CMS Demands Repayment for Items and Services Furnished to Incarcerated Beneficiaries


CMS recently initiated recoveries from providers and suppliers for services furnished to beneficiaries while “incarcerated,” which generally are not covered by Medicare.  Such services are not covered because a state or local government entity that has custody of a Medicare beneficiary under a penal statute has a financial obligation to pay for medical services while the beneficiary is in custody.  In a recent provider bulletin, CMS explains that a beneficiary may be incarcerated even when the individual is not confined to a penal facility, such as when the beneficiary is on a supervised release, medical furlough, or residing in a halfway house.  According to the bulletin, CMS has identified a number of previously paid claims with dates of service that partially or fully overlap a period of incarceration based on information from the Social Security Administration (SSA), and, thus, has issued demand letters to recover the overpayments. 

CMS appears to be placing the burden of encouraging the beneficiary to correct any inaccurate penal records on the provider.  In the bulletin, CMS instructs providers not to file appeal letters if they believe that the beneficiary was not incarcerated when the service was provided.  Instead, CMS instructs that providers should contact the beneficiary to gather as much information as possible.  If the information gathered indicates that the SSA record is not current, then the provider should encourage the beneficiary to contact his or her local SSA office to update the records.  If the information gathered indicates that the SSA record is current, and that the beneficiary was not incarcerated on the date of service, then the provider should send a fax to the provider’s Regional Office including the following information:

  • Fax subject: Incarcerated Beneficiary Claim Issue
  • Provider Name and Contact Information
  • Beneficiary Name
  • Health Insurance Claim Number
  • Dates of Service
  • Claim Number (ICN/DCN)
  • Reason why incarceration information for the date of service is incorrect

For a copy of the provider bulletin, please click here

Reporter, Kerrie S. Howze, Atlanta, +1 404 572 3594,  

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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