CurrentMedicarePolicy N/A

Erroneous Program Guidance: Basis to Waive Penalty (§903(c))

Governs waiver of penalties when a Medicare provider or supplier relied on erroneous guidance from CMS or a Medicare contractor; affects Medicare fee-for-service providers and suppliers and contractor decision-making.

Policy Summary

PayerMedicare

PolicyErroneous Program Guidance: Basis to Waive Penalty (§903(c))

Policy CodePolicy N/A

Change TypeNo material change

Effective DateJul 24, 2003

Next Review DateN/A

Key ActionProviders/suppliers may request a §903(c) penalty waiver when penalties resulted from following erroneous Medicare program guidance; request by the deadline in the notice of intent to impose a penalty.

SourceLink

POLICY UPDATE CHANGES

No material clinical or coverage changes in this revision.

8required conditions to invoke penalty waiver

07/24/2003guidance must be issued on or after

yeswriting required

60/45decision timelines

120extended filing window (pre-implementation)

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Conditions and Contractor Evaluation

inv-01: Penalty waiver conditions and limits

Covered when ALL of the following conditions are met:

ALL of the following

Guidance was erroneous and material — the guidance was erroneous at the time of the provider or supplier's act or omission, and the error was the necessary cause of the act or omission.
Guidance was issued by the Secretary or by a Medicare contractor; CMS officer/employee communications are treated as Secretary-issued; guidance from other contractors qualifies only if confirmed and communicated by CMS or a Medicare contractor before the act or omission.
Guidance was in writing — e.g., hardcopy, e-mail, fax, or a CMS/contractor website posting — and bears indicia of issuance; the provider/supplier must document the writing.
Guidance related to the furnishing of an item or service or to the submission of a claim or other filing relevant to the provider or supplier (including filings such as enrollment forms, claims, cost reports, CMNs, ABNs, or additional documentation).
Guidance was issued on or after July 24, 2003 and before the act or omission that gave rise to the penalty.
Provider or supplier accurately and fully presented the circumstances in writing to the Medicare contractor or CMS (presentation may be by the provider or an identified agent, made to the relevant contractor or CMS component, include all relevant material facts, be accurate without material ambiguity, and be in writing as broadly defined).
Provider or supplier substantially followed the guidance (the act or omission must be in substantial accord with the guidance; immaterial deviations may not disqualify, but material deviations may).
Provider or supplier's reliance on the guidance was reasonable — a definitive, directly on-point communication to the provider creates a rebuttable presumption of reasonableness; equivocal, speculative, or informal communications may not support that presumption.
Limit: Waiver applies only to penalties (broadly including civil money penalties, assessments, sanctions, suspensions, terminations, and similar actions) and only where the contractor has authority to implement the penalty; routine determinations (e.g., claim denials, NCDs/LCDs, coding decisions, enrollment decisions, overpayments, interest) are excluded from §903(c) relief.

inv-02: Penalty waiver evaluation and decision criteria

Contractor evaluation and decision process (contractor must determine error first, then address threshold and substantive conditions):

ALL of the following

Threshold review — contractor considers timeliness of the request, ripeness (whether a notice of intent to impose a penalty was given or has been rescinded), sufficiency of information, and mootness before adjudicating the substantive conditions.
Timeliness — provider must request the waiver by the deadline in the notice of intent to impose the penalty; contractor may decline untimely requests but may adjudicate on equitable grounds.
Ripeness — if no notice of intent to impose a penalty was given or it was rescinded, the contractor generally will decline to adjudicate the waiver (but may do so for administrative efficiency or good cause).
Sufficiency of information — provider bears the burden of proof; contractor makes a preliminary sufficiency determination, notifies any deficiencies and allows 45 days to supply missing information; failure to supply permits case closure (contractor may grant extensions at its discretion).

inv-03: Contractor procedural requirements

Contractor procedural obligations and provider rights for penalty waiver determinations:

ALL of the following

Reconsideration rights and timing — provider/supplier may request reconsideration of an adverse penalty waiver determination according to procedures and deadlines in the adverse determination notice; the provider may be heard or submit written arguments and evidence (written submissions due within 30 days of the request or within 10 days of any hearing, whichever is later); contractor completes reconsideration within 30 days of the request, hearing, or filings and issues a decision based on the section's standards.
Recordkeeping — contractor must compile a complete record for each penalty waiver determination including all documentary material regardless of form, associate it with the penalty record, and retain/dispose of it per applicable record retention policies; if no penalty attaches, retain per claims records procedures.
Reporting — contractors shall submit detailed and summary quarterly reports of penalty activities and attach documentation of previously unreported erroneous guidances.

How Providers Request Waivers and Notices

Note

Request penalty waiver when reliance on erroneous guidance

Providers and suppliers may request a penalty waiver when penalties resulted from following erroneous Medicare guidance. Under §903(c) of the MMA, a provider or supplier shall not be subject to a penalty under Title XVIII or Title XI (related to Title XVIII) if the penalty was based on an act or omission that resulted from following erroneous Medicare guidance. Providers should request a waiver in accordance with the deadlines and procedures specified in the notice of intent to impose a penalty. The contractor having jurisdiction may also initiate a waiver determination on equitable grounds or for other good cause.

Do not file a waiver request before receiving a notice of intent to impose a penalty.
File the waiver request by the deadline specified in the notice of intent to impose a penalty (or the extended deadline where applicable).
Contractors may initiate a waiver determination in limited circumstances.

Note

Notice requirements

Every notice of intent to impose a penalty must include notice of the penalty waiver policy and instructions on how to perfect a waiver request. The notice must state the deadline for requesting a waiver (aligned with the penalty process) and must either include the full statement of waiver conditions or provide the URL where the policy may be reviewed. For penalties imposed before this policy's implementation date, affected providers or suppliers have up to 120 days after implementation to request a waiver (until May 19, 2006, for this policy); specific individual notice of the extended deadline is not required unless the contractor is actively communicating with the provider or supplier about the pre-implementation penalty.

Notice must include how to perfect a waiver request and the applicable deadline.
Include full waiver conditions or a URL to the policy.
Extended filing window for pre-implementation penalties: 120 days after implementation.

Prior Authorization

Requesting a penalty waiver

To request a §903(c) penalty waiver determination, submit your request by the deadline in the notice of intent to impose a penalty or, if applicable, by the extended deadline for pre-implementation penalties. Although the affected provider or supplier customarily requests the waiver determination, the contractor with jurisdiction may initiate it on equitable grounds or for other good cause.

Request must be filed by the deadline specified in the notice of intent to impose a penalty.
Do not file before receiving the notice of intent to impose a penalty.
Contractor may initiate on equitable grounds.

Denial Risk

Adverse determination notice and appeal rights

The contractor will furnish a written notice of its penalty waiver determination. If the waiver is denied in whole or in part, the notice must specify the basis for the adverse determination and must inform the provider or supplier of appeal rights. Every adverse determination notice must: a) state that the provider or supplier has a right to request reconsideration of the penalty waiver determination; b) describe how to file a request for reconsideration; c) specify the deadline for requesting reconsideration; and d) advise that the provider may also request a hearing and may present written evidence and arguments.

Adverse determination must state the basis for denial.
Notice must explain how to request reconsideration and specify the deadline.
Notice must advise that a hearing may be requested and that written evidence and arguments may be submitted.

Note

Reconsideration request and submission timelines

A provider or supplier may request reconsideration of an adverse penalty waiver determination by following the procedures and meeting the deadline specified in the adverse determination notice. If timely filed, the contractor will reconsider the determination and will permit the provider or supplier to be heard or to submit written arguments and evidence. Written arguments and evidence must be submitted within 30 days of the request for reconsideration or within 10 days of any requested hearing, whichever is later. The contractor shall complete its reconsideration within 30 days of receiving the reconsideration request, the hearing, or the filing of written arguments or evidence, whichever is later, and will issue a decision based on the standards in this section.

File reconsideration per the procedures and deadline in the adverse determination notice.
Submit written arguments/evidence within 30 days of the reconsideration request or within 10 days of any hearing, whichever is later.
Contractor will complete reconsideration within 30 days after receiving the request, hearing, or written submissions.

Key Terms

inv-11: Medicare Contractor

Definition — Medicare ContractorAny Medicare Administrative Contractor (MAC) or an eligible entity with a contract under §1893 of the Act, including Program Safeguard Contractors; guidance from a CMS officer or employee is considered Secretary-issued.

inv-12: Penalty

Broad penalty definitionIncludes civil money penalties, assessments, sanctions, suspensions, terminations, and other similar penalties (illustrative statutory examples cited in policy).

Delegation limitationApplies only to penalties that have been or may be delegated to Medicare contractors; whether a contractor may grant a waiver depends on whether it has authority to impose the penalty.

Waiver does not override program rulesThe term 'penalty' is not construed so broadly as to forgive or render moot Medicare program policy or procedural requirements.

inv-13: Penalty — additional text

Illustrative statutory remediesExamples include remedies/sanctions under provisions such as §1819(h)(2)(B), §1833(h)(5)(D), §1834(j)(2)(A)(iii), §1842(j)(2), §1846 (intermediate sanctions), §1848(g)(1)(B), and actions under §1866(b)(2), §1866(d), or §1866(i).

10% stale claim penalty noteThe 10% penalty for filing a 'stale' assigned claim is illustrative but subject to broader waiver conditions under §1848(g)(4)(B).

inv-14: Non-penalty actions

Non-penalty examplesNot penalties for §903(c) purposes include claim rejections or return-to-provider actions (RTP), initial determinations, redeterminations, reconsiderations, contractor hearing decisions, NCDs/LCDs, local medical review policy determinations, coding decisions, enrollment decisions, notices of program reimbursement, overpayments and accrued interest, Medicare allowed amount/payment determinations, and similar routine fee-for-service determinations.

Scope limitationA penalty waiver determination under this section does not affect other adverse Medicare determinations nor supersede other authorities delegated to contractors to waive penalties when administratively appropriate.

inv-15: adverse penalty waiver determination

Adverse waiver determination definedA contractor decision to deny a request for a penalty waiver (an adverse penalty waiver determination), which triggers reconsideration and appeal rights per the notice provided.

Provider remedy pathProviders may request reconsideration in accordance with procedures and deadlines specified in the adverse determination notice; contractor must allow hearing or written submissions and complete reconsideration within 30 days of filings/hearing.

inv-16: penalty waiver record

Penalty waiver record contentsA compiled record must include all documentary material related to the penalty waiver determination, regardless of form or format, and be associated with the record concerning the penalty.

Retention and dispositionThe penalty waiver record must be retained and disposed of in accordance with the record retention policies and procedures that apply to the associated penalty record (or claims records procedures if no specific penalty attaches).

OpenPayer

Erroneous Program Guidance: Basis to Waive Penalty (§903(c))

Conditions and Contractor Evaluation

Penalty Types and Effective-Date Threshold

How Providers Request Waivers and Notices

Key Terms