Rescinded 1981
SSR 68-40: Section 1862(a)(2).—Charges for Hospital Services Limited to Amount of Health Insurance Coverage
20 CFR 405.311
SSR 68-40
Where a participating hospital has a policy of limiting its charges to the extent of the patient's coverage under commercial health insurance or health insurance under title XVIII of the Social Security Act and waiving collection of all its charges in the case of indigent patients who have no such insurance coverage, held, section 1862(a)(2) of the Social Security Act does not bar payment on behalf of a beneficiary for covered services furnished by such hospital, since such services are not services for which the beneficiary has no legal obligation to pay and which no other person has a legal obligation to pay for or provide.
The X Hospital, a private non-profit institution, is a participating hospital in the Health Insurance for the Aged Program under title XVIII of the Social Security Act. It is the policy of the hospital to waive collection of its charges to indigent patients who have no health insurance coverage of any kind. However, in the case of patients who have health insurance, the hospital limits its charge to the extent of the patient's coverage under commercial health insurance and to the extent of his coverage under title XVIII of the Act. Upon admission to the hospital the patient signs an admission form under which, in substance, the patient agrees to pay and to be liable for all bills and charges, and by which the hospital agrees voluntarily to limit these bills and charges to the extent of his health insurance coverage.
Section 1862(a) of the Social Security Act provides in pertinent part that:
Notwithstanding any other provision of this title, no payment may be made under Part A or Part B [of title XVIII of the Act] for any expenses incurred for items or services—* * *
(2) for which the individual furnished such items or services has no legal obligation to pay, and which no other person (by reason of such individual's membership in a prepayment plan or otherwise) has a legal obligation to provide or pay for; * * *.
In the light of the hospital policy, a question has been raised as to whether section 1862(a)(2) (supra) precludes payment on behalf of a beneficiary whose liability to the hospital does not extend beyond his coverage under title XVIII. The answer to this depends upon whether the services provided under the circumstances described herein are services for which the individual has no legal obligation to pay and which no other person has a legal obligation to provide or pay for.
Under the terms for admittance to X Hospital, a patient specifically assumes liability for all charges, but the hospital in turn commits itself to limit its charges to the extent of the patient's health insurance coverage. It would appear, therefore, that the hospital does charge for its services, but conditions collections within limits governed by the patient's commercial health insurance coverage and health insurance coverage under title XVIII of the Social Security Act. The fact that the hospital waives collection of its charges in the case of indigent patients not having hospital, medical, or surgical insurance coverage does not mean that the hospital intends to waive collection of its charges in the case of individuals who have insurance coverage under title XVIII of the Social Security Act.
Thus, it is apparent, the X Hospital does not provide services gratuitously for insured individuals, and, therefore, it cannot be said that the services provided are services for which "the individual" * * * has no legal obligation to pay, and which no other person * * * has a legal obligation to provide or pay for; * * *." Held,section 1862(a)(2) of the Social Security Act does not bar payment on behalf of a beneficiary under title XVIII of the Social Security Act for covered services provided at the X Hospital.