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Medicare Conditions of Participation
Provider Agreements and Supplier Approval

1.) Provider Agreements and Supplier Approval

        a.) General 

In order to participate in the Medicare program, a provider must meet applicable civil rights laws, including Title VI of the Civil Rights Act, Section 504 of the Rehabilitation Act, and the Age Discrimination Act.1

If CMS determines that the provider meets the requirements, it will send the provider written notice of that determination and two copies of the provider agreement. If CMS accepts the agreement, it will return one copy to the provider.2

CMS may refuse to enter into an agreement for any of the following reasons:3

  • Principals of the prospective provider have been convicted of fraud;
  • The prospective provider has failed to disclose ownership and control interests;
  • The prospective provider is a physician-owned hospital and does not have procedures in place for making physician ownership disclosures to patients; or
  • The prospective provider is unable to give satisfactory assurance of compliance with the requirements of Title XVIII of the Act.

        b.) Essentials of provider agreements

Provider agreements must comply with regulatory requirements.4 A provider may not charge a Medicare beneficiary for services that the beneficiary is entitled to be paid by Medicare.5

A provider may not:6

  • Require an individual entitled to hospital insurance benefits to prepay for inpatient services as a condition of admittance as an inpatient, except where it is clear upon admission that payment under Medicare cannot be made.
  • Deny covered inpatient services to an individual entitled to have payment made for those services on the ground of inability or failure to pay a requested amount at or before admission.
  • Evict, or threaten to evict, an individual for inability to pay a deductible or a coinsurance amount required under Medicare.
  • Charge an individual for its agreement to admit or readmit the individual on some specified future date for covered inpatient services; or for failure to remain an inpatient for any agreed-upon length of time or for failure to give advance notice of departure from the provider's facilities.

A provider that furnishes inpatient hospital services to a retired Federal worker age 65 or older who is enrolled in a fee-for-service Federal Employee Health Benefit (“FEHB”) plan and who is not covered under Medicare Part A, must accept, as payment in full, an amount that approximates as closely as possible the Medicare inpatient hospital prospective payment system (PPS) rate.7

A hospital with an emergency department must treat all patients who seek treatment in the emergency department whether or not the patient is eligible for Medicare benefits and regardless of his or her ability to pay.8 The hospital will be sanctioned for inappropriate transfers of patients.

For inpatient services, a hospital that participates in the Medicare program must participate in any health plan contracted with Civilian Health and Medical Program of the Uniformed Services and Civilian Health and Medical Program of the Veterans Administration and accept the CHAMPUS/CHAMPVA-determined allowable amount as payment in full.9

For inpatient services, a hospital that participates in the Medicare program must admit any veteran whose admission is authorized by the Department of Veterans Affairs.10

Any home care agency entering the Medicare program must have available sufficient funds at the time of application submission and at all times during the enrollment process up to the expiration of the 3 month period following the conveyance of Medicare billing privileges to operate the Home Health Agency (“HHA”).11

Hospitals and critical access hospitals that participate in the Medicare program and furnish inpatient hospital services must accept the payment methodology for health programs provided by the Indian Health Service.12

        c.) Allowable charges

Providers must comply with requirements in how they charge deductibles and coinsurance for Medicare beneficiaries.13

  • A provider may charge a beneficiary only for the first 3 pints of blood or units of packed red cells furnished under Medicare.14
  • A provider is permitted to do balance billing if services furnished at the request of the beneficiary are more expensive than services covered under Medicare.15
  • A hospital receiving payment for a covered hospital stay under either a state reimbursement control system or a demonstration project may charge a beneficiary for noncovered services, specifically custodial care and medically unnecessary care.16

        d.) Handling of incorrect collections

“Incorrect collections” means any amounts collected from a beneficiary that is not authorized. A payment properly made to a provider by an individual not entitled to Medicare benefits will be deemed to be an incorrect collection.17 A prompt refund to the beneficiary or other person is the preferred method of handling incorrect collections.18  In order to carry out the commitment to refund amounts incorrectly collected, CMS may determine that amounts offset are to be paid directly to the beneficiary or other person from whom the provider receive the incorrect collection.19

        e.) Termination of a provider agreement

A provider, CMS, and the Office of the Inspector General may terminate a provider agreement.20 The public must be provided notice before the effective date of termination. Payment is available for up to 30 days after the effective date of termination for inpatient hospital services, home health services, and hospice care.21 When a provider agreement has been terminated by CMS or the OIG, a new agreement with that provider will not be accepted unless CMS or the OIG finds that the reason for termination of the previous agreement has been removed and there is reasonable assurance that it will not recur and that the provider has fulfilled all of the statutory and regulatory responsibilities of its previous agreement.22

        f.) Advance directives

Hospitals, critical access hospitals, skilled nursing facilities, home health agencies, providers of home health care, hospices and religious nonmedical health care institutions must maintain written policies and procedures concerning advance directives.23



  • 1. 42 C.F.R. § 489.10
  • 2. 42 C.F.R. § 489.11
  • 3. 42 C.F.R. § 489.12
  • 4. 42 C.F.R. § 489.20
  • 5. 42 C.F.R. § 489.21
  • 6. 42 C.F.R. § 489.22
  • 7. 42 C.F.R. § 489.23
  • 8. 42 C.F.R. § 489.24
  • 9. 42 C.F.R. § 489.26
  • 10. 42 C.F.R. § 489.27
  • 11. 42 C.F.R. § 489.28
  • 12. 42 C.F.R. § 489.29
  • 13. 42 C.F.R. § 489.30
  • 14. 42 C.F.R. § 489.31
  • 15. 42 C.F.R. § 489.32
  • 16. 42 C.F.R. § 489.34
  • 17. 42 C.F.R. § 489.40
  • 18. 42 C.F.R. § 489.41
  • 19. 42 C.F.R. § 489.42
  • 20. 42 C.F.R. §§ 489.52 through 489.54
  • 21. 42 C.F.R. § 489.55
  • 22. 42 C.F.R. § 489.57
  • 23. 42 C.F.R. § 489.102