THIS CMS GUIDANCE HAS BEEN SUPERSEDED (click here to read a November 2005 update)
HHS staff have provided new guidance on the ability of health care providers to seek amounts in excess of Medicare specified amounts from retiree health plans (or apparently other secondary payors) where Medicare is primary. The guidance distinguishes between physicians and other suppliers, on the one hand -- who may not charge such additional amounts -- and hospitals and others defined as "providers" under the Medicare law, who may seek such payment in certain circumstances, according to HHS Centers for Medicare and Medicaid Services staff.
Federal law governs the amount health care providers can charge Medicare beneficiaries beyond the amount payable by Medicare. Questions have been raised, though, about the ability of health care providers to charge secondary payors more than the amount specified by Medicare where Medicare is primary and the provider's claim is based on the terms of a managed care contract or other purportedly independent source of payment obligation, rather than a payment obligation of the patient.
HHS staff have now confirmed that physicians and Medicare suppliers who participate in the Medicare program or accept Medicare assignment may not charge a secondary payor more than the Medicare RVRVS amount, or the Medicare limiting charge in the case of doctors not participating in Medicare, regardless of the circumstances or any contract by the physician or supplier with a payor. However, according to HHS staff, hospitals and other "providers," as that term is defined in the Medicare regulations, are not barred by the Medicare laws or regulations from charging a retiree health plan secondary payor more than the Medicare allowed amount for services they provide, so long as the claim is not based on any amount purportedly owed or incurred by the patient. Thus, if the provider claims that it is owed the additional amount pursuant to a contract with the managed care organization or on some other independent basis, its claim would not be barred by federal law. By this reasoning, where an HMO or other managed care organization has contracted with the provider, the provider's ability to collect more than the Medicare allowed amount could depend on the terms of the applicable managed care participating provider agreement.
The guidance provided to Crowell & Moring on February 19, 2002 by CMS staff follows:
I am writing in response to your inquiry regarding whether a provider or supplier is permitted to collect more than the Medicare allowed amounts from a beneficiary's private retiree GHP coverage (which is secondary to Medicare). When a retiree becomes eligible for Medicare, then Medicare becomes the primary payer for that individual's health care benefits and the existing GHP becomes the secondary payer.
Pursuant to Subpart C of 42 CFR 489, providers of services (as defined by 42 CFR 489.2) are prohibited from charging a beneficiary (or his/her representative) more than the applicable deductible and coinsurance amounts for a Medicare-covered service. Thus, a beneficiary's financial obligation for a Medicare-covered service is always limited to the applicable deductible and coinsurance amounts. However, Medicare law and regulations do not prohibit providers from collecting more than the applicable deductible and coinsurance amounts for a Medicare-covered service from a beneficiary's private retiree GHP coverage (which is secondary to Medicare) provided that the provider does not attempt to collect from the beneficiary any amounts that exceed the applicable deductible and coinsurance amounts. Therefore, if State law and the rules of the beneficiary's private retiree GHP coverage permit the provider to collect more than the amounts the beneficiary is actually liable for (i.e., the applicable deductible and coinsurance amounts), then Medicare does not prohibit the provider from collecting those amounts from the beneficiary's private retiree GHP coverage.
However, pursuant to 42 CFR 424.55, suppliers (as defined by 42 CFR 400.202) that accept assignment are prohibited from charging a beneficiary or any other source (including a beneficiary's private retiree GHP coverage) more than the difference between the Medicare approved amount and the Medicare Part B payment. For example, if a participating physician (who is required to always accept assignment) provides a service that is $100 according to Medicare's physician fee schedule to a beneficiary that has previously met their Part B deductible, then Medicare would pay the physician $80 (which is the Medicare approved amount) and the beneficiary or his/her private retiree GHP coverage would be liable for $20. The Medicare Part B payment is $100 ($80+$20). Therefore, the physician in this example is prohibited by Medicare law and regulations from collecting (or attempting to collect) more than $20 from the beneficiary or the beneficiary's private retiree GHP coverage.
Additionally, pursuant to 42 CFR 414.48, nonparticipating suppliers that do not accept assignment are prohibited from charging the beneficiary or any other source (including a beneficiary's private retiree GHP coverage) more than the limiting charge (as defined by section 1848(g)(2) of the Social Security Act).