CurrentMedicarePolicy N/A

Chapter 30 — Financial Liability Protections (Limitation on Liability, ABN and Indemnification)

National Medicare guidance (Chapter 30) describing financial liability protections, limitation on liability rules, Advance Beneficiary Notice (ABN) forms and procedures, indemnification, and contractor/carrier/intermediary instructions affecting beneficiaries, providers, practitioners, suppliers, and Medicare contractors.

Policy Summary

PayerMedicare

PolicyFinancial Liability Protections (FLP) / Limitation on Liability (Chapter 30)

Policy CodePolicy N/A

Change TypeNo material changes

Effective DateN/A

Next Review DateN/A

Key ActionProvide the appropriate ABN/HHABN/SNFABN/HINN using the correct CMS form and obtain required beneficiary signature when services may be noncovered.

SourceLink

POLICY UPDATE CHANGES

No material clinical or coverage changes in this revision.

Chapter 30Manual Chapter

20–150+Sections

CMS-R-131, CMS-R-296, CMS-10055, CMS-20007Forms referenced

MultipleSupporting PMs/CMS Rulings

Limitation on Liability & Coverage Notice Criteria

Limitation on Liability and notice criteria

Coverage denial categories and application of Limitation on Liability:

Denials to which Limitation on Liability (LOL) applies as described in sections 20 - 20.2.2 and associated CMS Rulings (e.g., 95-1, 96-2, 96-3, 97-1).

Denials for which the Limitation on Liability provision does not apply as described in section 30 and PM AB-02-168 Part I; see CMS Ruling 95-1 for related guidance.

When services may be noncovered, the provider must give the appropriate advance notice (ABN, HINN, HHABN, or SNFABN) following the form instructions and signature requirements; see ABN form selection and signature rules (sections 50.5–50.7 and related guidance).

Indemnification and contractor criteria

Indemnification and contractor responsibilities:

Policy Summary

PayerMedicare

PolicyFinancial Liability Protections (FLP) / Limitation on Liability (Chapter 30)

Policy CodePolicy N/A

Change TypeNo material changes

Effective DateN/A

Next Review DateN/A

Key ActionProvide the appropriate ABN/HHABN/SNFABN/HINN using the correct CMS form and obtain required beneficiary signature when services may be noncovered.

SourceLink

On This Page

Advance Notice, Forms, and Provider Responsibilities

Documentation Required

SNF and Hospital notice responsibilities

Skilled Nursing Facility (SNF) and Hospital notice responsibilities: Providers must use the SNF Advance Beneficiary Notice (SNFABN, Form CMS-10055) and Hospital-Issued Notice of Noncoverage (HINN/Hospital ABN) per CMS guidance. Notices must be provided when services are expected to be noncovered by Medicare and the beneficiary may be liable. For SNFs, give the SNFABN when a covered Part A stay is ending or when a payment liability determination is required; follow the SNFABN form instructions and signature requirements. For hospitals, issue the appropriate Hospital ABN (HINN) when the hospital determines items or services will likely be noncovered. Hospital ABNs must follow timing, delivery, and signature rules, and permit beneficiary requests for reconsideration. Quality Improvement Organization (QIO) review authority applies to Hospital ABNs and QIOs monitor ABN issuance and compliance per CMS procedures.

Use SNFABN (CMS-10055) for Skilled Nursing Facility noncoverage notices
Use Hospital ABN/HINN for hospital-issued notices of noncoverage
Follow form-specific instructions and signature requirements
Allow QIO review and monitoring for hospital ABNs

Billing Rule

Indemnification actions

Indemnification actions: Contractors and Social Security Offices (SSOs) are responsible for processing indemnification claims for charges falling within the Limitation on Liability provision. Conditions for indemnification, development and documentation of requests, procedures for questionable requests, and determination of indemnification amounts must follow CMS guidance. Contractors/SSOs must notify the provider, practitioner, or supplier when indemnification is allowed and make payment under indemnification according to defined rules. Special handling applies when a beneficiary requests indemnification but had no financial interest in the claim; note that limitation on liability determinations do not change Medicare exclusions. Keep complete documented evidence supporting indemnification requests, including beneficiary communications and claim-level details.

Contractors/SSOs process indemnification claims per CMS procedures
Document and develop indemnification requests thoroughly; follow questionable-request procedures
Determine indemnification amount following CMS rules and notify provider/supplier
Make payments under indemnification only when criteria are met
Limitation on Liability does not alter Medicare exclusion status

Key Terms and Definitions

inv-08: Limitation on Liability (LOL)

DefinitionLimitation on Liability (LOL) under §1879: rules governing beneficiary and provider financial responsibility when Medicare claims are disallowed.

Applies toCoverage denials identified in Chapter 30 sections 20 - 20.2.2 and related CMS Rulings (95-1, 96-2, 96-3, 97-1).

ExclusionsDenials specifically excluded from LOL are described in section 30 and PM AB-02-168 Part I and CMS Ruling 95-1.

Liability determinationGuidance for determining beneficiary versus provider/practitioner/supplier liability is provided in sections 30.1–30.2.3 (including A3-3432 and related references).

Related guidanceChapter 30 cross-references multiple carrier/intermediary instructions (Pub. 13/14 entries) and PMs supporting LOL application and interpretation.

inv-09: Advance Beneficiary Notice (ABN)

DefinitionAdvance Beneficiary Notice (ABN): Form CMS-R-131 used to inform beneficiaries when services may not be covered and of their potential financial liability.

Standards and form referenceABN standards and Form CMS-R-131 are described in Chapter 30 (see Advance Beneficiary Notice Standards and PM AB-02-168 Part I).

When to giveChapter 30 specifies when and to whom an ABN should be given (sections 50.2–50.2.6) including situations where services may be noncovered.

Delivery and signatureDelivery of the ABN and signature requirements are addressed in section 50.3–50.4; providers must follow form instructions for proper notice and documentation.

Related NoticesChapter 30 also distinguishes other notice forms and settings (HHABN, SNFABN, HINN) and provides setting-specific guidance elsewhere in the chapter.

inv-10: Indemnification

DefinitionIndemnification: procedures for contractor and Social Security Office (SSO) responsibility and payment where Limitation on Liability applies.

Procedures locationIndemnification procedures for claims within the Limitation on Liability provision are described in Chapter 30, section 100 and subsections (100.1, 100.2).

Contractor/SSO responsibilitiesContractor and SSO responsibilities for processing indemnification requests, development/documentation, and making payment are set out in section 100.1 (A3-3446.1).

Conditions for indemnificationConditions under which indemnification applies are detailed in section 100.2 and related carrier/intermediary guidance (A3-3446.2; B3-7320.23, B3-7300.5).

OpenPayer

Chapter 30 — Financial Liability Protections (Limitation on Liability, ABN and Indemnification)

Limitation on Liability & Coverage Notice Criteria

Advance Notice, Forms, and Provider Responsibilities

Forms and Code References

Key Terms and Definitions

CMS-R-131	Advance Beneficiary Notice form
CMS-R-296	Home Health Advance Beneficiary Notice form
CMS-10055	Skilled Nursing Facility Advance Beneficiary Notice form
CMS-20007	Notices of Exclusions From Medicare Benefits (NEMBs)