Inpatient Facility Coding & Compliance Alert

Question: What are “Limitation On Liability” and the “Refund Requirements”? Is there some difference in the significance of the beneficiary’s signature on an Advance Beneficiary Notice (ABN) depending on these factors?

Mississippi Subscriber

Answer. Limitation On Liability (LOL) and the Refund Requirements (RR) are financial liability provisions of the Medicare law. LOL provides for program payment for denied claims and for beneficiary indemnification in certain circumstances. RR does not provide for either of these, but does provide that physicians and suppliers, if held liable under RR provisions, must make refunds to beneficiaries of any amounts collected. 

LOL applies to all Part A services and all assigned claims for Part B services. RR is for certain assigned and unassigned claims for medical equipment and supplies, as well as for unassigned claims for physicians’ services.

As for your question, in order for a beneficiary to be held liable under RR, that is, under §§1834(a) (18), 1834(j) (4), 1842(l), or 1879(h) of the Act, the beneficiary must sign the ABN as a first step. Next, as per the RR prerequisite, make sure that the beneficiary is notified, and the beneficiary agrees to pay for the service in order for him to be held liable. Remember that an unsigned ABN does not allow you to shift liability to a beneficiary when RR applies. 

However, when LOL applies, the beneficiary’s signature is not an absolute requirement. The beneficiary need only be properly notified; there is no explicit requirement for an agreement to pay.