AMARILLO, TX – For the last four decades, DME suppliers have primarily provided DME on an assigned basis. Medicare paid the suppliers directly and the patients only had to pay their copayments and deductibles. Until approximately 2010, this worked out for DME suppliers. Reimbursement was high enough and audits were not onerous—meaning that the “assignment model” worked relatively well.
However, in today’s climate of competitive bidding and lower reimbursement, it is challenging for suppliers to rely entirely on the assignment model. What we are now witnessing is that an increasing number of DME suppliers are electing to be non-participating and are billing non-assigned. If a non-participating supplier provides a product on a non-assigned basis, this means that the supplier (i) is not agreeing to accept the Medicare allowable as payment in full, (ii) can collect directly from the patient, and (iii) can charge more than the Medicare allowable in such cases. The supplier must file the claim with Medicare on behalf of the patient and any Medicare reimbursement will go directly to the patient.
Two weeks ago, I presented an article entitled “Billing Non-Assigned.” In that article, I discussed a number of key issues pertaining to billing on a non-assigned basis. This article discusses a number of additional key issues.
Commercial Insurance Mandating Assignment
If the commercial insurer requires the DME supplier to bill on an assigned basis for all products, then does the supplier have the right (under the anti-discrimination provision) to sell/rent a particular product to a Medicare patient on a non-assigned basis? The answer is “yes.” The supplier has the right to choose whether to accept Medicare assignment on a claim by claim basis. The supplier should adopt a policy that a particular item will be available to a patient if the reimbursement received meets a certain dollar threshold. The supplier can always make that item available to a Medicare patient on a non-assigned basis. If the commercial insurance does not allow non-assigned claims, the item is only available to the patient if the insurance reimbursement meets the threshold dollar amount.
Medicare Advantage Mandating Assignment
Suppliers will need to look at the Medicare Advantage plan to see if the plan requires the supplier to take assignment or allows the supplier to bill non-assigned. If the answer is that the plan requires assignment, then the supplier can adopt a policy where an item is only available to a patient if the reimbursement received meets a threshold dollar amount.
What the Supplier Can Charge
A non-participating supplier can charge the patient an amount higher than the Medicare fee schedule. If the supplier desires to charge the patient less than the Medicare fee schedule, then it needs to be aware of the federal statute that says that a supplier is prohibited from charging Medicare substantially in excess of the supplier’s usual charge, unless there is good cause shown. The supplier needs to also be aware of (i) Medicaid statutes that specify the supplier’s charge that must be billed to the Medicaid program and (ii) provisions in commercial insurance contracts that may require that the supplier give its “best price” to the insurer.
Limiting Charge
According to CMS requirements, some providers are prohibited from billing the beneficiary in excess of the “limiting charge” for covered services. Should the provider bill more than the limiting charge for a covered service, the provider may be subject to fines or penalties. This “limiting charge” restriction does not apply to DME suppliers.
Billing for Items on Same Day
A supplier cannot submit some items assigned and others non-assigned on the same claim. It is unclear if a supplier can have two separate claims, one assigned and one non-assigned, with the same date of service, or if different dates of service are required.
Commercial Insurance/Medicaid Requiring Medicare Enrollment
Commercial insurance carriers decide what the criteria are for a supplier to be able to participate as a provider under the insurance plans. Many commercial insurance plans require suppliers to be able to bill Medicare. In addition, many state Medicaid programs require DME suppliers to be enrolled with Medicare.
Home Oxygen
During the rental period, the contents for the portable equipment are included in the payment for the concentrator. The DME supplier may want to consider providing the concentrator on a non-assigned basis and providing the portable equipment on an assigned basis. After the 36th month, there is uncertainty regarding adjusting the price on the non-assigned portable contents based on tanks used – and then whether this would apply to all payors. CMS has issued no guidance on what suppliers can do in this instance. There is a risk that this would be perceived as unbundling as Medicare requires oxygen contents to be paid at a bundled rate.
The supplier can choose not to provide oxygen to Medicare beneficiaries after the five years. Suppliers are obligated to provide oxygen equipment, once they submit the first rental claim, through the five-year period unless the patient chooses to change suppliers or another exception applies. The supplier cannot force patients to go to another supplier mid-rental unless the patient moves outside the supplier’s service area.
Cylinders/Contents/Same Date of Service
A supplier cannot restrict the number of cylinders a patient receives per month. Portable contents are reimbursed in the amount paid for the concentrator. A credible argument can be made that DME suppliers should have the ability to bill equipment assigned or non-assigned if provided on the same date of service without it being considered a fragmented claim.
Replacement Equipment/Damage to CPAP
If Medicare paid for the 13-month rental resulting in title to the CPAP being transferred to the patient, the supplier is responsible for furnishing replacement equipment at no cost to the patient if Medicare determines that the item furnished by the supplier will not last the 5-year reasonable useful lifetime. If the CPAP suffered irreparable damage, the patient can elect to obtain replacement equipment, in which case Medicare will pay for a new capped rental. Irreparable damage refers to a specific incident of damage to equipment such as equipment falling down a flight of stairs as opposed to equipment that is worn out over time.
Billing After 36th Month
A supplier cannot bill any amount, either to Medicare or the patient, for rental of oxygen equipment beyond the 36th month. After the 36th month rental, the supplier can only bill for oxygen contents (if applicable) and maintenance and servicing (if performed).
Oxygen Contents
A non-participating supplier can bill oxygen contents non-assigned after the 36 month rental period.
Stationary and Portable
If an oxygen patient has both a stationary unit and a portable unit that are being billed on two different anniversary dates, one claim can be assigned and the other claim can be non-assigned. It is unclear as to whether the claims can have the same date of service, or if different dates of service will be required.
Nebulizer Medications
Nebulizer medications should be covered if the patient meets Medicare medical necessity coverage criteria for the nebulizer and all of the following information is submitted with the initial claim in Item 19 on the CMS-1500 claim form or in the NTE segment for electronic claims: HCPCS code of base equipment, a notation that this equipment is beneficiary owned, and the date the patient obtained the equipment.
Secondary Insurance
If the supplier does not accept assignment on an item, the billed amount will be whatever amount the supplier chooses to set. The secondary will not typically pay the difference between the billed and allowed charge.
Crossover to Secondary
Non-assigned claims process the same way as assigned claims. If it is a non-assigned claim, the supplier has no obligation to file secondary claims. There is no guaranty that the payor will pay the patient the same way that Medicare does. A DME supplier will be obligated to send any secondary payment to the patient.
Medical Assistance Secondary
As to whether a supplier can bill non-assigned for patients with medical assistance secondary is a state by state issue. Some states allow suppliers to bill patients as long as they do not bill the Medicaid program. If the patient is a QMB Medicaid eligible, a supplier must take assignment. Other Medicaid programs may allow a supplier to not take assignment.
Product’s Coding Verification
An item’s PDAC code-verification presence in the coding system does not determine whether an item must be billed to Medicare or sold for cash. While PDAC does require specific items to be PDAC code-verified, most products, including CPAP and portable oxygen concentrators, are not required to be code-verified. Obtaining PDAC HCPCS code verification for non-required items is voluntary. In the absence of a PDAC coding verification, it is the supplier’s responsibility to determine whether the item falls within an existing HCPCS definition, and if so, whether the supplier must use the associated HCPCS code when submitting claims.
Payment of Copayments
The DME supplier cannot collect all rental copayments up front because a copayment is tied to the monthly rental charge. A supplier can bill its regular charge for the equipment and collect the full amount from the patient on a non-assigned basis for the first month, and then take assignment for all subsequent monthly rentals. A one-time claim authorization is effective for future monthly rentals when assignment is accepted. A separate authorization is required for each monthly rental filled on a non-assigned basis.
Billing the Copayment After Medicare Pays
If the DME supplier chooses to file the claim non-assigned, it is its decision when and how to collect from the patient. If the supplier wants to wait to collect from the patient until after Medicare pays the patient, it can do so. However, it may be unwise to do so since the supplier’s best opportunity to collect from the patient is before it hands the product to the patient.
Prior Authorization
A supplier can bill non-assigned on an item that requires prior approval.
DME Supplier Without a PTAN
The Medicare rules say that a supplier without a Medicare PTAN is required to refund the money it collects from a Medicare patient unless it has the patient sign an ABN acknowledging that Medicare will not pay for any item obtained from that supplier because it is not enrolled with Medicare. In the absence of a signed ABN, if the supplier can prove that it provided adequate prior written notice to the customer, it can keep the funds collected from the customer. 42 U.S.C. §1395m(j)(4)(A). CMS guidance recommends a printed sign posted in a place likely to be seen by customers. Whether a disclaimer printed at the bottom of the store’s receipt will be considered adequate prior written notice will depend on how prominently the notice is displayed on the receipt, and how likely it is that the patient saw the notice prior to completing the purchase.
- Sample Notice Disclaimer:
“Medicare will pay for medical equipment and supplies only if a supplier has a Medicare supplier number. We do not have a Medicare supplier number. Medicare will not pay for any medical equipment and supplies we sell or rent to you. You will be personally and fully responsible for payment.”
Selling Prescription-Only Products
Items that require a prescription prior to dispensing should be labeled as such. Any item labeled as a prescription device or supply requires a prescription prior to dispensing, regardless of whether it is being sold by a Medicare supplier with a PTAN, a “retail” company without a PTAN, or online company without a PTAN. State licensing requirements govern who can/cannot sell prescription items. The seller of a prescription-only item should retain the prescription in its records.
Electronic Signature
Medicare should accept an electronic signature that meets the requirements of the Uniform Electronic Transactions Act (“UETA”). In the past, CMS has taken the approach that electronic signatures are not sufficient for AOBs and have attempted to require blue ink documents. However, a credible argument can be made that as long as the UETA is followed, CMS should be required to accept electronic documentation. However, the supplier should be aware that there is some risk that CMS may still question the use of an electronic signature.
Accepting Lesser Amount from Non-Assigned Patient
If the supplier usually charges all insurances, e.g., $400/month for E1390, but is unwilling to accept Medicare’s rates and charges a patient $200/month as non-assigned, the supplier is essentially saying that it will take $200/month. As such, the supplier will be obligated to change its E1390 price to $200/month. By charging a non-assigned price of $200/month, the supplier is stating that it will accept $200/month as adequate payment. The price the supplier charges for a non-assigned claim should be its usual charge, and not a reduced amount, as other payors could claim that the supplier is charging them an excess amount.
Fragmented Billing
Assume that a non-participating supplier furnishes two cushions (A7032) to the patient on the same day and at the same place. In this scenario, the non-participating supplier cannot bill cash for one A7032 as non-assigned and the other one A7032 as assigned. This is considered fragmented billing. The supplier must choose to submit two cushions (A7032) as either assigned or non-assigned. Medicare considers “fragmented” billing to arise when a supplier accepts assignment for some products and payment from the patient for other products at the same place on the same date of service.
Dropping Accreditation
If a supplier drops its accreditation on a product category (resulting in the supplier no longer being able to bill Medicare for that product category), this does not allow the supplier to collect cash up front. The supplier must be accredited for the products it provides because accreditation certifies that the supplier meets the specific standards for the products provided. Otherwise, the supplier may be in violation of the supplier standards and the requirements of the supplier’s accreditation agency. This is true for both Medicare and commercial insurance patients.
Sale of Non-Covered Items
Medicare does not restrict a DME supplier from selling products that are not reimbursable by Medicare.
Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, PC, a law firm based in Amarillo, Texas. He represents pharmacies, infusion companies, HME companies and other health care providers throughout the United States. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization, and can be reached at (806) 345-6320 or [email protected].
