42 CFR § 411.408 - Refunds of amounts collected for physician services not reasonable and necessary, payment not accepted on an assignment-related basis.
(a) Basic rule. Except as provided in paragraph (d) of this section, a physician who furnishes a beneficiary services for which the physician does not undertake to claim payment on an assignment-related basis must refund any amounts collected from the beneficiary for services otherwise covered if Medicare payment is denied because the services are found to be not reasonable and necessary under § 411.15(k).
(b) Time limits for making refunds. A timely refund of any incorrectly collected amounts of money must be made to the beneficiary to whom the services were furnished. A refund is timely if -
(1) A physician who does not request a review within 30 days after receipt of the denial notice makes the refund within that time period; or
(2) A physician who files a request for review within 30 days after receipt of the denial notice makes the refund within 15 days after receiving notice of an initial adverse review determination, whether or not the physician further appeals the initial adverse review determination.
(c) Notices and appeals. If payment is denied for nonassignment-related claims because the services are found to be not reasonable and necessary, a notice of denial will be sent to both the physician and the beneficiary. The physician who does not accept assignment will have the same rights as a physician who submits claims on an assignment-related basis, as detailed in subpart H of part 405 and subpart B of part 473, to appeal the determination, and will be subject to the same time limitations.
(d) When a refund is not required. A refund of any amounts collected for services not reasonable and necessary is not required if -
(1) The physician did not know, and could not reasonably have been expected to know, that Medicare would not pay for the service; or
(2) Before the service was provided -
(e) Criteria for determining that a physician knew that services were excluded as not reasonable and necessary. A physician will be determined to have known that furnished services were excluded from coverage as not reasonable and necessary if one or more of the conditions in § 411.406 of this subpart are met.
(f) Acceptable evidence of prior notice to a beneficiary that Medicare was likely to deny payment for a particular service. To qualify for waiver of the refund requirement under paragraph (d)(2) of this section, the physician must inform the beneficiary (or person acting on his or her behalf) that the physician believes Medicare is likely to deny payment.
(1) The notice must -
(i) Be in writing, using approved notice language;
(ii) Cite the particular service or services for which payment is likely to be denied; and
(iii) Cite the physician's reasons for believing Medicare payment will be denied.
(2) The notice is not acceptable evidence if -
(i) The physician routinely gives this notice to all beneficiaries for whom he or she furnishes services; or
(ii) The notice is no more than a statement to the effect that there is a possibility that Medicare may not pay for the service.
(g) Applicability of sanctions to physicians who fail to make refunds under this section. A physician who knowingly and willfully fails to make refunds as required by this section may be subject to sanctions as provided for in chapter V, parts 1001, 1002, and 1003 of this title.