she has
less for services furnished to a Medi- current employment status, the GHP
care beneficiary than for the same coverage is by virtue of the COBRA law
services furnished to an enrollee who is rather than by virtue of the current
not entitled to Medicare. employment status.
(9) Providing misleading or incom- (3) A GHP may terminate COBRA
plete information that would have the continuation coverage of an individual
effect of inducing a Medicare entitled who becomes entitled to Medicare on
individual to reject the employer plan, the basis of ESRD, when permitted
thereby making Medicare the primary under the COBRA provisions.
payer. An example of this would be in- [60 FR 45362, Aug. 31, 1995; 60 FR 53876, Oct.
forming the beneficiary of the right to 18, 1995]
accept or reject the employer plan but
failing to inform the individual that, if § 411.110 Basis for determination of
he or she rejects the plan, the plan will nonconformance.
not be permitted to provide or pay for (a) A ‘‘determination of nonconform-
secondary benefits. ance’’ is a CMS determination that a
(10) Including in its health insurance GHP or LGHP is a nonconforming plan
cards, claims forms, or brochures dis- as provided in this section.
tributed to beneficiaries, providers, and (b) CMS makes a determination of

suppliers, instructions to bill Medicare nonconformance for a GHP or LGHP
437
§ 411.112 42 CFR Ch. IV (10–1–09 Edition)
the following:
primary payment.
mary payment.
438
§ 411.106 42 CFR Ch. IV (10–1–09 Edition)
(c) Coverage by virtue of current em- (3) Members of the clergy. A member of
ployment status. An individual has cov- the clergy is considered to have cur-
erage by virtue of current employment rent employment status with a church
status with an employer if— or other religious organization if the
(1) the individual has GHP or LGHP individual is receiving cash remunera-
coverage based on employment, includ- tion from the church or other religious
ing coverage based on a certain number organization for services rendered.
of hours worked for that employer or a (f) Special rule: Delayed compensation
certain level of commissions earned subject to FICA taxes. An individual who
from work for that employer at any is not working is not considered an em-
time; and ployee solely on the basis of receiving
(2) the individual has current em- delayed compensation payments for
ployment status with that employer, previous periods of work even if those
as defined in paragraph (a) of this sec- payments are subject to FICA taxes (or
tion. would be subject to FICA taxes if the
(d) Special rule: Self-employed person. employer were not exempt from paying
A self-employed individual is consid- those taxes). For example, an indi-
ered to have GHP or LGHP coverage by vidual who is not working in 1993 and
receives payments subject to FICA
virtue of current employment status
taxes for work performed in 1992 is not
during a particular tax year only if,
considered to be an employee in 1993
during the preceding tax year, the indi-
solely on the basis of receiving those
vidual’s net earnings, from work in
payments.
that year related to the employer that
offers the group health coverage, are at § 411.106 Aggregation rules.
least equal to the amount specified in
section 211(b)(2) of the Act, which de- The following rules apply in deter-
mining the number and size of employ-
fines ‘‘self-employment income’’ for so-
ers, as required by the MSP provisions
cial security purposes.
for the aged and disabled:
(e) Special Rule: members of religious (a) All employers that are treated as
orders and members of clergy—(1) Mem- a single employer under subsection (a)
bers of religious orders who have not or (b) of section 52 of the Internal Rev-
taken a vow of poverty. A member of a enue Code (IRC) of 1986 (26 U.S.C. 52 (a)
religious order who has not taken a and (b)) are treated as a single em-
vow of poverty is considered to have ployer.
current employment status with the (b) All employees of the members of
religious order if— an affiliated service group (as defined
(i) The religious order pays FICA in section 414(m) of the IRC (26 U.S.C.
taxes on behalf of that member; or 414m)) are treated as employed by a
(ii) The individual is receiving cash single employer.
remuneration from the religious order. (c) Leased employees (as defined in
(2) Members of religious orders who section 414(n)(2) of the IRC (26 U.S.C.
have taken a vow of poverty. A member 414(n)(2)) are treated as employees of
of a religious order whose members are the person for whom they perform serv-
required to take a vow of poverty is ices to the same extent as they are
not considered to be employed by the treated under section 414(n) of the IRC.
order if the services he or she performs (d) In applying the IRC provisions
as a member of the order are consid- identified in this section, CMS relies
ered employment only because the upon regulations and decisions of the
order elects social security coverage Secretary of the Treasury respecting
under section 3121(r) of the IRC. This those provisions.
exemption applies retroactively to
services performed as a member of the § 411.108 Taking into account entitle-
order, beginning with the effective ment to Medicare.
dates of the MSP provisions for the (a) Examples of actions that constitute
aged and the disabled, respectively. ‘‘taking into account’’. Actions by GHPs
The exemption does not apply to serv- or LGHPs that constitute taking into
ices performed for employers outside of account that an individual is entitled

the order. to Medicare on the basis of ESRD, age,
436
or disability (or eligible on the basis of first for services furnished to Medicare
ESRD) include, but are not limited to, beneficiaries without stipulating that
the following: such action may be taken only when
(1) Failure to pay primary benefits as Medicare is the primary payer.
required by subparts F, G, and H of this (11) Refusing to enroll an individual
part 411. for whom Medicare would be secondary
(2) Offering coverage that is sec- payer, when enrollment is available to
ondary to Medicare to individuals enti- similarly situated individuals for
tled to Medicare. whom Medicare would not be secondary
(3) Terminating coverage because the payer.
individual has become entitled to (b) Permissible actions. (1) If a GHP or
Medicare, except as permitted under LGHP makes benefit distinctions
COBRA continuation coverage provi- among various categories of individ-
sions (26 U.S.C. 4980B(f)(2)(B)(iv); 29 uals (distinctions unrelated to the fact
U.S.C. 1162.(2)(D); and 42 U.S.C. 300bb– that the individual is disabled, based,
2.(2)(D)). for instance, on length of time em-
(4) In the case of a LGHP, denying or ployed, occupation, or marital status),
terminating coverage because an indi- the GHP or LGHP may make the same
vidual is entitled to Medicare on the distinctions among the same cat-
basis of disability without denying or egories of individuals entitled to Medi-
terminating coverage for similarly sit- care whose plan coverage is based on
uated individuals who are not entitled current employment status. For exam-
to Medicare on the basis of disability. ple, if a GHP or LGHP does not offer
(5) Imposing limitations on benefits coverage to employees who have
for a Medicare entitled individual that worked less than one year and who are
do not apply to others enrolled in the not entitled to Medicare on the basis of
plan, such as providing less comprehen- disability or age, the GHP or LGHP is
sive health care coverage, excluding not required to offer coverage to em-
benefits, reducing benefits, charging ployees who have worked less than one
higher deductibles or coinsurance, pro- year and who are entitled to Medicare
viding for lower annual or lifetime ben- on the basis of disability or age.
efit limits, or more restrictive pre-ex- (2) A GHP or LGHP may pay benefits
isting illness limitations. secondary to Medicare for an aged or
(6) Charging a Medicare entitled indi- disabled beneficiary who has current
vidual higher premiums. employment status if the plan coverage
(7) Requiring a Medicare entitled in- is COBRA continuation coverage be-
dividual to wait longer for coverage to cause of reduced hours of work. Medi-
begin. care is primary payer for this bene-
(8) Paying providers and suppliers ficiary because, although he or she has
less for services furnished to a Medi- current employment status, the GHP
care beneficiary than for the same coverage is by virtue of the COBRA law
services furnished to an enrollee who is rather than by virtue of the current
not entitled to Medicare. employment status.
(9) Providing misleading or incom- (3) A GHP may terminate COBRA
plete information that would have the continuation coverage of an individual
effect of inducing a Medicare entitled who becomes entitled to Medicare on
individual to reject the employer plan, the basis of ESRD, when permitted
thereby making Medicare the primary under the COBRA provisions.
payer. An example of this would be in- [60 FR 45362, Aug. 31, 1995; 60 FR 53876, Oct.
forming the beneficiary of the right to 18, 1995]
accept or reject the employer plan but
failing to inform the individual that, if § 411.110 Basis for determination of
he or she rejects the plan, the plan will nonconformance.
not be permitted to provide or pay for (a) A ‘‘determination of nonconform-
secondary benefits. ance’’ is a CMS determination that a
(10) Including in its health insurance GHP or LGHP is a nonconforming plan
cards, claims forms, or brochures dis- as provided in this section.
tributed to beneficiaries, providers, and (b) CMS makes a determination of

suppliers, instructions to bill Medicare nonconformance for a GHP or LGHP
437
§ 411.106 42 CFR Ch. IV (10–1–09 Edition)
payments.

436
covered or seeks to be covered under (2) The provisions of section 1128A of

the plan; and the Act (other than subsections (a) and
(ii) May not differentiate in the bene- (b)) apply to the civil money penalty of
fits it provides between individuals up to $5,000 in the same manner as the
with ESRD and other individuals cov- provisions apply to a penalty or pro-
ered under the plan, on the basis of the ceeding under section 1128A(a).
existence of ESRD, or the need for di-
alysis, or in any other manner. § 411.104 Current employment status.
(2) The prohibitions of paragraph (a)
(a) General rule. An individual has
of this section do not prohibit a plan
current employment status if—
from paying benefits secondary to
Medicare after the first 18 months of (1) The individual is actively working
ESRD-based eligibility or entitlement. as an employee, is the employer (in-
(b) Age. A GHP of an employer or em- cluding a self-employed person), or is
ployee organization of at least 20 em- associated with the employer in a busi-
ployees— ness relationship; or
(1) May not take into account the (2) The individual is not actively
age-based Medicare entitlement of an working and—
individual or spouse age 65 or older who (i) Is receiving disability benefits
is covered (or seeks to be covered) from an employer for up to 6 months
under the plan by virtue of current em- (the first 6 months of employer dis-
ployment status; and ability benefits are subject to FICA
(2) Must provide, to employees age 65 taxes); or
or older and to spouses age 65 or older (ii) Retains employment rights in the
of employees of any age, the same ben- industry and has not had his employ-
efits under the same conditions as it ment terminated by the employer, if
provides to employees and spouses
the employer provides the coverage (or
under age 65.
has not had his membership in the em-
(c) Disability. A GHP of an employer
ployee organization terminated, if the
or employee organization of at least 100
employees may not take into account employee organization provides the
the disability-based Medicare entitle- coverage), is not receiving disability
ment of any individual who is covered benefits from an employer for more
(or seeks to be covered) under the plan than 6 months, is not receiving dis-
by virtue of current employment sta- ability benefits from Social Security,
tus. and has GHP coverage that is not pur-
suant to COBRA continuation coverage
§ 411.103 Prohibition against financial (26 U.S.C. 4980B; 29 U.S.C. 1161–1168; 42
and other incentives. U.S.C. 300bb–1 et seq.). Whether or not
(a) General rule. An employer or other the individual is receiving pay during
entity (for example, an insurer) is pro- the period of nonwork is not a factor.
hibited from offering Medicare bene- (b) Persons who retain employment
ficiaries financial or other benefits as rights. For purposes of paragraph (a)(2)
incentives not to enroll in, or to termi- of this section, persons who retain em-
nate enrollment in, a GHP that is, or ployment rights include but are not
would be, primary to Medicare. This limited to—
prohibition precludes offering to Medi- (1) Persons who are furloughed, tem-
care beneficiaries an alternative to the porarily laid off, or who are on sick
employer primary plan (for example,
leave;
coverage of prescription drugs) unless
(2) Teachers and seasonal workers
the beneficiary has primary coverage
other than Medicare. An example who normally do not work throughout
would be primary coverage through his the year; and
own or a spouse’s employer. (3) Persons who have health coverage
(b) Penalty for violation. (1) Any enti- that extends beyond or between active
ty that violates the prohibition of employment periods; for example,
paragraph (a) of this section is subject based on an hours bank arrangement.
to a civil money penalty of up to $5,000 (Active union members often have

for each violation; and hours bank coverage.)
435
§ 411.106 42 CFR Ch. IV (10–1–09 Edition)
payments.

436

under age 65.
leave;

435
§ 411.101 42 CFR Ch. IV (10–1–09 Edition)
§ 411.101 Definitions. employee health and welfare funds or

As used in this subpart and in sub- other employee organization plans. The
parts F through H of this part— term also includes employee-pay-all
COBRA stands for Consolidated Om- plans, which are plans under the aus-
nibus Budget Reconciliation Act of pices of one or more employers or em-
1985. ployee organizations but which receive
Days means calendar days. no financial contributions from them.
Employee (subject to the special rules The term does not include a plan that
in § 411.104) means an individual who— is unavailable to employees; for exam-
(1) Is working for an employer; or ple, a plan only for self-employed per-
(2) Is not working for an employer sons.
but is receiving payments that are sub- IRC stands for Internal Revenue
ject to FICA taxes, or would be subject Code.
to FICA taxes except that the em- IRS stands for Internal Revenue
ployer is exempt from those taxes Service.
under the Internal Revenue Code. Large group health plan (LGHP) means
Employer means, in addition to indi- a GHP that covers employees of ei-
viduals (including self-employed per- ther—
sons) and organizations engaged in a (1) A single employer or employee or-
trade or business, other entities ex- ganization that employed at least 100
empt from income tax such as reli- full-time or part-time employees on 50
gious, charitable, and educational in- percent or more of its regular business
stitutions, the governments of the days during the previous calendar year;
United States, the individual States, or
Puerto Rico, the Virgin Islands, Guam, (2) Two or more employers, or em-
American Samoa, the Northern Mar- ployee organizations, at least one of
iana Islands, and the District of Colum- which employed at least 100 full-time
bia, and the agencies, instrumental- or part-time employees on 50 percent
ities, and political subdivisions of or more of its regular business days
these governments. during the previous calendar year.
FICA stands for the Federal Insur- MSP stands for Medicare secondary
ance Contributions Act, the law that payer.
imposes social security taxes on em- Multi-employer plan means a plan that
ployers and employees under section 21 is sponsored jointly by two or more
of the Internal Revenue Code. employers (sometimes called a mul-
Group health plan (GHP) means any tiple-employer plan) or by employers
arrangement made by one or more em- and unions (sometimes under the Taft-
ployers or employee organizations to Hartley law).
provide health care directly or through Self-employed person encompasses con-
other methods such as insurance or re- sultants, owners of businesses, and di-
imbursement, to current or former em- rectors of corporations, and members
ployees, the employer, others associ- of the clergy and religious orders who
ated or formerly associated with the are paid for their services by a reli-
employer in a business relationship, or gious body or other entity.
their families, that— Similarly situated individual means—
(1) Is of, or contributed to by, one or (1) In the case of employees, other
more employers or employee organiza- employees enrolled or seeking to enroll
tions. in the plan; and
(2) If it involves more than one em- (2) In the case of other categories of
ployer or employee organization, pro- individuals, other persons in any of
vides for common administration. those categories who are enrolled or
(3) Provides substantially the same seeking to enroll in the plan.
benefits or the same benefit options to
all those enrolled under the arrange- § 411.102 Basic prohibitions and re-
ment. quirements.
The term includes self-insured plans, (a) ESRD. (1) A group health plan of
plans of governmental entities (Fed- any size—(i) May not take into account
eral, State and local), and employee or- the ESRD-based Medicare eligibility or
ganization plans; that is, union plans, entitlement of any individual who is
434

under age 65.
leave;

435
§ 411.101 42 CFR Ch. IV (10–1–09 Edition)
§ 411.101 Definitions. employee health and welfare funds or

As used in this subpart and in sub- other employee organization plans. The
parts F through H of this part— term also includes employee-pay-all
COBRA stands for Consolidated Om- plans, which are plans under the aus-
nibus Budget Reconciliation Act of pices of one or more employers or em-
1985. ployee organizations but which receive
Days means calendar days. no financial contributions from them.
Employee (subject to the special rules The term does not include a plan that
in § 411.104) means an individual who— is unavailable to employees; for exam-
(1) Is working for an employer; or ple, a plan only for self-employed per-
(2) Is not working for an employer sons.
but is receiving payments that are sub- IRC stands for Internal Revenue
ject to FICA taxes, or would be subject Code.
to FICA taxes except that the em- IRS stands for Internal Revenue
ployer is exempt from those taxes Service.
under the Internal Revenue Code. Large group health plan (LGHP) means
Employer means, in addition to indi- a GHP that covers employees of ei-
viduals (including self-employed per- ther—
sons) and organizations engaged in a (1) A single employer or employee or-
trade or business, other entities ex- ganization that employed at least 100
empt from income tax such as reli- full-time or part-time employees on 50
gious, charitable, and educational in- percent or more of its regular business
stitutions, the governments of the days during the previous calendar year;
United States, the individual States, or
Puerto Rico, the Virgin Islands, Guam, (2) Two or more employers, or em-
American Samoa, the Northern Mar- ployee organizations, at least one of
iana Islands, and the District of Colum- which employed at least 100 full-time
bia, and the agencies, instrumental- or part-time employees on 50 percent
ities, and political subdivisions of or more of its regular business days
these governments. during the previous calendar year.
FICA stands for the Federal Insur- MSP stands for Medicare secondary
ance Contributions Act, the law that payer.
imposes social security taxes on em- Multi-employer plan means a plan that
ployers and employees under section 21 is sponsored jointly by two or more
of the Internal Revenue Code. employers (sometimes called a mul-
Group health plan (GHP) means any tiple-employer plan) or by employers
arrangement made by one or more em- and unions (sometimes under the Taft-
ployers or employee organizations to Hartley law).
provide health care directly or through Self-employed person encompasses con-
other methods such as insurance or re- sultants, owners of businesses, and di-
imbursement, to current or former em- rectors of corporations, and members
ployees, the employer, others associ- of the clergy and religious orders who
ated or formerly associated with the are paid for their services by a reli-
employer in a business relationship, or gious body or other entity.
their families, that— Similarly situated individual means—
(1) Is of, or contributed to by, one or (1) In the case of employees, other
more employers or employee organiza- employees enrolled or seeking to enroll
tions. in the plan; and
(2) If it involves more than one em- (2) In the case of other categories of
ployer or employee organization, pro- individuals, other persons in any of
vides for common administration. those categories who are enrolled or
(3) Provides substantially the same seeking to enroll in the plan.
benefits or the same benefit options to
all those enrolled under the arrange- § 411.102 Basic prohibitions and re-
ment. quirements.
The term includes self-insured plans, (a) ESRD. (1) A group health plan of
plans of governmental entities (Fed- any size—(i) May not take into account
eral, State and local), and employee or- the ESRD-based Medicare eligibility or
ganization plans; that is, union plans, entitlement of any individual who is
434
(ii) If the liability insurer does not basis of disability, and covered under
pay within the 120-day period, the pro- the plan by virtue of the individual’s or
vider or supplier: a family member’s current employ-
(A) Must withdraw its claim with the ment status with an employer. (Sec-
liability insurer and/or withdraw its tion 1862(b)(1)(B))
lien against a potential liability settle- (2) Sections 1862(b)(1)(A), (B), and (C)
ment. of the Act provide that group health
(B) May only bill Medicare for Medi- plans and large group health plans may
care covered services. not take into account that the individ-
(C) May bill the beneficiary only for uals described in paragraph (a)(1) of
applicable Medicare deductible and co- this section are entitled to Medicare on
insurance amounts plus the amount of the basis of age or disability, or eligi-
any charges that may be made to a ble for, or entitled to Medicare on the
beneficiary under 413.35 of this chapter basis of ESRD.
(when cost limits are applied to these (3) Section 1862(b)(1)(A)(i)(II) of the
services) or under 489.32 of this chapter Act provides that group health plans of
(when services are partially covered). employers of 20 or more employees
[54 FR 41734, Oct. 11, 1989, as amended at 68 must provide to any employee or
FR 43942, July 25, 2003] spouse age 65 or older the same bene-
fits, under the same conditions, that it
Subpart E—Limitations on Payment provides to employees and spouses
for Services Covered Under under 65. The requirement applies re-
Group Health Plans: General gardless of whether the individual or
spouse 65 or older is entitled to Medi-
Provisions care.
(4) Section 1862(b)(1)(C)(ii) of the Act
SOURCE: 60 FR 45362, Aug. 31, 1995, unless
provides that group health plans may
otherwise noted.
not differentiate in the benefits they
§ 411.100 Basis and scope. provide between individuals who have
ESRD and other individuals covered
(a) Statutory basis. (1) Section 1862(b) under the plan on the basis of the ex-
of the Act provides in part that Medi- istence of ESRD, the need for renal di-
care is secondary payer, under specified alysis, or in any other manner. Actions
conditions, for services covered under that constitute ‘‘differentiating’’ are
any of the following: listed in § 411.161(b).
(i) Group health plans of employers
(b) Scope. This subpart sets forth gen-
that employ at least 20 employees and
eral rules pertinent to—
that cover Medicare beneficiaries age
65 or older who are covered under the (1) Medicare payment for services
plan by virtue of the individual’s cur- that are covered under a group health
rent employment status with an em- plan and are furnished to certain bene-
ployer or the current employment sta- ficiaries who are entitled on the basis
tus of a spouse of any age. (Section of ESRD, age, or disability.
1862(b)(1)(A)) (2) The prohibition against taking
(ii) Group health plans (without re- into account Medicare entitlement
gard to the number of individuals em- based on age or disability, or Medicare
ployed and irrespective of current em- eligibility or entitlement based on
ployment status) that cover individ- ESRD.
uals who have ESRD. Except as pro- (3) The prohibition against differen-
vided in § 411.163, group health plans tiation in benefits between individuals
are always primary payers throughout who have ESRD and other individuals
the first 18 months of ESRD-based covered under the plan.
Medicare eligibility or entitlement. (4) The requirement to provide to
(Section 1862(b)(1)(C)) those 65 or over the same benefits
(iii) Large group health plans (that under the same conditions as are pro-
is, plans of employers that employ at vided to those under 65.
least 100 employees) and that cover (5) The appeals procedures for group
Medicare beneficiaries who are under health plans that CMS determines are
age 65, entitled to Medicare on the nonconforming plans.
433
§ 411.9 42 CFR Ch. IV (10–1–09 Edition)
ance benefits.
ices.
416
§ 411.1 42 CFR Ch. IV (10–1–09 Edition)
411.353 Prohibition on certain referrals by SOURCE: 54 FR 41734, Oct. 11, 1989, unless
physicians and limitations on billing. otherwise noted.
411.354 Financial relationship, compensa-
EDITORIAL NOTE: Nomenclature changes to
tion, and ownership or investment inter-
part 411 appear at 71 FR 9471, Feb. 24, 2006
est.
411.355 General exceptions to the referral
prohibition related to both ownership/in- Subpart A—General Exclusions
vestment and compensation. and Exclusion of Particular
tion related to ownership or investment
Services
interests.
§ 411.1 Basis and scope.
tion related to compensation arrange- (a) Statutory basis. Sections 1814(a)
ments. and 1835(a) of the Act require that a
411.361 Reporting requirements. physician certify or recertify a pa-
tient’s need for home health services
but, in general, prohibit a physician
Services
from certifying or recertifying the
411.370 Advisory opinions relating to physi- need for services if the services will be
cian referrals. furnished by an HHA in which the phy-
411.372 Procedure for submitting a request. sician has a significant ownership in-
411.373 Certification. terest, or with which the physician has
411.375 Fees for the cost of advisory opin- a significant financial or contractual
ions.
relationship. Sections 1814(c), 1835(d),
411.377 Expert opinions from outside
sources. and 1862 of the Act exclude from Medi-
411.378 Withdrawing a request. care payment certain specified serv-
411.379 When CMS accepts a request. ices. The Act provides special rules for
411.380 When CMS issues a formal advisory payment of services furnished by the
opinion. following: Federal providers or agen-
411.382 CMS’s right to rescind advisory cies (sections 1814(c) and 1835(d)); hos-
opinions. pitals and physicians outside of the
411.384 Disclosing advisory opinions and
U.S. (sections 1814(f) and 1862(a)(4)); and
supporting information.
411.386 CMS’s advisory opinions as exclu- hospitals and SNFs of the Indian
sive. Health Service (section 1880 of the
411.387 Parties affected by advisory opin- Act). Section 1877 of the Act sets forth
ions. limitations on referrals and payment
411.388 When advisory opinions are not ad- for designated health services fur-
missible evidence. nished by entities with which the refer-
411.389 Range of the advisory opinion. ring physician (or an immediate family
member of the referring physician) has
a financial relationship.
Services
(b) Scope. This subpart identifies:
411.400 Payment for custodial care and serv- (1) The particular types of services
ices not reasonable and necessary. that are excluded;
411.402 Indemnification of beneficiary. (2) The circumstances under which
411.404 Criteria for determining that a bene- Medicare denies payment for certain
ficiary knew that services were excluded
from coverage as custodial care or as not
services that are usually covered; and
reasonable and necessary. (3) The circumstances under which
411.406 Criteria for determining that a pro- Medicare pays for services usually ex-
vider, practitioner, or supplier knew that cluded from payment.
services were excluded from coverage as
custodial care or as not reasonable and [54 FR 41734, Oct. 11, 1989, as amended at 60
necessary. FR 41978, Aug. 14, 1995; 60 FR 45361, Aug. 31,
411.408 Refunds of amounts collected for 1995; 66 FR 952, Jan. 4, 2001]
physician services not reasonable and
necessary, payment not accepted on an § 411.2 Conclusive effect of QIO deter-
assignment-related basis. minations on payment of claims.
AUTHORITY: Secs. 1102, 1860D–1 through If a utilization and quality control
quality improvement organization
1860D–42, 1871, and 1877 of the Social Security

Act (42 U.S.C. 1302, 1395w–101 through 1395w– (QIO) has assumed review responsi-
152, 1395hh, and 1395nn). bility, in accordance with part 466 of
414

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§ 411.9 42 CFR Ch.

this chapter, for services furnished to § 411.6 Services furnished by a Federal

the Social Security Act other than

this chapter, for services furnished to § 411.6 Services furnished by a Federal

the Social Security Act other than

this chapter, for services furnished to § 411.6 Services furnished by a Federal

the Social Security Act other than

Subpart D—Limitations on Medi- Self-insured plan means a plan under

Subpart D—Limitations on Medi- Self-insured plan means a plan under

§ 411.47 Apportionment of a lump-sum medical expenses (as determined under

The Medicare overpayment, for which the

service under the particular workers’ is intended to compensate the indi-

benefits. If a lump-sum compensation the lump-sum settlement allocated to

service under the particular workers’ is intended to compensate the indi-

benefits. If a lump-sum compensation the lump-sum settlement allocated to

service under the particular workers’ is intended to compensate the indi-

benefits. If a lump-sum compensation the lump-sum settlement allocated to

Federal fiscal year 2006 base period.

deductible or coinsurance amounts that

deductible or coinsurance amounts that

§ 411.387 Parties affected by advisory plier that had accepted assignment of

deductible or coinsurance amounts that

§ 411.387 Parties affected by advisory plier that had accepted assignment of

service under the particular workers’ is intended to compensate the indi-

benefits. If a lump-sum compensation the lump-sum settlement allocated to

this chapter, for services furnished to § 411.6 Services furnished by a Federal

the Social Security Act other than

§ 411.387 Parties affected by advisory plier that had accepted assignment of

§ 411.387 Parties affected by advisory plier that had accepted assignment of

§ 411.387 Parties affected by advisory plier that had accepted assignment of

complicated fact patterns, within a proval, or discontinue the action with-

issues in accordance with this subpart.

complicated fact patterns, within a proval, or discontinue the action with-

issues in accordance with this subpart.

complicated fact patterns, within a proval, or discontinue the action with-

issues in accordance with this subpart.

by law. CMS determines, in its discretion, in-

complicated fact patterns, within a proval, or discontinue the action with-

issues in accordance with this subpart.

by law. CMS determines, in its discretion, in-

by law. CMS determines, in its discretion, in-

by law. CMS determines, in its discretion, in-

by law. CMS determines, in its discretion, in-

CMS to address including, if possible, a knowledge of the penalties for false

concerning whether a physician’s refer- tion is under investigation, or is or has

CMS to address including, if possible, a knowledge of the penalties for false

change Commission and other rules of individual or entity may request a

concerning whether a physician’s refer- tion is under investigation, or is or has

change Commission and other rules of individual or entity may request a

§ 411.356 Exceptions to the referral riod as Congress may specify), is not a

commercially reasonable even if no re- (v) The compensation to be paid over

requirements concerning physician in- of the lowest number of contiguous zip

(ii) Not determined in a manner that of inpatient hospital services under

ty the excess nonmonetary compensa- the arrangement. The compensation

staff members only on the hospital’s physician (either directly or indirectly

provided to enrollees of a health plan, erwise attributable to the services per-

(A) A percentage of the revenue insurance premiums for a physician

malpractice insurance policy or pro- HPSA, or an area with demonstrated

visory opinion issued in accordance to the physician in any manner that

of referrals or other business generated ices, is determined in a manner that

change Commission and other rules of individual or entity may request a

§ 411.356 Exceptions to the referral riod as Congress may specify), is not a