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«CMS Referral for Own Motion Review by DAB/MAC Appellant at ALJ Level ALJ Appeal Number 1-791627923 Beneficiary (if not the Appellant) List attached ...»

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CMS Referral for Own Motion Review by DAB/MAC

Appellant at ALJ Level ALJ Appeal Number

1-791627923

Beneficiary (if not the Appellant) List attached ALJ Decision Date

August 19, 2011

Health Insurance Claim Number (HICN)* Specific Item(s) OR Service(s)

Ambulance Service and Ground Mileage

Provider, Practitioner OR Supplier

Part A Part B

American Medical Response NW

Basis for referral

Pre-BIPA Any Case CMS as a Participant Decision not supported by Error of law material to the outcome of Decision not supported by the substantial evidence the claim preponderance of evidence Abuse of discretion Broad policy or procedural issue of Abuse of discretion public interest

Rationale for Referral and Background:

The beneficiary’s daughter, on behalf of her deceased father (Appellant), requested a redetermination from the Medicare Administrative Contractor, Noridian Administrative Services, LLC (MAC), after the MAC denied Medicare coverage for ambulance services and ground mileage provided to the beneficiary by American Medical Response, NW (Provider).1 Exh.2 at 1. Provider transported the beneficiary from the hospital to a nursing facility. Exh.4 at 1. The MAC issued an unfavorable redetermination decision, finding Medicare did not cover the ambulance and ground mileage services because the beneficiary could have been transported by other means. Exh.3 at 2.

Thereafter, Appellant requested a reconsideration from the Qualified Independent Contractor, C2C Solutions, Inc. (QIC), arguing it was medically necessary for the beneficiary to be transported by ambulance from the hospital to the nursing facility.

Exh.4 at 1. Appellant also submitted a statement from the beneficiary’s treating physician stating ambulance transport was medically necessary due to the beneficiary’s hip fracture. Exh.4 at 7. Citing section 1861(s)(7) of the Social Security Act (the Act), 2 sections 410.40 and 410.41 of Title 42 of the Code of Federal Regulations (CFR),3 and 1 Provider initially filed the claim for reimbursement with the MAC and appended a “GY” modifier, indicating the services were statutorily excluded. Exh.1 at 2.

2 Defining “medical and other health services” to include “ambulance service where the use of other methods of transportation is contraindicated by the individual’s condition, but only to the extent provided in the regulations.” Social Security Act § 1861(s)(7).

3 Setting forth the requirements for Medicare coverage of ambulance services. Section 410.40(d) of Title 42 of the CFR provides: “Medicare covers ambulance services, including fixed wing and rotary wing ambulance services, only if they are furnished to a AQ-CMS OMR Referral Form 2.1 Page 1 of 6 10/8/2010 chapter 10 of the Medicare Benefit Policy Manual (MBPM) (CMS Pub. 100-02),4 the QIC issued an unfavorable reconsideration, stating the beneficiary could “have been transported by other means, such as a stretcher van, without potential harm to the patient’s health.” Exh.5 at 4.

Accordingly, Appellant sought review of the denial by the Administrative Law Judge (ALJ), arguing the beneficiary was following his doctor’s orders when being transported from the hospital to the nursing facility. Exh.6 at 2. After a telephonic hearing, the ALJ issued an unfavorable decision. ALJ at 1. The ALJ affirmed the QIC’s denial, finding the “beneficiary could have been safely transported to the nursing home by stretcher van” and “the ambulance transport was not medically reasonable and necessary pursuant to Section 1862(a)(1) of the Social Security Act and 42 C.F.R. § 411.15(k).” ALJ at 5-6. Nevertheless, the ALJ waived Appellant’s financial liability pursuant to section 1879 of the Act, stating: “However, the record does not contain any indication that the beneficiary received notice that the services would not be covered by Medicare.

Therefore, the beneficiary is not responsible for payment pursuant to section 1879 of the Social Security Act.” ALJ at 6.

The ALJ erred as a matter of law in finding the limitation on liability provision of section 1879 of the Act limited the beneficiary’s liability in this case. Specifically, the limitation of liability provision of section 1879 of the Act only applies if the claim for Medicare reimbursement is denied after the items or services are determined to be not reasonable and necessary pursuant to section 1862(a)(1)(A) of the Act5 if the items or services are not otherwise statutorily excluded. Social Security Act § 1879; see also Requirements for Determining Limitation on Liability of a Medicare Beneficiary, Provider, Practitioner, or Other Supplier for Certain Services and Items for Which Medicare Payment is Denied, § I Health Care Financing Administration (HCFA) Ruling 95-1, Dec. 1995, available at beneficiary whose medical condition is such that other means of transportation are contraindicated.” Section 410.41 of Title 42 of the CFR articulates the requirements for ambulance suppliers.

4 Chapter 10 of the MBPM provides additional explanation for Medicare coverage of ambulance services. (CMS Pub. 100-02).

5

Section 1862(a)(1)(A) of the Act states:

Notwithstanding any other provision of this title, no payment may be made under part A or part B for any expenses incurred for items or services... which, except for items and services described in a succeeding subparagraph, are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.





Page 2 of 6 www.cms.gov/rulings/cmsr/itemdetail.asp?itemid=CMS026534 (hereinafter CMS Ruling 95-1); Ch.30, § 20.2 of the Medicare Claims Processing Manual (MCPM) (CMS Pub.

100-04). Additionally, section 410.42(d) of Title 42 of the CFR bars Medicare coverage of ambulance transportation services if other methods of transportation are not contraindicated. Therefore, in finding section 1879 of the Act applicable in this case, where the ambulance transportation services were denied because other methods of transportation were not contraindicated, the ALJ erred as a matter of law.

Applicable Law, Regulation, and Medicare Policy:

A party dissatisfied with a reconsideration may request a hearing before an ALJ. 42 C.F.R. § 405.1000(a). The ALJ conducts a de novo review and issues a decision based on the hearing record. 42 C.F.R. § 405.1000(d). An ALJ’s “decision must be based on evidence offered at the hearing or otherwise admitted into the record.” 42 C.F.R. § 405.1046(a). An ALJ is bound by statutes, regulations, National Coverage Determinations (NCD), and CMS rulings. 42 C.F.R. §§ 405.1060(a)(4), 405.1063.

However, an ALJ is not bound by contractor Local Coverage Determinations (LCD), Local Medicare Review Policies (LMRP), or CMS program guidance such as program memoranda and manual instructions, “but will give substantial deference to these policies if they are applicable to a particular case.” 42 C.F.R. § 405.1062(a). An ALJ must explain its reasoning for deviating from CMS’s manual instructions in a particular case. 42 C.F.R. § 405.1062(b).

Section 1879 of the Act limits the liability of providers and beneficiaries who did not know and could not have been reasonably expected to know an item or service would not be covered by Medicare. Social Security Act § 1879(a); CMS Ruling 95-1. In cases where section 1879 of the Act applies, Medicare assumes financial responsibility for the item or service. Social Security Act § 1879(a). However, the limitation on liability provision of section 1879 of the Act generally applies only to claims denied as not reasonable or necessary if the claims are not otherwise statutorily excluded. Social Security Act § 1879(a)(1) (applying the limitation on liability to denials pursuant to section 1862(a)(1)6 or (9)7 [of the Act] or by reason of a coverage denial described in [section 1879(g)8 of the Act]); § II.A, CMS Ruling 95-1 (“The claims payment and beneficiary indemnification provisions (sections 1879(a) and (b)) of the limitation on liability provision [of the Act] are applicable only to claims for beneficiary items or 6 Section 1862(a)(1) of the Act prohibits payment for items or services “not reasonable and necessary.” 7 Section 1862(a)(9) of the Act prohibits payment “where such expenses are for custodial care (except, in the case of hospice care, as is otherwise permitted...).” 8 Section 1879(g) of the Act addresses the applicability of the limitation on liability in home health services and hospice care claims.

Page 3 of 6 services submitted by providers, or by practitioners and other suppliers that have taken assignment, and only to claims for services, not otherwise statutorily excluded, that are denied on the basis of section[s] 1862(a)(1), 1862(a)(9), 1879(e), or 1879(g) of the Act.”); Ch.30, § 20.2 of MCPM (CMS Pub. 100-04) (stating the limitation on liability only applies to claims for services not otherwise statutorily excluded that are denied as not reasonable or necessary). In the event the provider or beneficiary knew or could have been reasonably expected to know the claim would not be covered by Medicare based on a statutory exclusion, the limitation on liability provision of section 1879 of the Act does not apply. See Social Security Act § 1879(c); Ch.30, § 20 of MCPM (CMS Pub.

100-04) (stating when the beneficiary knew or could have know the services were not covered by Medicare, the beneficiary is financially responsible).

When an item or service is statutorily excluded or not a covered benefit, no determination of medical necessity is required. § II.A, CMS Ruling 95-1 (“A coverage determination for an item or service must be made before there can be a decision with respect to whether Medicare payment may be made under the limitation on liability provision.”); Ch.30, § 20.2 of MCPM (CMS Pub. 100-04). Accordingly, any claim denied on statutory grounds cannot also be denied based on a lack of reasonableness and necessity in order to trigger the limitation on liability provisions of section 1879 of the Act. See Social Security Act § 1879(a)(1); § III, CMS Ruling 95-1 (stating section 1879 of the Act “explicitly restricts the application of the limitation on liability provision to cases that are decided one of the statutory grounds” expressly articulated); Ch.30, §

20.2 of MCPM (CMS Pub. 100-04).

Section 1861(s)(7) of the Act establishes Medicare coverage of ambulance services “where the use of other methods of transportation is contraindicated by the individual’s condition, but only to the extent provided in the regulations.” Medicare Part B covers ambulance services if the services are not payable under Part A and if the services meet the medical necessity and origin and destination requirements of subsections (d) and (e) of section 410.40 of Title 42 of the CFR. 42 C.F.R. § 410.40(a)(1). Section 410.40(d) of Title 42 of the CFR articulates the medical necessity requirements for coverage for ambulance services, stating that ambulance services are covered “only if they are furnished to a beneficiary whose medical condition is such that other means of transportation are contraindicated.” Therefore, if ambulatory services are denied because other means of transportation were not contraindicated, the claim is denied on statutory grounds for failing to meet the requirements set forth in section 410.40 of Title 42 of the CFR. § III, CMS Ruling 95-1; see also Ch.30, § 20.2 of MCPM (CMS Pub.

100-04) (providing the example of a claim being denied on statutory grounds as an ambulance claim under Medicare Part B when the ambulance was not the only acceptable mode of transportation).

Specifically, CMS Ruling 95-1 provides the following example of when “Medicare payment under the limitation on liability provision cannot be made because the actual Medicare payment denial is based on a statutory provision other than section 1862(a)(1)” of the Act:

Page 4 of 6 Payment for ambulance services is denied because transportation by other means is not contraindicated or because regulatory criteria specified in 42 [C.F.R. §] 410.40, such as those relating to destination or nearest appropriate facility, are not met. In such circumstances, Medicare payment is denied on the basis of section 1861(s)(7) of the Act.

§ III, CMS Ruling 95-1; see also Ch.30, § 20.2.2 of MCPM (CMS Pub. 100-04).

Additionally, the MCPM recites another example of ambulatory services being denied based on a statutory provision other than section 1862(a)(1) of the Act originating from

section III of CMS Ruling 95-1:

For example, when a Part B claim is submitted for ambulance services, the first step in processing the claim is to determine whether the services meet the requirements of §1861(s)(7) of the Act (that is, to ascertain that other methods of transportation are contraindicated) and, therefore, may be covered services under the Medicare statute. If other methods of transportation are contraindicated (and all other regulatory criteria are met), only then must the Medicare contractor determine if the ambulance services are “reasonable and necessary” under §1862(a)(1). If other methods of transportation are not contraindicated, there is no reason for the Medicare contractor to make a medical necessity determination under §1862(a)(1) because the services have already been determined to be not otherwise covered under the Medicare statute.

Ch.30, § 20.2 of MCPM (CMS Pub. 100-04); see also § III, CMS Ruling 95-1. Section 1867(s)(7) of the Act states “[t]he term ‘medical and other health services’ means...

ambulance service where the use of other means of transportation is contraindicated by the individual’s condition, but only to the extent provided in [the] regulations.”

Discussion:

The ALJ erred as a matter of law in misapplying the limitation on liability provision of section 1879 of the Act and limiting the beneficiary’s liability in this case. This error of law is material to the outcome of the claim because it results in the financial responsibility for the beneficiary’s denied ambulance claim being shifted from the beneficiary to the Medicare Trust Fund.



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