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CurrentBlue Cross Blue Shield - NebraskaPolicy N/A

General exclusions from coverage (Chapter 16) — Coverage Criteria (Part 1)

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Describes categories of items and services excluded from Medicare payment and explains specific exclusion rules and examples; covers general exclusions and selected sections (§10, §30, §40, §50 and subsections).

Policy Summary

PayerBlue Cross Blue Shield - Nebraska

PolicyGeneral exclusions from coverage (Chapter 16) — Coverage Criteria (Part 1)

Policy CodePolicy N/A

Change TypeNo material changes

Effective DateJan 26, 2026

Next Review DateN/A

Key ActionWhen billing for services to incarcerated individuals, indicate applicable jurisdiction conditions and use condition code '63' on the claim or QJ modifier on line items to avoid denial.

SourceLink

POLICY UPDATE CHANGES

No material clinical or coverage changes in this revision.

16chapter number referenced

>15named exclusion sections

63/QJinmate claim codes

6 monthsVA SNF authorization

12-monthantigen supply limit

General Exclusions and Specific Exclusion Categories

inv-01: General exclusions

Payment is prohibited when any of the following exclusions apply:

General Exclusion List: Not reasonable and necessary; No legal obligation to pay; Paid for by a governmental entity; Not provided within United States; Resulting from war; Personal comfort items; Routine services and appliances; Custodial care; Cosmetic surgery; Charges by immediate relatives or household members; Dental services; Paid or expected to be paid under workers' compensation/other liability plans; Non-physician services to a hospital inpatient not provided directly or arranged by the hospital; Services related to and required as a result of services not covered under Medicare; Excluded foot care and supportive devices for feet; Excluded investigational devices.

If any single exclusion applies, Medicare payment is prohibited.

inv-02: Services to individuals in custody of a penal authority

Default presumption and rebuttal conditions for inmates:

Rebuttable presumption for inmates: An incarcerated individual is presumed to have no legal obligation to pay for items/services received while in custody; Medicare payment is prohibited unless the State or local government demonstrates all three conditions: (1) law requires the individual to pay the cost of items/services; (2) the penal authority bills all such individuals regardless of Medicare or other insurance status; and (3) the penal authority pursues collection with the same vigor as other debts.

Policy Summary

PayerBlue Cross Blue Shield - Nebraska

PolicyGeneral exclusions from coverage (Chapter 16) — Coverage Criteria (Part 1)

Policy CodePolicy N/A

Change TypeNo material changes

Effective DateJan 26, 2026

Next Review DateN/A

Key ActionWhen billing for services to incarcerated individuals, indicate applicable jurisdiction conditions and use condition code '63' on the claim or QJ modifier on line items to avoid denial.

SourceLink

On This Page

Providers/suppliers should retain documentation (regulations, directives, billing records) and A/B MAC may inspect representative cases to confirm enforcement; failure to use required claim condition codes/modifiers will result in denial.

inv-04: Warranty and device replacement rules

Payment considerations when replacements are provided under warranty:

Warranty rules: If equipment or a device is replaced free of charge by the warrantor, no program payment may be made since there was no charge. If the warrantor supplied replaced equipment but a pro rata charge was imposed, program payment may be made for that partial charge. If an acceptable warranty replacement was refused and another device purchased, payment may be limited or prohibited under prudent buyer rules. Coverage may be allowed when substituted replacement from another manufacturer was necessary because the warranty replacement was unacceptable.

Prudent buyer and hospital reimbursement rules affect payment; cost-reimbursed hospitals subject to prudent buyer rules.

inv-03: Items/services authorized/paid by the VA or Federal agency

Medicare payment exclusion when a Federal agency authorizes payment:

Federal authorization exclusion: If a Federal agency (for example, the VA) issues an authorization under which the Federal government agrees to pay for services furnished by a non-Federal provider, Medicare will not pay for those authorized services. VA-authorized services are generally paid by the VA; Medicare may credit VA copayments toward Medicare deductible/coinsurance per applicable rules.

If VA authorization was not given to the party rendering services, Medicare payment may still be possible; VA may authorize up to six months of non-VA SNF care in specified circumstances.

inv-05: Medicare secondary payment when VA involvement

Determination of Medicare payment and deductible/benefit crediting where VA authorizes or pays (in whole or part):

Medicare secondary payment when VA authorizes fewer days or pays partially: When the VA authorizes fewer days than the total covered days or pays less than Medicare allowable amounts, Medicare secondary payment is the lower of: (1) gross Medicare payable for all covered days minus amount paid by VA for Medicare-covered services; or (2) gross Medicare payable minus any applicable Medicare deductible/coinsurance. VA payments may credit the beneficiary's Medicare deductibles.

Example computations and crediting rules provided in policy guidance.

Utilization days adjustment: When VA authorizes fewer days, Medicare utilization days are prorated by dividing actual Medicare payment by the amount Medicare would have paid as primary, multiplying by covered days, and rounding partial days (<0.5 dropped, >=0.5 rounded up). If VA payment is less than or equal to deductible+coinsurance, utilization is not reduced.partial day rounding rule: <0.5 not charged, >=0.5 charged

See examples for calculations.

Situations where Medicare may pay despite VA involvement: Medicare may pay when VA did not authorize payment to the party rendering services, when VA makes no payment for particular services, or when beneficiary files a VA claim and VA payment is less than Medicare allowable, allowing Medicare secondary benefits under described rules.

Beneficiary must submit VA explanation of benefits or VA Form 10-9014 where applicable.

VA fee-basis acceptance consequences: If a physician accepts VA fee-basis payment, VA payment is considered payment in full and Medicare generally will not pay; if physician does not accept fee-basis and beneficiary files for VA payment and VA pays less than Medicare allowable, Medicare may pay secondary benefits (lower of allowable minus deductible/coinsurance or allowable minus VA payment). VA payments may credit Part B deductible.

Documentation requirements and examples described in policy.

inv-06: Governmental Entity Exclusion

Excluded when payments or services fall under governmental entity exclusions unless specified exceptions apply

Governmental entity exclusion: Medicare payment may not be made for items or services paid for directly or indirectly by a Federal, State, or local governmental entity, subject to statutory exceptions.

Exceptions include employee health plans, services under titles of the Social Security Act (e.g., Medicaid/Title XIX), and rural health clinic services.

Exceptions permitting payment by CMS: Payment may be made for items/services furnished under governmental employee health plans; services under Social Security Act titles like Title XIX (Medicaid); and rural health clinic services. Participating State or local government hospitals that serve the general community may receive payment even if they furnish services free of charge.

See subsequent blocks for government hospital exceptions and State veterans homes.

inv-07: Government Hospital Payment Exception

Payment allowed for certain government hospitals serving the general community

State or local government hospitals serving general community: Medicare may pay for items and services furnished in or by a participating State or local government hospital (including psychiatric or tuberculosis hospitals) that serve the general community, even if services are furnished without charge. Institutions serving only a special population (e.g., prison hospitals) are excluded unless state law permits voluntary commitment making them general community facilities.

Payment depends on the facility's role in serving the general community and applicable state law.

inv-08: State Veterans Homes

State veterans homes

State veterans homes payment conditions: If a participating State veterans home charges residents according to ability to pay or seeks payment from sources other than Medicare, Medicare benefits are payable. If the institution admits and treats veterans without charge due to veteran status or service-connection, Medicare payment is precluded. Per diem VA payments to State veterans homes may be credited toward deductible/coinsurance; excess VA payments reduce Medicare payment.

Medicare payment adjusted to reflect per diem VA payments when applicable.

inv-09: Special Population Rules

Individuals in custody and health department clinics

Individuals in custody of a penal authority generally are public charges with no legal obligation to pay for medical care; Medicare payment is generally prohibited except in exceptional circumstances established under rebuttal criteria.

See rebuttal documentation requirements and claim coding guidance.

Health department outpatient clinics: Services rendered free of charge by State and local health department outpatient clinics are not covered unless rendered due to indigence or to control infectious disease, in which case payment may be made.

Community health clinics serving the poor or for infectious disease control are exceptions.

inv-10: TRICARE/CHAMPVA Coordination

TRICARE and CHAMPVA coordination

Medicare primary for TRICARE/CHAMPVA beneficiaries: When beneficiaries have both Medicare and TRICARE/CHAMPVA, Medicare is the primary payer and TRICARE/CHAMPVA is secondary, reducing its liability by amounts payable by Medicare and supplementing Medicare deductible/coinsurance amounts.

Dependents of active duty members and entitlement effects are governed by specific rules; duplicate payments are subject to recovery.

inv-11: Active Duty Uniformed Services

Active duty members

Active duty civilian care: Services paid for or expected to be paid by the Uniformed Services are not reimbursable by Medicare; prior approval is generally required for civilian care paid by the Uniformed Services except for emergency services.

Claims for such services will be excluded from Medicare payment when Uniformed Services payment applies.

inv-12: Foreign Services Exclusion

Services furnished outside the United States

General outside US exclusion: Items and services furnished outside the United States are excluded from Medicare except limited inpatient emergency exceptions (e.g., emergency occurring while beneficiary was physically present in U.S. or certain Canadian travel situations), physician and ambulance services related to covered foreign hospitalization, and services on ships within specified port time windows.

'United States' includes the 50 States, DC, Puerto Rico, Virgin Islands, Guam, Northern Mariana Islands, American Samoa, and certain territorial waters for ship services.

inv-13: War-related Exclusion

War-related services

War or act of war exclusion: Items and services required as a result of war, or an act of war occurring after the patient's current entitlement date, are not covered by Medicare.

This exclusion applies regardless of other coverage considerations.

inv-14: Personal Comfort and Routine Services

Personal comfort and routine services exclusions

Personal comfort items excluded: Items that do not contribute meaningfully to treatment or functioning (e.g., radio, TV, telephone, air conditioner, beauty/barber services) are excluded; a provider may charge the patient if the patient requested the item and was informed of the charge. Basic personal hygiene services routinely provided without charge by certain institutions may be reimbursable as Part A costs; more elaborate services are excluded.

Providers must inform patients of charges when applicable.

Routine services and appliances excluded: Routine physical checkups; eyeglasses/contact lenses and exams for prescribing/fitting/changing them; eye refractions; hearing aids and exams for hearing aids; and immunizations are excluded except for specified screening and preventive services listed in regulation (e.g., screening mammography, colorectal screening, initial preventive physical exam, annual wellness visit).

Refractions and refractive procedures are excluded regardless of performer; exceptions apply for eye disease, post-surgical prosthetic lenses, and statutory preventive services.

inv-15: Routine Services Exclusion

Excluded unless an exception applies

Routine service exclusion conditions: Routine physical checkups; eyeglasses, contact lenses and exams to prescribe/fit/change them; eye refractions; hearing aids and exams for hearing aids; and immunizations are excluded unless an enumerated exception applies (e.g., disease treatment, post-surgical needs, or statutory preventive services).

See regulatory list of preventive exceptions in policy.

inv-16: Immunizations

Vaccinations are excluded except when

Immunization exceptions: Immunizations are excluded except when they are (1) directly related to treatment of an injury or direct exposure (e.g., antirabies, tetanus after exposure) or (2) specifically covered by statute as described in Medicare Benefit Policy guidance.

Documentation must show treatment or exposure or statutory coverage to support payment.

inv-17: Antigens

Payment may be made when ALL conditions are met

Physician‑prepared antigen payment criteria: Payment may be made for antigens prepared for a patient only if: (1) the antigens are prepared by a physician (MD/DO); and (2) that physician examined the patient and determined a treatment plan and dosage regimen. A reasonable supply is limited to not more than a 12‑month supply prepared for the patient at any one time.12-month supply

Documentation must support physician preparation and treatment plan.

inv-18: Hearing aids and auditory implants

Coverage stance for hearing devices

Hearing device coverage logic: Hearing aids and examinations for prescribing/fitting/changing hearing aids are excluded from Medicare. Certain implantable auditory prosthetic devices (e.g., cochlear implants, auditory brainstem implants, osseointegrated implants) that replace the function of the middle ear, cochlea, or auditory nerve may be payable when hearing aids are medically inappropriate or cannot be utilized.

Contractors deny payment for items/services associated with hearing aids; prosthetic implantable devices follow prosthetic device coverage rules.

inv-19: Custodial Care

Excluded services when ALL apply

Custodial care exclusion: Custodial care—care that assists in activities of daily living and does not require continuing medical or paramedical attention—is excluded. Determination is based on level of care and medical supervision required, not diagnosis or rehabilitation potential. Some Part B services may still be covered if reasonable and necessary.

Institutional care below SNF level is custodial; hospice custodial rules also apply per guidance.

inv-20: Cosmetic Surgery

Cosmetic procedures are excluded except when

Cosmetic surgery exceptions: Cosmetic surgery aimed at improving appearance is excluded unless required for prompt repair of accidental injury or to improve function of a malformed body member; therapeutic procedures (e.g., repair after severe burns) that also have cosmetic effect may be covered.

Medical necessity to repair function or urgent repair after accident are required for coverage.

inv-21: Charges by Immediate Relatives or Household Members

Excluded when provider/owner has excluded relationship

Relative/household member charge exclusion: Expenses charged by immediate relatives of the beneficiary or members of the beneficiary's household, and items/services furnished by providers to immediate relatives of owners, are excluded. The policy defines immediate relatives and household members and applies the exclusion to providers, physicians, and nonphysician suppliers with excluded relationships, with limited corporate exceptions.

Relationships include spouse, parents, children, siblings, in‑laws, grandparents, grandchildren, and certain step relationships.

inv-22: Dental Services Exclusion

Dental procedures and supporting structures are excluded except narrow exceptions

Dental exclusion logic: Items and services for care, treatment, filling, removal, or replacement of teeth or structures directly supporting the teeth (periodontium) are excluded. Exceptions exist for certain services of a dentist that are covered, for extractions to prepare for radiation therapy, and when a dental procedure is an integral part of a covered non‑dental procedure. Coverage of associated anesthesia or x‑rays depends on whether the primary dental procedure is covered.

When excluded service is primary procedure, related services are generally excluded except rare exceptions.

inv-23: Liability/Workers' Compensation

Noncoverage when liable third-party payment exists

Third-party liability exclusion: Medicare will not pay for items and services for which payment has been made or can reasonably be expected to be made promptly under liability, automobile, no‑fault, or workers' compensation laws or plans. Medicare payments are subject to repayment if notice indicates availability of other payment.

See the Medicare Secondary Payer Manual for instructions on coordination and repayment.

inv-24: Nonphysician Services Not Provided Directly or Under Arrangement

Excluded except specified exceptions

Inpatient nonphysician service exclusion with exceptions: Nonphysician services provided to hospital or SNF inpatients that are not provided directly by the hospital/SNF or under arrangement are generally excluded. Exceptions include physicians' services, physician assistants, nurse practitioners and clinical nurse specialists, certified nurse‑midwives, qualified clinical psychologists, certified registered nurse anesthetists, and certain anesthetist services; additional specified exceptions for SNF Part A inpatients also apply.

A/B MAC may pay Part B bills for these practitioner services if medically necessary and exceptions criteria are met.

inv-25: Services reimbursable under other liability plans

Not covered when payment has been or can reasonably be expected to be made by another liability/auto/no-fault/workers' compensation plan.

Primary rule: The program may not pay for items and services for which payment has been made or can reasonably be expected to be made promptly under a liability, automobile, no‑fault, or workers' compensation law or plan. Program payments are subject to repayment if notice indicates availability of other coverage.

Coordination instructions are provided in the MSP manual.

inv-26: Inpatient non-hospital/SNF-arranged services — exclusion with listed exceptions

Inpatient non-hospital/SNF-arranged services — exclusion with listed exceptions

General exclusion: Nonphysician services to hospital or SNF inpatients not provided directly by the hospital/SNF or under arrangement are generally excluded from coverage.

Exceptions include: physicians' services for hospital inpatients; physician assistant services; nurse practitioners and clinical nurse specialists; certified nurse‑midwives; qualified clinical psychologists; certified registered nurse anesthetists; certain anesthetist services from employed anesthetists (historical/date‑limited); and additional SNF Part A exceptions such as home dialysis supplies, EPO, hospice, radioisotope services, some customized prosthetic devices, some chemotherapy services, and specified hospital‑only services (cardiac cath, CT, MRI, ambulatory OR surgery, radiation therapy, emergency services, and related ambulance).

Specific coding guidance found in Medicare Claims Processing Manual.

inv-27: Services related to non-covered procedures

Services related to non-covered procedures

Related services not covered: Services 'related to' non-covered services (for example, cosmetic surgery, non‑covered transplants or implants), including follow‑up care and complications requiring treatment during the same inpatient stay in which the non‑covered service was performed, are not covered by Medicare.

Not related / subsequent services potentially covered: Services not related to the non‑covered service are covered. After discharge, medical services required to treat a condition or complication arising from prior non‑covered services may be covered if reasonable and necessary in all other respects, except for services that would have been incorporated into a global fee (e.g., routine postoperative visits expected as part of cosmetic surgery).

Examples include reversal of intestinal bypass or treatment of infections from non‑covered transplant after discharge.

Items and services listed in the general exclusion list are expressly excluded from Medicare payment when the stated conditions apply. Key exclusion categories include items or services that are not reasonable and necessary, those for which there is no legal obligation to pay, items paid for by a governmental entity, services not provided within the United States, war-related services, personal comfort items, routine services and appliances, custodial care, cosmetic surgery, charges by immediate relatives or household members, dental services, services paid or expected to be paid under workers’ compensation or other liability plans, nonphysician inpatient services not provided directly or under arrangement by the hospital/SNF, services related to non‑covered procedures performed during the same inpatient stay, excluded foot care/supportive foot devices, and excluded investigational devices. If any single exclusion applies, Medicare payment is prohibited.

Medicare payment may not be made for items or services paid for directly or indirectly by a Federal, State, or local governmental entity. There are statutory exceptions: payment may still be made for items or services furnished under a governmental employee health benefits or insurance plan, for services furnished under a title of the Social Security Act (for example, Title XIX/Medicaid), and for rural health clinic services. Absent an applicable exception, governmental payment or provision of the service generally precludes Medicare reimbursement.

Excluded categories include items or services paid for by governmental entities, services furnished outside the United States (with narrow inpatient emergency and related physician/ambulance exceptions), personal comfort items that do not meaningfully contribute to treatment, and routine services and appliances such as eye refractions, routine eyeglasses/contact lens services, hearing aids and exams for hearing aids, routine physical checkups, and immunizations when not otherwise covered by statute or regulation. Where exceptions apply (for example emergency inpatient services under specific circumstances), limited payment may be allowed.

Routine physical checkups; eyeglasses, contact lenses, and eye examinations for prescribing, fitting, or changing lenses; eye refractions; hearing aids and examinations to prescribe or fit hearing aids; and immunizations are excluded from Medicare coverage unless a specific statutory or regulatory exception applies (for example certain preventive screening services listed at 42 CFR 411.15(a)(1)). Claims for these routine services will be denied when the exclusion applies.

Custodial care—defined as personal care that assists with activities of daily living (walking, bathing, dressing, feeding, toileting, preparation of special diets, or supervision of usually self‑administered medications) and that does not require the continuing attention of trained medical or paramedical personnel—is excluded from Medicare coverage. Determination depends on the level of care and medical supervision required, not solely on diagnosis or rehabilitation potential.

Items and services in connection with the care, treatment, filling, removal, or replacement of teeth, and structures directly supporting the teeth, are excluded from Medicare coverage. Limited exceptions apply (for example, extraction required to prepare for radiation therapy for neoplastic disease or certain dentist services described in the Benefit Policy Manual); when the excluded dental service is the primary procedure, it is generally not covered.

Nonphysician services furnished to hospital or SNF inpatients that are not provided directly by the hospital/SNF or under arrangement with the hospital/SNF are generally excluded from Medicare coverage. Enumerated exceptions where Part B payment may be made include physicians’ services, physician assistant services, nurse practitioners and clinical nurse specialists, certified nurse‑midwife services, qualified clinical psychologist services, certified registered nurse anesthetists, and certain other specified services; for SNF Part A inpatients additional listed exceptions may apply when medically necessary.

Items and services that are not reasonable and necessary for diagnosis or treatment of illness or injury, or to improve the functioning of a malformed body member, are not covered. Coverage decisions should be based on whether the item or service is reasonable and necessary to treat the beneficiary’s condition; examples include denial of rentals or equipment not integral to treatment when not medically necessary.

Routine services — including routine physical exams, refractive procedures, eyeglasses/contact lenses and related refractions, hearing aids and associated exams, and immunizations — are explicitly excluded except where specific exceptions exist. Refractions and refractive procedures are excluded regardless of the practitioner performing them, though services for eye disease or post‑surgical prosthetic lenses may be covered under separate rules.

Services classified as routine, and items such as hearing aids, are not payable absent specific exceptions. Hearing aids are defined as amplifying devices that compensate for impaired hearing (including air and bone conduction devices) and are excluded; by contrast, certain implantable devices that replace cochlear, middle ear, or auditory nerve function (for example cochlear implants, auditory brainstem implants, and osseointegrated implants) are considered prosthetic devices and may be payable when hearing aids are medically inappropriate or cannot be used.

When a service is determined to be not reasonable and necessary (a non‑covered service), other services that are related to and required as a result of that non‑covered service and furnished during the same inpatient stay are also non‑covered. Services not related to the non‑covered procedure, or medically necessary services provided after discharge to treat complications, may be covered if reasonable and necessary.

Billing Codes, Modifiers and Claim Indicators

Billing condition codes/modifiers for incarcerated beneficiariesModifier

63	Condition code to indicate requirements met for payment for individuals in custody of a penal authority (claim-level)
QJ	Modifier to identify services at the line level for individuals in custody of a penal authority

Regulatory citationsmixed

42 CFR §411.4

Regulation prohibiting Medicare payment when no legal obligation to pay exists

Claims indicator codesmixed

Y trailer code (code 3)	Health Insurance Master File indicator when beneficiary has a VA fee basis card
code 36 (type code 3)	Indicator referenced for automatic notice from the Health Insurance Master File

inv-42: Partial day rounding rule — Partial day < 0.5 not charged; >= 0.5 charged as full day

RulePartial day rounding: a partial day < 0.5 is not charged; a partial day ≥ 0.5 is charged as a full day.

ContextApplied when VA authorizes fewer days than total covered days to prorate Medicare utilization days.

Calculation exampleExample in policy: $1,000 ÷ $2,538 = 0.39 × 7 days = 2.75, rounded to 3 days per rounding rule.

inv-43: Antigen supply limit — ≤ 12-month supply

LimitPhysician-prepared antigens: reasonable supply defined as not more than a 12-month supply at any one time.

Preparation requirementAntigens must be prepared by a physician (MD/DO) who examined the patient and determined a treatment and dosage regimen.

Purpose of limitTwelve-month limit ensures antigen potency and effectiveness over administration period.

Provider Obligations, Documentation, and Billing Actions

Documentation Required

VA fee-basis card authorization

VA fee-basis ID card (VA Outpatient Medical Treatment Information Card) constitutes an agreement by the VA to pay up to a specified monthly dollar amount for treatment of listed conditions. If charges exceed that amount the VA may authorize additional payment if the physician justifies the need; retroactive increases may be allowed. If the physician bills the VA fee-basis card directly, the VA may reimburse the beneficiary or pay the physician; if VA payment is less than the Medicare allowable, Medicare may pay secondary benefits to supplement the VA payment when properly documented.

Fee-basis card = VA agreement to pay up to specified monthly amount
VA may retroactively authorize additional payment or increases for a period of time
If physician bills veteran (not VA), beneficiary may file claim with VA and Medicare may pay secondary benefits if VA payment < Medicare allowable

Prior Authorization

Prior authorization / medical necessity notes

When services are furnished pursuant to a VA authorization to a non‑Federal provider, Medicare will not pay for those services. Beneficiaries requesting reimbursement for VA copayment amounts or crediting Medicare deductible/coinsurance must attach VA Form 10-9014 (Statement of Charges for Medical Care) to the Medicare claim. If a VA computer-generated notice (VA explanation of benefits) is submitted and it is unclear who filed the VA claim, contractors follow rules (see Provider response to A/B MAC inquiry and Nonresponse below) to determine payment.

VA-authorized non-Federal services are excluded from Medicare payment
VA Form 10-9014 must be attached when requesting Medicare payment toward VA copayment or for deductible credit
VA explanation of benefits supports secondary payment claims

Denial Risk

Claims for inmates must use '63' or QJ or be denied

Claims or claim lines for services furnished to individuals in custody of a penal authority must indicate the jurisdiction meets the conditions of 42 CFR § 411.4(b) by using condition code '63' on the entire claim or the QJ modifier at the line level. If these indicators are not used the claim or line(s) will be denied.

Use '63' condition code for entire claim OR QJ modifier for line-level services
Failure to indicate jurisdiction compliance results in denial

Billing Rule

Provider response to A/B MAC inquiry

When the contractor (A/B MAC or DME MAC) receives automated indication of a VA fee-basis card or related VA code, it will contact the physician or supplier to determine whether a claim has been or will be submitted to the VA. If the physician indicates a VA claim has been or will be filed, the Medicare claim is denied. If the physician states no VA claim will be submitted, Medicare pays in the usual manner.

Contractor contacts physician/supplier when Y trailer code or type code 3 is present
If physician indicates VA claim will be/was submitted → Medicare claim denied
If physician indicates no VA claim → Medicare pays normally

Denial Risk

Nonresponse on secondary benefit determination

If the physician fails to respond to the contractor's inquiry within 30 days on assigned claims, the A/B MAC denies benefits for failure to furnish necessary information (assignment cases). In unassigned cases, failure to respond within 30 days generally results in payment in the usual manner (contractor assumes beneficiary filed the VA claim), except where policy directs denial. For secondary benefit claims, nonresponse in assigned cases leads to denial; in unassigned cases contractor assumes beneficiary filed the VA claim and may pay secondary benefits to the beneficiary.

30-day response window for physician inquiries
Assigned claims: nonresponse → denial for refusal to furnish information
Unassigned claims: nonresponse → contractor may pay as usual or assume beneficiary filed VA claim for secondary benefits

Denial Risk

Claims may be denied when items or services are paid for by a governmental entity

Medicare payment may not be made for items or services that have been paid for or are expected to be paid by Federal, State, or local governmental entities (including VA-authorized services), subject to limited exceptions (e.g., government employee health plans, services under Social Security Act titles, rural health clinic services). Contractors may deny claims when another governmental program pays or is expected to pay, unless the other program's payment is limited to deductible and coinsurance as described for certain programs.

Exclusion applies when a government program pays or the provider intends to bill a government program
Exceptions include government employee plans, certain Social Security Act titles, rural health clinic services

Denial Risk

Denied Routine Services

Routine physical checkups, eyeglasses/contact lenses and related exams, hearing aids and examinations for hearing aids, and immunizations are generally excluded from Medicare coverage. A limited set of preventive and screening services are exceptions. Documentation should indicate if a service falls within an exception (for example, diagnostically indicated tests, screening services listed in regulation, or immunizations given for direct treatment/exposure).

Routine checkups and exams without relation to diagnosis are excluded
Certain preventive/screening services (e.g., screening mammography, colorectal screening, initial preventive physical exam, annual wellness visit) are covered
Immunizations are covered only if directly related to treatment/exposure or specifically covered by statute

Denial Risk

Denied Hearing Aid Items/Services

Medicare denies payment for items or services associated with hearing aids (amplifying devices) and examinations for the purpose of prescribing, fitting, or changing hearing aids. However, certain implantable auditory devices (cochlear implants, auditory brainstem implants, osseointegrated implants) are considered prosthetic devices and may be payable when hearing aids are medically inappropriate or cannot be used.

Hearing aids and associated exams are excluded from Medicare payment
Cochlear implants, auditory brainstem implants, and osseointegrated implants are considered prosthetics and may be covered when hearing aids are inappropriate

Documentation Required

VA form 10-9014 required

Providers and beneficiaries seeking Medicare payment for VA copayment reimbursement or deductible credit must attach VA Form 10-9014 (Statement of Charges for Medical Care) to the Medicare claim to document VA-authorized services and copay amounts.

VA Form 10-9014 required with Medicare claim to request reimbursement or deductible credit for VA copayment amounts
Form documents VA copayment/charges for authorized services

Billing Rule

When a non-Medicare program (e.g., VA per diem to State veterans homes or State VR agencies) pays amounts on behalf of beneficiaries

When a non‑Medicare program (e.g., VA per diem payments to State veterans homes or State vocational rehabilitation agencies) pays amounts on behalf of beneficiaries, contractors may reduce Medicare payments to account for those amounts or require repayment to the trust fund if notice that other payment is available is received. When State veterans homes collect VA per diem amounts in excess of deductible/coinsurance, contractors reduce Medicare payments accordingly.

VA per diem to State veterans homes may be credited toward deductible/coinsurance; excess collections reduce Medicare payment
State VR agencies may claim Part B payment due a beneficiary if authorized by beneficiary

Documentation Required

Antigen Preparation Documentation

For payment of physician‑prepared antigens, documentation must show the antigens were prepared by an MD or DO who examined the patient and established a treatment and dosage regimen. Payment is limited to a reasonable supply (not more than a 12‑month supply) prepared for a particular patient to ensure potency and effectiveness.

Antigens must be prepared by an MD/DO who examined the patient and determined treatment/dosage
Payment limited to ≤ 12‑month supply prepared for the patient

Documentation Required

Immunization Documentation

Vaccination claims must document that the immunization is either directly related to treatment or direct exposure (e.g., antirabies, tetanus after injury) or is specifically covered by statute to be payable by Medicare. Preventive immunizations not linked to treatment/exposure are excluded.

Immunizations covered only when for treatment/exposure or specifically authorized by statute
Preventive vaccinations (e.g., routine childhood or travel vaccines) are generally excluded

Billing Rule

Liability payment coordination

If notice or information is received that payment is available under liability, automobile/no‑fault, or workers' compensation, Medicare payment is subject to repayment to the appropriate trust fund. Providers should report and coordinate benefits; contractors follow MSP manual instructions for specific processing.

Payments may be recovered if other liability/no‑fault/workers' compensation coverage is available
See MSP manual for contractor processing rules

Documentation Required

Exceptions to inpatient non-coverage

Exceptions to inpatient non‑coverage (services provided to hospital or SNF inpatients that are not delivered directly or under arrangement) require documentation demonstrating the exception applies — for example, physician services, specified practitioner services, dialysis, hospice, certain chemotherapy, customized prosthetics, or other listed exceptions. Contractors may make direct Part B payments when medically necessary and when an exception is applicable.

List of exceptions includes physician services, physician assistants, NPs, nurse‑midwives, qualified clinical psychologists, CRNAs, certain dialysis and chemotherapy services, hospice, some customized prosthetic devices
Contractors may pay Part B directly for these services if medically necessary

Billing Rule

Warranty rules affecting payment

If a device replacement is provided under a warranty at no charge, program payment for the device is prohibited. Partial payments imposed by the warrantor may be payable. If a provider purchases a replacement when a free warranty replacement was available, payment cannot be made for the purchased device beyond the amount that would have been paid under the warranty or under prudent buyer rules.

Free warranty replacement → no program payment for device
Partial or pro rata charges by warrantor may be payable
Coverage limited to warranty amount when provider purchased a replacement instead of accepting warranted replacement

Documentation Required

Hearing Device Indication

Hearing prosthetic devices that replace middle ear, cochlear, or auditory nerve function (e.g., cochlear implants, auditory brainstem implants, osseointegrated implants) are payable as prosthetic devices only when hearing aids are medically inappropriate or cannot be utilized due to congenital malformations, chronic disease, severe sensorineural loss, or surgery. Documentation must support medical necessity of implantable devices in lieu of hearing aids.

Implantable auditory devices considered prosthetics and may be covered when hearing aids are inappropriate
Medical documentation must justify why hearing aids are medically inappropriate or cannot be used

Note

Not applicable

Not applicable.

Policy Background and Scope

This chapter catalogs the statutory and regulatory exclusions to Medicare payment, including items that are not reasonable and necessary, items for which there is no legal obligation to pay, items paid for by governmental entities, services furnished outside the United States, war‑related services, personal comfort items, routine services and appliances, custodial care, cosmetic surgery, dental services, and other specified exclusions. The chapter provides interpretive guidance and examples to assist providers, suppliers, and contractors in applying these exclusions.

Key Terms and Definitions

inv-72: No legal obligation to pay — A payment exclusion under Section 1862(a)(2) of the Social Security Act and 42 CFR §411.4 that prohibits Medicare payment when neither th...

AuthorityPayment exclusion based on Section 1862(a)(2) of the Social Security Act and regulation 42 CFR §411.4.

Definition'No legal obligation to pay' prohibits Medicare payment when neither the beneficiary nor any other person/organization has a legal obligation to pay for the item or service (e.g., services furnished at no cost).

ApplicationIf this exclusion applies, Medicare payment is prohibited; each exclusion must be analyzed separately before determining payment eligibility.

inv-73: In custody of a penal authority — Includes individuals incarcerated in jail/prison, temporarily on medical furlough, escaped from confinement, or required to reside in a m...

ScopeIncludes individuals incarcerated in jail, prison, penitentiary, or similar institution; those temporarily on medical furlough; escaped from confinement; or required to reside in a mental health facility under a penal statute.

ExclusionsNot considered in custody: individuals released pending trial, on parole, probation, home detention/home confinement, or residing in halfway houses/transitional facilities.

Obligation criteriaAn individual in custody is considered to have a legal obligation to pay only if: (1) law requires payment; (2) penal authority bills all such individuals regardless of other coverage; (3) penal authority pursues collection with vigor comparable to other debts.

inv-74: VA Fee Basis ID Card — VA Outpatient Medical Treatment Information Card issued to certain veterans that authorizes VA payment up to a specified monthly amount f...

DocumentVA Outpatient Medical Treatment Information Card ('fee-basis ID card')—issued to certain veterans and constitutes an agreement by the VA to pay up to a specified monthly dollar amount for listed treatments.

Provider choiceVeteran is not restricted in choice of physician and the selected physician need not notify the VA in advance nor be a VA participating physician.

Payment effectWhen a physician accepts fee-basis payment, the VA fee-basis payment is payment in full and Medicare generally cannot make payment on assigned or unassigned claims for the same services.

inv-75: United States — Includes the 50 States, D.C., Puerto Rico, Virgin Islands, Guam, Northern Mariana Islands, American Samoa, and, for ship services, territ...

Geographic definition'United States' includes the 50 States, District of Columbia, Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, American Samoa, and, for ship services, territorial waters adjoining U.S. land areas.

ImplicationItems or services furnished outside these jurisdictions are generally excluded from Medicare payment, even if contracted or purchased while in the United States.

Hospital location ruleA hospital not physically situated in these jurisdictions is considered outside the United States even if owned/operated by the U.S. Government.

inv-76: Prisoner/public charge — Individuals in custody of a penal authority are generally public charges with no obligation to pay for medical care; Medicare is generall...

PrincipleIndividuals in custody of a penal authority are generally public charges with no obligation to pay for medical care; consequently, Medicare is generally prohibited from paying for such care.

Related exclusionsPayment exclusions at 42 CFR §411.6 and §411.8 may also apply when federal providers furnish services or a governmental entity pays for services.

Rebuttal evidenceProviders may rebut the presumption by documenting state or local laws, billing/enforcement practices showing legal obligation and vigorous collection by the penal authority.

inv-77: Hearing aids — Amplifying devices compensating for impaired hearing including air conduction and bone conduction devices; excluded from Medicare coverag...

DefinitionHearing aids are amplifying devices compensating for impaired hearing, including air conduction and bone conduction devices.

ExclusionHearing aids and examinations for prescribing, fitting, or changing hearing aids are excluded from Medicare coverage under 42 CFR 411.15(d) and section 1862(a)(7) of the Social Security Act.

Prosthetic exceptionCertain implantable devices (cochlear implants, auditory brainstem implants, osseointegrated implants) that replace cochlear/middle ear/auditory nerve function may be payable as prosthetic devices when hearing aids are medically inappropriate.

inv-78: Custodial care — Personal care assisting Activities of Daily Living (walking, bathing, dressing, feeding, toileting, supervision of self-administered medi...

DefinitionCustodial care: personal care assisting activities of daily living (walking, bathing, dressing, feeding, toileting, supervision of self-administered medications) that does not require continuing medical or paramedical attention.

ExclusionCustodial care is excluded from Medicare coverage when services do not require continuing medical or paramedical personnel; determination is based on level of care/medical supervision needed, not diagnosis or rehabilitation potential.

ExamplesExamples include assistance for ambulatory stroke patient who needs help with feeding/dressing, stable cardiac patient requiring ADL assistance, and senile patient needing supervision for medication/diet adherence.

inv-79: Liability/No-Fault/Workers' Compensation coverage — Plans or laws under which payment has been made or can reasonably be expected to be made for items and services, thereby precluding payme...

Primary ruleMedicare will not pay for items and services for which payment has been made or can reasonably be expected to be made promptly under liability, automobile, no-fault, or workers' compensation laws or plans.

Repayment requirementProgram payments are subject to repayment to the appropriate trust fund if notice or information is received that other payment is available.

ReferenceSee the Medicare Secondary Payer (MSP) manual for specific instructions.

inv-80: Services not furnished directly or under arrangement — Nonphysician services to inpatients that are not provided by the hospital/SNF itself or under an arrangement with the hospital/SNF and ar...

ExclusionNonphysician services provided to hospital or SNF inpatients that are not provided directly by the hospital/SNF or under arrangement are generally excluded from Medicare coverage.

ExceptionsExceptions include physicians' services, physician assistant services, nurse practitioners/clinical nurse specialists, certified nurse-midwives, qualified clinical psychologists, certified registered nurse anesthetists, and certain anesthetist services; A/B MAC may pay Part B bills for these if medically necessary.

SNF exceptionsFor SNF Part A inpatients, additional exceptions (e.g., home dialysis supplies, EPO, hospice, some prosthetics/chemotherapy/radioisotope services) may apply when provided by another authorized provider or supplier.

Document History

2026-01-26Chapter transmittal / revisionLatest

Issued transmittal R13593 that updated 'No Legal Obligation to Pay' and Examples of Government Entity Exclusion and created section 40.7; implementation date 04-27-2026.

2025-06-18Transmittal update

Issued transmittal R13272 to update 'No Legal Obligation to Pay' and Examples of Government Entity Exclusion and create section 40.7; implementation date 05-01-2025.

2024-12-20Transmittal rescind/replace

Issued transmittal R13011 which was later rescinded and replaced by transmittal 13272 addressing updates to chapter sections 40 and 50.3.3 and new section 40.7.

2014-11-06Chapter issuance (earlier revision)

Revision 198 issued for 'General Exclusions from Coverage' (Rev. 198) with effective date 2015-01-01 and implementation 2015-01-05.