Leveraging Limitation on Liability to Win Appeals

By Denise Wilson | October 28, 2019

Limitation on Liability is a very common phrase to appeal writers, specifically when dealing with government denials. It’s a crucial argument that is vital to a winning appeal argument. Have you ever stopped to think about what that phrase means? Have you ever dug deep into government regulations to fully really understand Limitation on Liability and how it should be used to support your winning argument?

Limitation on Liability comes from the Social Security Act § SEC 1879. [42 USC 1395pp], to be exact. http://www.ssa.gov/OP_Home/ssact/title18/1879.htm. Remember, all things Medicare and Medicaid are born out of the Social Security Act, are published through the Code of Federal Regulations, and are then interpreted by The Centers for Medicare and Medicaid Services (CMS).

The Limitation on Liability of Beneficiary Where Medicare Claims Are Disallowed is the full title of the section of the Social Security Act that describes the Limitation on Liability. The phrase “provider of services … 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,” is the essence of the Limitation on Liability as it relates to denial of payment for services under Medicare.

In plain English, Medicare assumes that a provider or supplier of healthcare services (a physician, hospital, clinic, or DME (durable medical equipment) supplier, for example) knows when it’s appropriate for Medicare to pay for the services rendered. The provider should know when payment is appropriate for medically necessary services provided to a patient based on that provider or supplier’s “experience, actual notice, or constructive notice.” The Code of Federal Regulations, at 42 CFR § 411.406, provides these example of what is meant by experience, actual notice or constructive notice:

(1) [The provider’s or supplier’s] receipt of CMS notices including manual issuances, bulletins, or other written guides or directives from intermediaries, carriers, or QIOs.

(2) Federal Register publications.

(3) [The provider’s or supplier’s] knowledge of what are considered acceptable standards of practice by the local medical community.

https://www.govinfo.gov/content/pkg/CFR-2011-title42-vol2/xml/CFR-2011-title42-vol2-sec411-406.xml

In short, CMS provides all kinds of information on what services are covered and what services are not covered. For example, in most cases, Medicare doesn’t pay for custodial care. Custodial care is defined as “Nonskilled, personal care, such as help with activities of daily living like bathing, dressing, eating, getting in or out of a bed or chair, moving around, and using the bathroom. It may also include care that most people do themselves, like using eye drops.” https://www.cms.gov/apps/glossary/

With all the information CMS provides about proper payment, a provider should know better than to bill for and expect payment for services that are not covered. However, CMS also considers “acceptable standards of practice by the local medical community,” as stated in number three above. Now, if your surgeons are amputating fingers for paper cuts, a provider should not expect to be paid for that because it doesn’t represent an acceptable standard of practice. However, if the provider or supplier has provided care to a patient based on the acceptable standards of care in the medical community and the documentation in the medical record supports that the provider or supplier has a solid argument for payment. The real crux of any medical necessity appeal argument is whether services provided were reasonable and medically necessary for the patient and met the standard of care in the medical community.