Waiver of Liability

Limitation of liability is a long-standing provision of Medicare law protecting beneficiaries who are furnished items or services on an assigned basis. The provision waives the beneficiary's liability for payment when he or she could not have known that items or services rendered on an assigned basis were not reasonable and necessary and therefore would not be paid under Medicare guidelines.

If a beneficiary could have been expected to know that an item or service furnished on an assigned basis was not reasonable and necessary, liability for payment must be accepted. A beneficiary is expected to know that the item or service is not reasonable and necessary after receiving a Medicare notice denying charges for the same or similar item or service. A beneficiary also is liable for payment if the physician or supplier accepting assignment gave the beneficiary advance written notice that Medicare is not likely to pay for an item or service and the beneficiary agreed to pay.

Liability also is waived for a physician or supplier who did not know and could not have been expected to know that items or services provided on an assigned basis were not reasonable and necessary.

A physician or supplier is expected to know the coverage limitations for an item or service after a Medicare notice is published. For example, a Medicare publication to the provider community that Medicare does not pay for a particular service for certain medical conditions would constitute evidence that the physician could have been expected to know the coverage limitations for the service. Also, a previous denial notice to a physician or supplier for an item or service furnished in a given situation is considered evidence that the coverage limitations were known.

When neither the beneficiary nor the physician/supplier knew or could have been expected to know that an item or service furnished on an assigned basis was not reasonable and necessary, Medicare reimburses under the limitation of liability provision.

A determination of the physician’s or supplier’s liability is made at the initial claim adjudication. If the physician or supplier accepting assignment provided advance written notice to the beneficiary that Medicare was likely to deny payment for the item or service, and the beneficiary agreed to pay, modifier GA, Waiver of liability statement on file, should be submitted on each detail line to which it applies. Waiver of liability statements and the beneficiary’s signed and dated agreement to pay should continue to be kept on file in the provider’s office and furnished to the carrier upon request.

Liability for Medically Unnecessary Unassigned Services

The Omnibus Budget Reconciliation Act of 1986 requires that nonparticipating physicians must refund any beneficiary payments for unassigned services that are determined to not be reasonable and necessary.

The nonparticipating physician is not required to make a refund if the physician did not know and could not reasonably have been expected to know that the services were not considered reasonable and necessary. In this instance a Medicare publication or a previous claim denial notice may be considered evidence for the physician. A refund is also not required if the physician notified the beneficiary of the likelihood that Medicare would not pay for the specific service and the beneficiary agreed to pay the physician.

Advance Notice

A physician or supplier accepting assignment may collect from the beneficiary for items or services deemed not reasonable and necessary if advance notice that Medicare is likely to deny payment was provided and the beneficiary agreed to pay.

The advance notice must be in writing and must inform the beneficiary of the likelihood that Medicare will deny payment for the item or service to be furnished. The statement must be more than routine notice of the possibility that payment for the item or service will be denied. In order to make an informed decision on accepting liability for payment, the beneficiary needs to be apprised of a definite reason for the likelihood of Medicare denial. Some possible reasons for denial are:

  1. Medicare Part B usually does not pay for this many visits or treatments.
  2. Medicare Part B usually does not pay for this service.
  3. Medicare Part B usually does not pay for this lab test.
  4. Medicare Part B does not pay for this treatment because it has not yet been proven effective.

The language of the advance notice is important, and the beneficiary's signed, dated agreement to pay is required.

A beneficiary cannot refuse to sign an advance written notice of possible Medicare denial and expect to have financial responsibility waived. If the beneficiary or their representative refuses to sign the advance written notice, the provider can still bill the beneficiary when the refusal is witnessed and the following information is documented in the beneficiary’s file:

  • date of the refusal;
  • who refused (the beneficiary, their representative, etc.);
  • who witnessed the refusal and that person’s signature, and;
  • the services and dates of service involved (as they appear on the advance notice).

Providers may use modifier GA, Waiver of liability statement on file, to report this circumstance. The advance notice and the information above should be documented in the beneficiary’s file and made available to the carrier upon request.

Physician/Supplier Notice to Beneficiary

Medicare Part B pays only for services that are determined to be reasonable and necessary under section 1862(a)(1) of the Medicare law. If a particular service is not reasonable and necessary under Medicare standards, although it would otherwise be covered, Medicare Part B denies payment for that service. I believe that, in your case, Medicare Part B is likely to deny payment for (specify service/procedure) _____________________________________________ on (give date) _______________________ for the following reasons: (give the assumed reason).

Beneficiary Agreement to Pay

  • Medicare does not pay for this service for this condition.
  • Medicare does not pay for this many services in this time period.
  • Other______________________________________________

I have been notified by my physician that, in my case, Medicare Part B is likely to deny payment for the services identified above. I have read and understand the above statement. I accept liability for those services not paid by Medicare.

Beneficiary signature__________________________________________________

Date____________________________________

Extended Course of Treatment

An advance notice covering an extended course of treatment is acceptable if the notice identifies all services that the physician believes that Medicare will not pay. If, as the course of treatment progresses, additional services are furnished which the physician believes Medicare will not pay, the beneficiary must be separately notified of the likelihood of Medicare nonpayment and the beneficiary must agree to pay.

Chiropractor Notice To Beneficiary

"Medicare will pay only for services that it determines to be reasonable and necessary under Section 1862(a)(1) of Title XVIII of the Social Security Act. If Medicare determines that a particular service, although it would otherwise be covered, is not reasonable and necessary under Medicare program standards, Medicare will deny payment for that service. I believe that, in your case, Medicare is likely to deny payment for chiropractic manipulative therapy (A2000, 98940, 98941, 98942) for the following reason:

_____ 1. Medicare usually does not pay for this many services in this time period.

_____ 2. Other ______________________________________________.

I will see this patient ____________ a week on an as needed basis from (date)________ to (date)________.

I have been notified by my physician that he or she believes that in my case Medicare is likely to deny payment for the services identified above for the reasons stated. If Medicare denies payment, I agree to be fully and personally responsible for payment.

Signature __________________ (Beneficiary)

Date __________________