Thursday, November 30, 2006

Q. Medicare recently refused to pay a claim we filed, saying the equipment was not medically necessary. Why are we held liable when we relied on the opinion of the treating physician?
A. Section 1879 of the Social Security Act includes a limitation of liability provision to protect providers who "did not know, and could not reasonably have been expected to know, that payment would not be made" for items or services that have been furnished to a beneficiary. While this law appears to support the notion that a supplier should rely on the professional judgment of the treating physician, CMS has provided little guidance to indicate when it would apply. This issue arose during a Special Open Door Forum on June 26, 2003. A CMS representative stated that, generally speaking, relying on a CMN or physician order would be enough to substantiate the non-liability of a supplier. Additionally, Dr. Mark McClellan, former CMS administrator, has emphasized the role of the physician in determining medical necessity. On March 8, 2004, Dr. McClellan stated that "The clinical criteria for deciding when a manual or power wheelchair is medically necessary and appropriate for a beneficiary has been and will continue to be a matter of clinical judgment by a physician." Despite these public statements, CMS has consistently not applied the waiver of liability provision in these circumstances. Courts may soon get their say on this matter. Claims raising the issue are in various federal appellate courts. Perhaps an independent judiciary will hold that the agency's unwillingness to apply the waiver of liability is contrary to the intent of the statute. If so, a supplier could finally collect payment for claims where he "did not know, and could not reasonably have been expected to know," that the submitted claims were not reasonable and necessary. hme
Valerie Eastwood is a healthcare attorney with Eastwood & Azia, PLLC. Reach her at 202-296-4100 or