The Council has considered the record which was before the Administrative Law Judge, the arguments submitted with the request for review, and the contentions and evidence submitted by CMA in its response to the notice of proposed decision. Except as modified herein, the Medicare Appeals Council adopts and incorporates by reference the Administrative Law Judge's statements as to the pertinent provisions of the Social Security Act, the issues in the case, and the evidentiary facts concerning the issue of coverage. The Council further adopts the Administrative Law Judge's findings and conclusions with respect to the issue of coverage, but does not adopt the Administrative Law Judge's findings and conclusions with respect to the issue of limitation on liability under section 1879 of the Act.

This case involves services provided to the beneficiary in a skilled nursing facility. The Administrative Law Judge held that the beneficiary did not require daily skilled services during the period August 25 through October 1, 1997, and, therefore, did not qualify for Medicare coverage. With respect to the issue of limitation of liability, the Administrative Law Judge found that Country Manor Health Care, the provider, was liable for the cost of the services provided to the beneficiary during the period August 26, 1997 through October 3, 1997, because there was no evidence indicating that the beneficiary's representative, acting on the beneficiary's behalf, received and acknowledged written notice of noncoverage as required by 42 CFR 411.404(b) and 411.406.

In reaching his conclusion, the Administrative Law Judge indicated that the record at Exhibit 1 contained a notice of noncoverage dated August 25, 1997, addressed to Patrick Agostinello, who is identified in the record as the responsible party acting on behalf of the beneficiary. The notice advised the responsible party that as of August 26, 1997, the services furnished to the beneficiary would no longer qualify for Medicare coverage. Page 2 of the notice stated that the facility representative contacted Mr. Agostinello by telephone on August 25^th and left a message on an answering machine informing him of the noncoverage.

The Administrative Law Judge did not accept the document contained in Exhibit 1 as evidence that the beneficiary had received notice that the services at issue would not be covered by Medicare. He concluded the notice was inadequate because there was no evidence that a written notice was ever actually sent to or acknowledged by Mr. Agostinello, that the facility representative was ever successful in reaching Mr. Agostinello, and that Mr. Agostinello had knowledge of the facility's determination. He also added that the line on page 2 of the notice reserved for the signature of the beneficiary or representative contacted was blank. Given the above, the Administrative Law Judge found that liability for the noncovered services must be assessed against the provider.

42 CFR 411.404 describes the criteria for determining that a beneficiary knew that services were excluded from coverage. The regulation provides that a beneficiary who receives services that constitute custodial care under §411.15(g) or that are not reasonable and necessary under §411.15(k), is considered to have known that the services were not covered if written notice has been given to the beneficiary, or to someone acting on his or her behalf, that the services were not covered because they did not meet Medicare coverage guidelines. Pursuant to §411.404(c)(3), the notice may be given by a provider of services, in this case, the skilled nursing facility.

Further guidance concerning the criteria for establishing beneficiary knowledge is provided in CMS Ruling 95-1. The Ruling interprets §411.404, in pertinent part, as establishing "a presumption the [the beneficiary] knew, or could reasonably have been expected to know, that Medicare payment for a service or item would be denied if advance written notice has been given either to the beneficiary or to someone acting on his or her behalf that the items or services were not covered." (Emphasis added.) Neither the regulation nor the Ruling provide that in order to establish the beneficiary's or a responsible party's knowledge the record must contain an acknowledgment or other evidence that the beneficiary or responsible party received the notice. Because the hearing decision requires such an acknowledgment, we find that it is based on an error of law.

Additional guidance in resolving the question of liability is found in Medicare Intermediary Manual §3440, entitled "establishing when beneficiary is on notice of noncoverege." It states that a beneficiary is presumed not to have known or not to have been expected to know that care would not be covered unless a provider or other source "advised the patient or the person acting on his behalf in writing that the patient no longer required covered care." (Emphasis in original.)

Section 3440.1 addresses situations in which providers must furnish notice to a beneficiary who is incapable of managing her own affairs. It provides that in these circumstances the provider must telephone the person acting on behalf of the beneficiary on the same day the provider knows that the services are not covered. The provider confirms the telephone contact by written notice mailed on that same date to protect itself from liability. It also provides that a written notice will be mailed on the same day even if a telephone contact cannot be made, and advises the provider to place a dated copy of the notice in the incapable patient's medical file.

The evidence of record indicates that the provider followed the above procedures. The provider has asserted that a phone call was made on August 25, 1997, to the person acting on the beneficiary's behalf and a message left on the answering machine. In addition, the provider contends that it mailed the notification to the responsible party on the same date. Both the copy of the notice of noncoverage contained in Exhibit 1 and the copy provided with the request for review are consistent with this assertion. The notice is addressed to Mr. Agostinello and indicates on the bottom that it was mailed on the same date that the provider's representative telephoned him.

The authorities quoted above do not require that the provider of services produce evidence that the notice of non-coverage was received by the responsible party, Mr. Agostinello. The Commissioner of the Connecticut Department of Social Services, who filed the request for hearing, did not produce any evidence to the Administrative Law Judge that the notice of non-coverage was directed to the wrong party or that Mr. Agostinello, to whom the notice was directed, did not receive the telephone message or the copy of the notice of noncoverage that was mailed to him. Accordingly, in our notice of proposed decision, we indicated that we were prepared to find that the notice of noncoverage found in Exhibit 1 is sufficient evidence under 42 CFR 411.404 that the responsible party, Mr. Agostinello, knew or could reasonably have been expected to know that the services provided from August 26, 1997, through October 1, 1997 would not be covered and that, therefore, the beneficiary is liable for the cost of the noncovered services provided beginning August 26, 1997, pursuant to section 1879 of the Act.

In its response dated November 14, 2002, CMA contends that both HCFA Ruling 95-1 and the Medicare Part A Intermediary Manual establish that "it is the provider's burden to prove that the notice of non-coverage was received by the beneficiary or her representative." (Emphasis added.) However, neither the Ruling nor the manual instruction, which were in effect during the period at issue, require the provider to provide proof of receipt of the notice of non-coverage. Rather, as CMA acknowledges later in its letter to the Council, those authorities indicate that the burden on the provider is to show that the notice was "given." (The Ruling also uses the word "furnish.").

CMA suggests, however, that because there is always some lag time between the date a notice is mailed and the date it is received, the Council's interpretation is equivalent to finding that a beneficiary or responsible party is presumed to "know" the contents of a letter before she even receives it. To the contrary, we emphasized in the proposed decision that the manual instruction provides additional procedures to address the lag time between mailing and receipt. Specifically, section 3440.1 of the Medicare Intermediary Manual advises providers that when they are issue a notice of non-coverage concerning a beneficiary who is incapable of managing his own affairs, they should "protect" themselves from liability by telephoning the person who is acting on the beneficiary's behalf and confirm the telephone contact by written notice on the same date.

The manual section further advises home health agencies who are unable to deliver a notice of noncoverage personally to a beneficiary to give notice by telephone, and on the same day to mail a written confirmation of the telephone notice. ⁽²⁾ Notably, the manual section adds that "[t]he date of the telephone call is considered the date the beneficiary received notice of noncoverage." Applying similar principles, we find that the date that a representative of the skilled nursing facility advises a beneficiary's responsible party by telephone of non-coverage is considered the date the responsible party received notice of noncoverage.

The above manual provisions do not provide, however, that the evidence that a telephone contact was made or a notice mailed cannot be rebutted. For example, an individual to whom the notice of non-coverage is directed may provide evidence on appeal that the telephone contact was not made, the telephone message did not clearly convey the information in the written notice, or that the written notice was never received. However, no such assertion or evidence has been offered in this case.

CMA also contends that the proposed decision is inconsistent with a CMS program memorandum issued on June 27, 2001 concerning advanced beneficiary notices (ABNs), which CMA enclosed with its reply. Exhibit MAC-3. The program memorandum is not controlling in this case, as its more stringent requirements were not in effect when the services at issue in this case were provided. (The cover transmittal states that both the effective and implementation dates for the policy were July 1, 2000.) Moreover, we note that the program memorandum specifically addressed only ABNs issued by institutional providers and suppliers hospitals concerning claims for Part B services. The instant case involves only Part A services. ⁽³⁾ In addition, section 3440.1 of the Medicare Intermediary Manual has not been rescinded or modified since the issuance of the program memorandum.

Finally, CMA contends that our proposed decision is inconsistent with another decision issued in the case of "Harold M." by the Medicare Appeals Council in July 2002. The administrative record of that case, including the evidence relied on by the Administrative Law Judge and the Council, is not currently available to us. We note, however, that the decision, which found that the provider was liable only during the period between the date an alleged telephone message was left and the date of receipt of the written notice of non-coverage, did not hold that providers may not initially advise responsible parties by telephone of potential changes in coverage if written notice cannot be delivered immediately in person. Rather, the Council's decision sustained the Administrative Law Judge's conclusion that the evidence of record was insufficient to establish that the responsible party actually received the telephone call or to establish what was said during the conversation and found the beneficiary liable beginning with the date of receipt of the written notice.

The responsible party in this case has not asserted that he did not receive adequate and timely notice. Accordingly, for the reasons given above, we find no basis for finding the provider liable for the services provided to the beneficiary in this case.

Decision

It is the decision of the Medicare Appeals Council that the services provided to the beneficiary from August 26, 1997 through October 1, 1997, by Country Manor Health Care were not Medicare covered services. For the reasons given above, the Council also finds that the beneficiary is liable for the cost of the noncovered services provided during that period pursuant to section 1879 of the Social Security Act.

Date: January 17, 2003

M. Susan Wiley
Administrative Appeals Judge

Clausen Krzywicki
Administrative Appeals Judge

1. In its response to the Council proposed action, CMA states that it did not receive a copy of the evidence submitted by the provider with its request for review. The only document enclosed with the request for review is a duplicate of Exhibit 1, which was entered in the record by the Administrative Law Judge. However, since the provider did not copy CMA on its request for review, we are attaching to this decision a copy of the request for review with its enclosure.

2. Because home health agencies do not always provide daily services to a beneficiary, they cannot always hand deliver a notice of non-coverage on the day they determine that Medicare coverage will terminate or be reduced.

3. While the program memorandum directs providers to obtain a beneficiary's or responsible party's written acknowledgment of receipt of an ABN, it also provides that if a beneficiary or responsible party refuses to sign the acknowledgment and accept financial responsibility for the services to be provided after the projected last day of coverage, the provider may refuse to provide any services after that date.