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. We will discuss several key issues pertaining to billing on a non-assigned basis.
Participating vs. Non-Participating
Participating. A DME supplier elects to become a “participating supplier” by completing the Medicare Participating Physician or Supplier Agreement (Form CMS-460). When a DME supplier elects to become a participating supplier, the supplier agrees to accept assignment on all claims for Medicare products and services and agrees to accept the Medicare-allowed amount as full payment. The supplier will collect any unmet deductible and 20% coinsurance from the beneficiary.
Non-Participating. When a DME supplier is a “non-participating supplier,” the supplier “may accept assignment on a claim-by-claim basis.” If a non-participating supplier does not accept assignment, the supplier can charge more than the Medicare allowable and will collect directly from the patient. In this instance, the supplier is required to file the claim with Medicare on a non-assigned basis on behalf of the patient, and any Medicare reimbursement is sent directly to the patient.
Switching from Participating Supplier to Non-Participating Supplier. If a participating supplier elects to become a non-participating supplier, the supplier must terminate its existing Medicare participating supplier agreement. To do this, the supplier must notify the National Supplier Clearinghouse (“NSC”) in writing during the Medicare participating supplier enrollment period. The annual participation enrollment period begins on November 15 and concludes on December 31 of each year.
The Age Discrimination Act of 1975 generally prohibits age discrimination under any program receiving federal financial assistance. CMS has a specific rule stating that CMS can terminate a DME supplier’s PTAN for a number of reasons, including if the supplier “places restrictions on the persons it will accept for treatment and it fails either to exempt Medicare beneficiaries from those restrictions or to apply them to Medicare beneficiaries the same as to all other persons seeking care.” 42 C.F.R. 489.53.
Statutorily Non-Covered. If a non-participating supplier without a Competitive Bidding (“CB”) contract sells or rents an item that falls within a product category covered by CB on a non-assigned basis to a patient residing in a Competitive Bidding Area (“CBA”), the item is statutorily non-covered, and Medicare will not reimburse the patient. The noncontract supplier is responsible for notifying the beneficiary that the supplier is not a CB contract supplier for the item in the CBA, and the supplier must obtain a signed ABN indicating that the beneficiary was informed in writing, prior to receiving the CB item, that there would be no payment by Medicare due to the supplier’s noncontract status.
Selling an Item that Medicare Reimburses as a “Sale Item.” Assume that a supplier sells an item, on a non-assigned basis, to a patient for cash. Assume that Medicare reimburses the item as a “sale item,” not as a “capped rental item.” The supplier can sell the item to the patient for an amount in excess of the Medicare fee schedule, and Medicare will pay the patient 80% of the fee schedule amount.
Renting/Selling a Capped Rental Item. Assume that an item is reimbursable by Medicare as a “capped rental item.” Assume that the supplier rents the item, on a non-assigned basis, to a patient. In this situation, the supplier can collect a rental amount from the patient that is higher than the Medicare fee schedule, and Medicare will pay 80% of the Medicare fee schedule rental payment to the patient on a monthly basis. If a DME supplier is billing a non-assigned capped rental item, the supplier cannot collect all 13 months at the time of initial set-up. Assume that, instead of renting the item, the supplier wants to sell the item on a non-assigned basis, to a patient for cash. In this situation, Medicare will not make any payment to the patient for the item. This is because Medicare will only pay for rental of capped rental items and does not pay for the purchase of such items. Because the supplier should expect Medicare not to make payment in this situation, it must obtain an ABN signed by the patient informing the patient that Medicare will pay for the rental, but not the purchase, of the item. The better approach may be to allow the patient to rent on a non-assigned basis so that the supplier receives higher reimbursement, but the patient still gets paid 80% of the Medicare allowable.
ABN. An ABN is required for assigned or non-assigned claims when the supplier reasonably expects that Medicare will not pay for the item or service, which is otherwise usually covered by Medicare. A single ABN is good for one year. A new ABN would be required if the rental extends beyond one year, or if the reason for expected Medicare denial changes. ABNs are specific to Medicare FFS. Whether a Medicare Advantage plan requires an ABN, or something equivalent to an ABN, to hold the patient responsible if the plan denies coverage for the claim, is dependent on the particular plan.
Beneficiary Claim Authorization. If the supplier is billing for an item on a non-assigned basis, it must have the Medicare beneficiary sign a claim authorization. This authorization can be a one-time authorization specifying the item, UNLESS the item is being rented on a non-assigned basis, in which case the supplier must have the beneficiary sign a separate authorization for each month the item is rented.
Supplies and Accessories. Medicare will pay for supplies and accessories used with beneficiary-owned equipment (equipment that is owned by the beneficiary, but was not paid for by Medicare) on condition that 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
- date the patient obtained the equipment.
Medicare will only cover supplies and accessories for equipment that meet the existing coverage criteria for the base item. If the supply or accessory has additional, separate criteria, these must also be met. In the event of a documentation request from the DME MAC or a redetermination request, the supplier must provide information justifying the medical necessity for the base item and the supplies and/or accessories. The DME supplier can bill for supplies and accessories on a non-assigned basis. In so doing, the supplier can charge higher than the Medicare allowable.
Repairs. Repairs to equipment that a beneficiary owns are covered when necessary to make the equipment serviceable. If the expense for repairs exceeds the estimated expense of purchasing (or renting another item of equipment for the remaining period of medical need), no payment will be made for the amount of the excess. When billing for repairs, include the HCPCS code and date of purchase of the item being repaired (if the HCPCS code is not available, include the manufacturer’s name, product name, and model number of the equipment), the manufacturer’s name, product name, model number, MSRP of the repair item provided, and the justification for the repair. The DME supplier can bill for the repairs on a non-assigned basis. If the bill exceeds the allowable for a replacement device, then that information should be disclosed to the beneficiary, via an ABN, as a potential reason for denial.
Changing from Assigned to Non-Assigned
If the supplier is non-participating, then it can change from assigned to non-assigned during the rental period. The supplier should give the patient at least 30 days advance notice, so the patient can look for another supplier that will accept assignment. In a webinar, the DME MACs stated that a supplier cannot change an oxygen patient from assigned to non-assigned during the course of the 36 month rental period. Brown & Fortunato disagrees. Language from the Federal Register makes it clear that the supplier’s notice to the patient of its original intention regarding acceptance of assignment is not binding. We expect that CMS will issue an FAQ that addresses this issue.
There is virtually no published information from Medicare on the risk of liability for non-assigned claims. The intake process needs to be same for assigned and non-assigned claims. If the patient does not meet medical necessity criteria and the supplier chooses to provide the product and bill non-assigned, an ABN should be issued and, assuming the ABN is valid, recoupment liability should not be imposed on the supplier. The supplier should not be routinely obtaining an ABN for all non-assigned claims. An ABN should only be issued when the supplier reasonably believes that the claim will be denied. In the instance when a non-assigned claim is reviewed and payment is denied, the supplier will usually be required to refund the amount collected back to the Medicare beneficiary unless a valid ABN was obtained.
A non-CB supplier can sell covered items for cash to Medicare patients who reside in a CBA on condition that a properly executed ABN is signed acknowledging that Medicare will not pay for the item since it is being provided by a supplier without a CB contract. A CB supplier cannot sell covered items for cash to Medicare patients who reside in a CBA unless the item is not medically necessary. CB suppliers must accept assignment on all items under their CB contracts. A non-participating Medicare supplier can sell, on a non-assigned basis, covered items for cash to Medicare patients residing outside of a CBA.
AAHOMECARE’S EDUCATIONAL WEBINAR
Managed Care Contracts: How to Negotiate and How to Access Another Supplier’s Contract
Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato, P.C.
Tuesday, November 19, 2019
2:30-3:30 p.m. EASTERN TIME
At the end of the day, DME suppliers primarily serve the elderly (Medicare) and those on the lower end of the socio-economic scale (Medicaid). Both the Medicare and Medicaid programs are gravitating towards “managed care.” Approximately 35% of Medicare beneficiaries are signed up with Medicare Advantage Plans, while approximately 70% of Medicaid beneficiaries are signed up with Medicaid Managed Care Plans. These percentages are increasing. Medicare and Medicaid Plans work essentially the same way: (i) the government health care program contracts with a “Plan” that is owned by an insurance company; (ii) the Plan signs up patients; (iii) the Plan signs contracts with hospitals, physicians, DME suppliers and other providers…these providers will take care of the Plan’s patients; and (iv) the government program pays the Plan that, in turn, pays the provider. Increasingly, DME suppliers will be asked to sign managed care contracts. In so doing, the supplier needs to be careful. Not only must the contract provide sufficient reimbursement to the supplier, but the contract will have some “trap” provisions that may be harmful to the supplier. This program will discuss the most important provisions that are contained in managed care contracts. The program will discuss how the supplier can negotiate with Plans; and the discussion will point out the provisions that are often non-negotiable and the provisions that are open to negotiation.
Register for Managed Care Contracts: How to Negotiate and How to Access Another Supplier’s Contract on Tuesday, November 19, 2019, 2:30-3:30 p.m. ET, with Jeffrey S. Baird, Esq., of Brown & Fortunato, PC.
AAHomecare’s Retail Work Group
The Retail Work Group is a vibrant network of DME industry stakeholders (suppliers, manufacturers, consultants) that meets once a month via video conference during which (i) an expert guest will present a topic on an aspect of selling products at retail, and (ii) a question and answer period will follow. The next Retail Work Group video conference is scheduled for November 14, 2019, at 11:00 a.m. Central. Lisa Wells of Cure Medical and Jenn Wolff, a disability advocate and end-user, will present “Learning the Voice of the Customer/End User with Disabilities.” Participation in the Retail Work Group is free to AAHomecare members. For more information, contact Ashley Plauché Manager of Government Affairs, AAHomecare (email@example.com).
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. Mr. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization, and can be reached at (806) 345-6320 or firstname.lastname@example.org.