HI 00620.070 Illustrations

The following explain the application of the governmental entity exclusion to various situations involving services rendered by governmental and nongovernmental facilities:

A. State veterans homes

Many State governments operate veterans homes and hospitals. These institutions are generally open only to veterans and certain dependents of veterans, and include domiciliary, hospital, infirmary, and/or nursing home type facilities. These institutions are financed primarily from State funds; in addition, most receive nominal per diem payments from the VA for domiciliary, hospital, or nursing home type care for each veteran who would also qualify for admission to a VA hospital or domiciliary.

Where such a participating institution charges its residents and patients to the extent of their ability to pay, or seeks payment from available sources other than Medicare, benefits are payable for covered items and services furnished to Medicare beneficiaries. However, if it is the policy of the institution to admit and treat a veteran without charge simply because he is a veteran, or because he has a service-connected condition, payment is precluded under title XVIII.

Per diem amounts paid by the VA to State veterans homes on behalf of patients who are otherwise eligible for care in a VA facility may be credited towards any deductible, coinsurance, or noncovered amounts required to be paid by the patient. However, if a State veterans home collects amounts from the VA in excess of the applicable deductible and coinsurance, the Medicare payment is reduced to the extent of such excess.

B. State and local psychiatric hospitals

Payment may be made under Medicare for covered services furnished without charge by State or local psychiatric hospitals which serve the general community. However, payment may not be made for services furnished without charge to individuals who have been committed under a penal statute (e.g., defective delinquents, persons found not guilty by reason of insanity, and persons incompetent to stand trial). For Medicare purposes such individuals are “prisoners,” as defined in C, and may have services paid by Medicare only under the exceptional circumstances described there.

C. Prisoners

Generally, no payment is made for items or services rendered to prisoners, since the State (or other government component which operates the prison) is responsible for their medical and other needs.

For this purpose, the term “prisoner” means a person who is in the custody of the police, penal authorities, or other agency of a governmental entity. This is a rebuttable presumption that may be overcome only at the initiative of the government entity. However, the entity must establish that:

  1. State or local law requires that individuals in custody repay the cost of the services.

  2. The State or local government entity enforces the requirement to pay by billing and seeking collection from all individuals in custody with the same legal status (e.g., not guilty by reason of insanity), whether insured or uninsured, and by pursuing collection of the amounts they owe in the same way and with the same vigor that it pursues the collection of other debts. This includes collection of any Medicare deductible and coinsurance amounts and the cost of items and services not covered by Medicare.

  3. The State or local entity documents its case with copies of regulations, manual instructions, directives, etc., spelling out the rules and procedures for billing and collecting amounts paid for by prisoners' medical expenses.

D. CHAMPUS (Civilian Health and Medical Program of the Uniformed Services) and CHAMPVA (Civilian Health and Medical Program of the Veterans Administration)

1. General

CHAMPUS and CHAMPVA are similar programs administered by the Department of Defense, except that the VA determines the eligibility of persons seeking entitlement to CHAMPVA coverage. CHAMPUS provides benefits for health care services furnished by civilian providers, physicians, and suppliers to retired members of the Uniformed Services and to spouses and children of active duty, retired, and deceased members. The term “Uniformed Services” includes the Army, Navy, Air Force, Marine Corps, Coast Guard, and the Commissioned Corps of the U.S. PHS and of the National Oceanic and Atmospheric Administration. CHAMPVA provides similar benefits for spouses and children of veterans who are entitled to VA permanent and total disability benefits and to widows and children of veterans who died of service-connected disabilities.

The governmental entity exclusion does not preclude Medicare payment for items or service furnished to a beneficiary who is also eligible for CHAMPUS/ CHAMPVA benefit payment for the same services. Medicare is the primary payer for such items and services, and CHAMPUS/CHAMPVA is