CMS: Demand Letters to Medicare Providers & Suppliers Associated with an Item or Service Provided to Incarcerated Beneficiaries

The “no legal obligation to pay” exclusion (see section 1862(a)(2) of the Social Security Act and 42 CFR 411.4) generally prohibits Medicare payment under Part A or Part B for individuals who are in custody of penal authorities. Individuals who are in custody include, but are not limited to, individuals who are under arrest, incarcerated, imprisoned, escaped from confinement, under supervised release, on medical furlough, required to reside in mental health facilities, required to reside in halfway houses, required to live under home detention or confined completely or partially in any way under a penal statute or rule.

Before Medicare can make payment for any prisoners’ (or for any patients under a government agency’s custody) medical services, all three of the conditions set out below must be met first:

  1. State or local law must require the prisoner (or the patient under the government agency’s custody) to repay the cost of medical services they receive while in custody. This must apply to all individuals and not be limited to those individuals with Medicare.
  2. The state or local government entity must enforce the requirement to pay by billing all prisoners (or all patients under the government agency’s custody) whether covered by Medicare or any other health insurance.
  3. The state or local entity must have documentary evidence to support their billing and collection efforts.

Medicare has identified previously paid claims that contain Dates of Service (DOS) that partially or fully overlap a period when the beneficiary was in custody of penal authorities based on information from the Social Security Administration. A large number of overpayments have been identified and demand letters released with appeals instructions. At this time, CMS asks that providers do not file appeal requests. This issue will be resolved more quickly and efficiently if providers follow the instructions below.

There may be instances where providers believe that the beneficiary was not incarcerated when the service was provided. Providers should research their own internal records and contact the beneficiary to gather as much information as possible.

Information to be Submitted by the Provider

If providers believe that the beneficiary was not incarcerated on the date(s) of service in question and SSA’s records are currently accurate, they can contact their local CMS Regional Office fax. At a minimum, providers should be prepared to submit the following information to the appropriate CMS Regional Office:

  • Fax Subject: Incarcerated Beneficiary Claim Issue
  • Provider Name and Contact information:
  • Beneficiary Name:
  • Health Insurance Claim Number:
  • Dates of Service:
  • Claim Number (ICN/DCN):
  • Reason why dates are incorrect:

Providers in Florida are assigned to CMS’ Region IV office located in Atlanta. The fax number is (443) 380-5949.

Click here to view this CMS announcement.

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