Updates to No Legal Obligation to Pay for or Provide Services and Examples of Application of Government Entity Exclusion (Pub. 100-02, chapter 16, sections 40 and 50.3.3 and newly created section 40.7) and Claims Submitted for Items or Services Furnished to Medicare Beneficiaries in State or Local Custody Under a Penal Authority (Pub. 100-04, chapter 1, section 10.4)

The purpose of this Change Request (CR) is to update the internet only manual to make it consistent with our regulations. In the CY 2025 OPPS rule, CMS clarified its regulations at 42 CFR 411.4(b) by stating that for purposes of Medicare payment, an individual is considered to be in the custody of a penal authority if the individual is:
(A) Incarcerated in a jail, prison, penitentiary, or similar institution;
(B) Temporarily outside of a jail, prison, penitentiary, or similar institution on medical furlough or similar arrangement;
(C) Escaped from confinement by a penal authority; or
(D) Required to reside in a mental health facility under a penal statute or rule.
Individuals who are not considered to be in the custody of a penal authority include, but are not limited to, individuals who are—
(A) Released to the community pending trial (including those in pretrial community supervision and those released pursuant to cash bail);
(B) On parole;
(C) On probation;
(D) On home detention or home confinement; or
(E) Required to live in a halfway house or other community-based transitional facility.
Therefore, as a result of the changes to our regulations, CMS is amending Pub. 100-02, chapter 16, sections 40 and 50.3.3, and creating new section 40.7. CMS is amending Pub. 100-04, chapter 1, section 10.4 of the Internet Only Manual in order to make them consistent with 42 CFR 411.4(b).

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