
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 23, 2000]
[Document not affected by Public Laws enacted between
  January 23, 2000 and December 4, 2001]
[CITE: 42USC1395pp]

 
                 TITLE 42--THE PUBLIC HEALTH AND WELFARE
 
                       CHAPTER 7--SOCIAL SECURITY
 
        SUBCHAPTER XVIII--HEALTH INSURANCE FOR AGED AND DISABLED
 
                    Part D--Miscellaneous Provisions
 
Sec. 1395pp. Limitation on liability where claims are disallowed


(a) Conditions prerequisite to payment for items and services 
        notwithstanding determination of disallowance

    Where--
        (1) a determination is made that, by reason of section 
    1395y(a)(1) or (9) of this title or by reason of a coverage denial 
    described in subsection (g) of this section, payment may not be made 
    under part A or part B of this subchapter for any expenses incurred 
    for items or services furnished an individual by a provider of 
    services or by another person pursuant to an assignment under 
    section 1395u(b)(3)(B)(ii) of this title, and
        (2) both such individual and such provider of services or such 
    other person, as the case may be, did not know, and could not 
    reasonably have been expected to know, that payment would not be 
    made for such items or services under such part A or part B of this 
    subchapter,

then to the extent permitted by this subchapter, payment shall, 
notwithstanding such determination, be made for such items or services 
(and for such period of time as the Secretary finds will carry out the 
objectives of this subchapter), as though section 1395y(a)(1) and 
section 1395y(a)(9) of this title did not apply and as though the 
coverage denial described in subsection (g) of this section had not 
occurred. In each such case the Secretary shall notify both such 
individual and such provider of services or such other person, as the 
case may be, of the conditions under which payment for such items or 
services was made and in the case of comparable situations arising 
thereafter with respect to such individual or such provider or such 
other person, each shall, by reason of such notice (or similar notices 
provided before the enactment of this section), be deemed to have 
knowledge that payment cannot be made for such items or services or 
reasonably comparable items or services. Any provider or other person 
furnishing items or services for which payment may not be made by reason 
of section 1395y(a)(1) or (9) of this title or by reason of a coverage 
denial described in subsection (g) of this section shall be deemed to 
have knowledge that payment cannot be made for such items or services if 
the claim relating to such items or services involves a case, provider 
or other person furnishing services, procedure, or test, with respect to 
which such provider or other person has been notified by the Secretary 
(including notification by a utilization and quality control peer review 
organization) that a pattern of inappropriate utilization has occurred 
in the past, and such provider or other person has been allowed a 
reasonable time to correct such inappropriate utilization.

(b) Knowledge of person or provider that payment could not be made; 
        indemnification of individual

    In any case in which the provisions of paragraphs (1) and (2) of 
subsection (a) of this section are met, except that such provider or 
such other person, as the case may be, knew, or could be expected to 
know, that payment for such services or items could not be made under 
such part A or part B of this subchapter, then the Secretary shall, upon 
proper application filed within such time as may be prescribed in 
regulations, indemnify the individual (referred to in such paragraphs) 
for any payments received from such individual by such provider or such 
other person, as the case may be, for such items or services. Any 
payments made by the Secretary as indemnification shall be deemed to 
have been made to such provider or such other person, as the case may 
be, and shall be treated as overpayments, recoverable from such provider 
or such other person, as the case may be, under applicable provisions of 
law. In each such case the Secretary shall notify such individual of the 
conditions under which indemnification is made and in the case of 
comparable situations arising thereafter with respect to such 
individual, he shall, by reason of such notice (or similar notices 
provided before the enactment of this section), be deemed to have 
knowledge that payment cannot be made for such items or services. No 
item or service for which an individual is indemnified under this 
subsection shall be taken into account in applying any limitation on the 
amount of items and services for which payment may be made to or on 
behalf of the individual under this subchapter.

(c) Knowledge of both provider and individual to whom items or services 
        were furnished that payment could not be made

    No payments shall be made under this subchapter in any cases in 
which the provisions of paragraph (1) of subsection (a) of this section 
are met, but both the individual to whom the items or services were 
furnished and the provider of service or other person, as the case may 
be, who furnished the items or services knew, or could reasonably have 
been expected to know, that payment could not be made for items or 
services under part A or part B of this subchapter by reason of section 
1395y(a)(1) or (a)(9) of this title or by reason of a coverage denial 
described in subsection (g) of this section.

(d) Exercise of rights

    In any case arising under subsection (b) of this section (but 
without regard to whether payments have been made by the individual to 
the provider or other person) or subsection (c) of this section, the 
provider or other person shall have the same rights that an individual 
has under sections 1395ff(b) and 1395u(b)(3)(C) of this title (as may be 
applicable) when the amount of benefit or payments is in controversy, 
except that such rights may, under prescribed regulations, be exercised 
by such provider or other person only after the Secretary determines 
that the individual will not exercise such rights under such sections.

(e) Payment where beneficiary not at fault

    Where payment for inpatient hospital services or extended care 
services may not be made under part A of this subchapter on behalf of an 
individual entitled to benefits under such part solely because of an 
unintentional, inadvertent, or erroneous action with respect to the 
transfer of such individual from a hospital or skilled nursing facility 
that meets the requirements of section 1395x(e) or (j) of this title by 
such a provider of services acting in good faith in accordance with the 
advice of a utilization review committee, quality control and peer 
review organization, or fiscal intermediary, or on the basis of a 
clearly erroneous administrative decision by a provider of services, the 
Secretary shall take such action with respect to the payment of such 
benefits as he determines may be necessary to correct the effects of 
such unintentional, inadvertent, or erroneous action.

(f) Presumption with respect to coverage denial; rebuttal; requirements; 
        ``fiscal intermediary'' defined

    (1) A home health agency which meets the applicable requirements of 
paragraphs (3) and (4) shall be presumed to meet the requirement of 
subsection (a)(2) of this section.
    (2) The presumption of paragraph (1) with respect to specific 
services may be rebutted by actual or imputed knowledge of the facts 
described in subsection (a)(2) of this section, including any of the 
following:
        (A) Notice by the fiscal intermediary of the fact that payment 
    may not be made under this subchapter with respect to the services.
        (B) It is clear and obvious that the provider should have known 
    at the time the services were furnished that they were excluded from 
    coverage.

    (3) The requirements of this paragraph are as follows:
        (A) The agency complies with requirements of the Secretary under 
    this subchapter respecting timely submittal of bills for payment and 
    medical documentation.
        (B) The agency program has reasonable procedures to notify 
    promptly each patient (and the patient's physician) where it is 
    determined that a patient is being or will be furnished items or 
    services which are excluded from coverage under this subchapter.

    (4)(A) The requirement of this paragraph is that, on the basis of 
bills submitted by a home health agency during the previous quarter, the 
rate of denial of bills for the agency by reason of a coverage denial 
described in subsection (g) of this section does not exceed 2.5 percent, 
computed based on visits for home health services billed.
    (B) For purposes of determining the rate of denial of bills for a 
home health agency under subparagraph (A), a bill shall not be 
considered to be denied until the expiration of the 60-day period that 
begins on the date such bill is denied by the fiscal intermediary, or, 
with respect to such a denial for which the agency requests 
reconsideration, until the fiscal intermediary issues a decision denying 
payment for such bill.
    (5) In this subsection, the term ``fiscal intermediary'' means, with 
respect to a home health agency, an agency or organization with an 
agreement under section 1395h of this title with respect to the agency.
    (6) The Secretary shall monitor the proportion of denied bills 
submitted by home health agencies for which reconsideration is 
requested, and shall notify Congress if the proportion of denials 
reversed upon reconsideration increases significantly.

(g) Coverage denial defined

    The coverage denial described in this subsection is--
        (1) with respect to the provision of home health services to an 
    individual, a failure to meet the requirements of section 
    1395f(a)(2)(C) of this title or section 1395n(a)(2)(A) of this title 
    in that the individual--
            (A) is or was not confined to his home, or
            (B) does or did not need skilled nursing care on an 
        intermittent basis; and

        (2) with respect to the provision of hospice care to an 
    individual, a determination that the individual is not terminally 
    ill.

(h) Supplier responsibility for items furnished on assignment basis

    If a supplier of medical equipment and supplies (as defined in 
section 1395m(j)(5) of this title)--
        (1) furnishes an item or service to a beneficiary for which no 
    payment may be made by reason of section 1395m(j)(1) of this title;
        (2) furnishes an item or service to a beneficiary for which 
    payment is denied in advance under section 1395m(a)(15) of this 
    title; or
        (3) furnishes an item or service to a beneficiary for which no 
    payment may be made by reason of section 1395m(a)(17)(B) of this 
    title,

any expenses incurred for items and services furnished to an individual 
by such a supplier on an assignment-related basis shall be the 
responsibility of such supplier. The individual shall have no financial 
responsibility for such expenses and the supplier shall refund on a 
timely basis to the individual (and shall be liable to the individual 
for) any amounts collected from the individual for such items or 
services. The provisions of section 1395m(a)(18) of this title shall 
apply to refunds required under the previous sentence in the same manner 
as such provisions apply to refunds under such section.

(Aug. 14, 1935, ch. 531, title XVIII, Sec. 1879, as added Pub. L. 92-
603, title II, Sec. 213(a), Oct. 30, 1972, 86 Stat. 1384; amended Pub. 
L. 96-499, title IX, Sec. 956(a), Dec. 5, 1980, 94 Stat. 2648; Pub. L. 
97-248, title I, Secs. 145, 148(e), Sept. 3, 1982, 96 Stat. 393, 394; 
Pub. L. 99-509, title IX, Secs. 9305(g)(1), 9341(a)(3), Oct. 21, 1986, 
100 Stat. 1991, 2038; Pub. L. 100-203, title IV, Sec. 4096(b), Dec. 22, 
1987, 101 Stat. 1330-139; Pub. L. 101-239, title VI, Sec. 6214(a), (b), 
Dec. 19, 1989, 103 Stat. 2252; Pub. L. 103-432, title I, Sec. 133(b), 
Oct. 31, 1994, 108 Stat. 4421; Pub. L. 105-33, title IV, Sec. 4447, Aug. 
5, 1997, 111 Stat. 424.)

                       References in Text

    Parts A and B of this subchapter, referred to in text, are 
classified to sections 1395c et seq. and 1395j et seq., respectively, of 
this title.


                               Amendments

    1997--Subsec. (g). Pub. L. 105-33 substituted ``subsection is--'' 
for ``subsection is,'', redesignated remaining text as par. (1) and 
former pars. (1) and (2) as subpars. (A) and (B), respectively, of par. 
(1), realigned margins, substituted ``; and'' for period at end, and 
added par. (2).
    1994--Subsec. (h). Pub. L. 103-432 added subsec. (h).
    1989--Subsec. (f)(1). Pub. L. 101-239, Sec. 6214(a)(1), struck out 
``with respect to any coverage denial described in subsection (g) of 
this section'' before period at end.
    Subsec. (f)(4). Pub. L. 101-239, Sec. 6214(a)(2), designated 
existing provisions as subpar. (A) and added subpar. (B).
    Subsec. (f)(6). Pub. L. 101-239, Sec. 6214(b), added par. (6).
    1987--Subsec. (b). Pub. L. 100-203 struck out ``, subject to the 
deductible and coinsurance provisions of this subchapter,'' after 
``(referred to in such paragraphs)'' and inserted at end ``No item or 
service for which an individual is indemnified under this subsection 
shall be taken into account in applying any limitation on the amount of 
items and services for which payment may be made to or on behalf of the 
individual under this subchapter.''
    1986--Subsec. (a). Pub. L. 99-509, Sec. 9305(g)(1)(A)-(C), inserted 
in par. (1) ``or by reason of a coverage denial described in subsection 
(g) of this section'', and in concluding provisions inserted ``and as 
though the coverage denial described in subsection (g) of this section 
had not occurred'' and ``or by reason of a coverage denial described in 
subsection (g) of this section''.
    Subsec. (c). Pub. L. 99-509, Sec. 9305(g)(1)(D), inserted ``or by 
reason of a coverage denial described in subsection (g) of this 
section''.
    Subsec. (d). Pub. L. 99-509, Sec. 9341(a)(3), substituted ``sections 
1395ff(b) and 1395u(b)(3)(C) of this title (as may be applicable)'' for 
``section 1395ff(b) of this title (when the determination is under part 
A) or section 1395u(b)(3)(C) of this title (when the determination is 
under part B)''.
    Subsecs. (f), (g). Pub. L. 99-509, Sec. 9305(g)(1)(E), added 
subsecs. (f) and (g).
    1982--Subsec. (a). Pub. L. 97-248, Sec. 145, inserted provisions 
relating to imputing knowledge to provider or other person furnishing 
items or services for which payment may not be made that payment may not 
be made if the provider or other person has been notified that a pattern 
of inappropriate utilization has occurred in the past and there has been 
a reasonable time for correction of such utilization.
    Subsec. (e). Pub. L. 97-248, Sec. 148(e), substituted ``quality 
control and peer review organization'' for ``professional standards 
review organization''.
    1980--Subsec. (e). Pub. L. 96-499 added subsec. (e).


                    Effective Date of 1997 Amendment

    Amendment by Pub. L. 105-33 applicable to benefits provided on or 
after Aug. 5, 1997, except as otherwise provided, see section 4449 of 
Pub. L. 105-33, set out as a note under section 1395d of this title.


                    Effective Date of 1994 Amendment

    Amendment by Pub. L. 103-432 applicable to items or services 
furnished on or after Jan. 1, 1995, see section 133(c) of Pub. L. 103-
432, set out as a note under section 1395m of this title.


                    Effective Date of 1989 Amendment

    Section 6214(c) of Pub. L. 101-239 provided that: ``The amendments 
made by subsection (a) [amending this section] shall apply to 
determinations for quarters beginning on or after the date of the 
enactment of this Act [Dec. 19, 1989].''


                    Effective Date of 1987 Amendment

    Amendment by Pub. L. 100-203 applicable to services furnished on or 
after Jan. 1, 1988, see section 4096(d) of Pub. L. 100-203, set out as a 
note under section 1320c-3 of this title.


                    Effective Date of 1986 Amendment

    Section 9305(g)(3) of Pub. L. 99-509, as amended by Pub. L. 100-360, 
title IV, Sec. 426(c), July 1, 1988, 102 Stat. 814; Pub. L. 101-508, 
title IV, Sec. 4207(b)(3), formerly Sec. 4027(b)(3), Nov. 5, 1990, 104 
Stat. 1388-118, renumbered Pub. L. 103-432, title I, Sec. 160(d)(4), 
Oct. 31, 1994, 108 Stat. 4444, provided that: ``The amendments made by 
paragraph (1) [amending this section] shall apply to coverage denials 
occurring on or after July 1, 1987, and before December 31, 1995.''
    Amendment by section 9341(a)(3) of Pub. L. 99-509 applicable to 
items and services furnished on or after Jan. 1, 1987, see section 
9341(b) of Pub. L. 99-509, set out as a note under section 1395ff of 
this title.


                    Effective Date of 1982 Amendment

    Amendment by Pub. L. 97-248 effective with respect to contracts 
entered into or renewed on or after Sept. 3, 1982, see section 149 of 
Pub. L. 97-248, set out as an Effective Date note under section 1320c of 
this title.


                    Effective Date of 1980 Amendment

    Section 956(b) of Pub. L. 96-499 provided that: ``The amendment made 
by subsection (a) [amending this section] shall take effect on January 
1, 1981.''


                             Effective Date

    Section 213(b) of Pub. L. 92-603 provided that: ``The amendments 
made by this section [enacting this section] shall be effective with 
respect to claims under part A or part B of title XVIII of the Social 
Security Act [part A or part B of this subchapter], filed with respect 
to items or services furnished after the date of the enactment of this 
Act [Oct. 30, 1972].''


           Reports to Congress on Denials of Bills for Payment

    Section 9305(g)(2) of Pub. L. 99-509 directed Secretary of Health 
and Human Services to report to Congress annually in March of 1987 and 
1988 information on frequency and distribution (by type of provider) of 
denials of bills for payment under this subchapter for extended care 
services, home health services, and hospice care, by reason of section 
1395y(a)(1) or (9) of this title, and coverage denials described in 
subsec. (g) of this section, and such other information as appropriate 
to evaluate the appropriateness of any percentage standards established 
for the granting of favorable presumptions with respect to such denials.

                  Section Referred to in Other Sections

    This section is referred to in sections 1320c-3, 1395h, 1395ff of 
this title.
