Page 19 - Medicare Benefit Policy Manual

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

1. 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 care, hospital care, or nursing home type care for
each veteran who would also qualify for admission to a VA hospital or domiciliary.

When 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 the individual is a veteran, or because the condition is service-connected,
payment would be precluded under title XVIII.

Per diem amounts paid by the VA to State veterans homes on behalf of those 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 A/B MAC (A) reduces the Medicare payment
to the extent of such payments.

2. State and Local Psychiatric Hospitals

In general, payment may be made under Medicare for covered services furnished without
charge by State or local psychiatric hospitals which serve the general community. (See
§50.3.1.) 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 subsection 3, and
may have services paid by Medicare only under the exceptional circumstances described
there.

A psychiatric hospital to which patients convicted of crimes are committed is considered
to be serving the general community if State law also provides for voluntary admissions
to the institution.

3. Prisoners

The regulation at 42 CFR §411.4(b) states: