AMARILLO, TX – DME suppliers and other health care providers make and receive requests for medical records constantly. It is not uncommon for a DME supplier to receive an audit or request for records to support the medical necessity of an item that was billed to an insurer. The DME supplier, then, has to rely on the patient’s health care provider to send copies of those medical records to the DME supplier in order to respond to the audit.

Failure to respond, or responding inadequately, to audits and requests for records can have serious consequences for DME suppliers, including recoupments and, in extreme cases, allegations of fraud, waste or abuse of the system. Given the importance of obtaining medical records, delays in or barriers to receiving the documentation can be problematic.

It is also not uncommon for health care providers, and third-party companies that provide medical records services to health care providers, to charge fees for copies of medical records. Individual requests for records are often accompanied by a charge for copying, paper, time, etc. But are health care providers, or their contractors, allowed to charge other health care providers, like DME suppliers, for copies of medical records? What happens if a DME supplier refuses to pay for the records? What kinds of issues could arise from a practice of charging other health care providers, like DME suppliers, to access the medical records of their own patients?

There are different rules controlling a DME supplier’s ability to request, and right to receive, records from other health care providers. The most commonly referenced law involving patient information is the Health Insurance Portability and Accountability Act (“HIPAA”). HIPAA permits the use and disclosure of protected health information (“PHI”), that is contained in medical records, under certain circumstances.

For example, a covered entity, as defined by HIPAA, is permitted to request PHI for treatment, payment, or health care operations purposes without first obtaining the consent of the subject of the PHI. HIPAA also permits covered entities to charge a reasonable cost-based fee to individuals and their personal representatives for copies of the individual’s PHI. The fee can only include the cost of (1) labor for copying the PHI (whether paper or electronic); (2) supplies for creating the copy (e.g., paper or USB); (3) postage; and (4) preparation of an explanation or summary of the PHI, if agreed by the individual.

These limits generally apply to requests from the individual only. However, an individual may also request to direct PHI to another person or entity. These requests must be in writing, signed by the individual and clearly identify the person or entity to whom the PHI is directed. Under this scenario, the charge limits would apply to this request as well. Notably, HIPAA does not address charges to other covered entities for PHI. It neither expressly permits nor prohibits the practice.

Recently, HHS finalized the rules on information blocking, that generally prohibit “actors” from engaging in information blocking, which means “a practice that. . . [] is unreasonable and is likely to interfere with access, exchange, or use of electronic health information.” 45 CFR 171.103. This rule is separate from HIPAA and the definitions differ slightly from HIPAA, and, notably, there is an exception for charging fees for accessing, exchanging or using electronic health information. So, that’s it? Covered entities can charge each other whatever they want for medical records?

Not quite.

Medicare, and its administrative contractors (“MACs”), provide additional guidance on the request for medical records. The Medicare guidelines make it clear that the patient’s medical record must include sufficient documentation to support medical necessity in order for the patient to qualify for the DME. Specifically

. . . the patient’s medical record must contain sufficient documentation of the patient’s medical condition to substantiate the necessity for the type and quantity of items ordered and for the frequency of use or replacement (if applicable)…neither a physician’s order nor a CMN[1]…nor a supplier prepared statement nor a physician attestation by itself provides sufficient documentation of medical necessity, even though it is signed by the treating physician or supplier. There must be information in the patient’s medical record that supports the medical necessity for the item and substantiates the answers on the CMN…or information on a supplier prepared statement or physician attestation (if applicable).[2]

Additionally, the law establishes an obligation for physicians and other practitioners to provide the evidence of medical necessity.

In the case of an item or service . . . ordered by a physician or [other specified practitioner], but furnished by another entity, if the Secretary (or fiscal agent of the Secretary) requires the entity furnishing the item or service to provide diagnostic or other medical information in order for payment to be made to the entity, the physician or practitioner shall provide that information to the entity at the time that the item or service is ordered by the physician or practitioner.[3]

Based on the above, it is clear that (1) the patient’s medical record must support the medical necessity of DME that is ordered for and dispensed to the patient and billed to Medicare and (2) physicians and other practitioners are required to provide medical records and information to DME suppliers that are requested by Medicare or the Department of Health and Human Services.

With respect to charges for medical records, the MACs published an open letter to physicians (read: health care providers) related to requests for medical records from DME suppliers. Excerpts of that letter follow:

For any DMEPOS item to be covered by Medicare, the patient’s medical record must contain sufficient information about the patient’s medical condition(s) to substantiate the necessity for the type and quantity of items ordered and for replacement (if applicable). The information should include the patient’s diagnosis and other pertinent information including (but not limited to) duration of the patient’s condition, clinical course (worsening or improvement), prognosis, nature and extent of functional limitations, other therapeutic interventions and results, and past experience with related items. For selected claims, the DME MACs, UPICs, or other contractors may request that the supplier obtain this information from you in order to verify that Medicare coverage criteria have been met.

The DMEPOS supplier is your partner in caring for your patient. The supplier will not receive payment from Medicare for the items that are ordered if you do not provide information from your patient’s medical record when it is requested. Furthermore, not providing this information may result in your patient having to pay out-of-pocket for the item.

. . . You cannot charge the supplier or the beneficiary to provide this information to the supplier. Help the DMEPOS supplier continue to provide quality service to your patient by promptly providing the information from the medical record that is requested.

Guidance from the MACs clearly states that physicians and other health care providers cannot charge DME suppliers (or the patients) for requests for medical records related to responses to requests for records from Medicare. Ultimately, however, if a health care provider attempts to charge a DME supplier for these types of requests, the DME supplier may be placed in a position to contest the charges.

Rossanna J. Madrigal, JD, is an attorney with the Health Care Group at Brown & Fortunato, PC, a law firm with a national health care practice based in Texas. She represents pharmacies, infusion companies, HME companies, manufacturers and other health care providers throughout the United States. Ms. Madrigal can be reached at (806) 345-6308 or [email protected].

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, PC, a law firm with a national health care practice based in Texas. He represents pharmacies, infusion companies, HME companies, manufacturers 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 [email protected].

AAHOMECARE’S EDUCATIONAL WEBINAR

Billing Nonassigned:  Steps to Succeed

Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato & Lisa K. Smith, Esq., Brown & Fortunato

Tuesday, April 18, 2023

1:30-2:30 p.m. CENTRAL TIME
Since its inception in the 1970s, the DME industry has been an “assignment” industry. A DME supplier would provide a product to a Medicare beneficiary, take assignment from the beneficiary, bill and collect from Medicare, and bill the beneficiary for the copayment. As a result of lower Medicare reimbursements, and in response to the willingness of aging Baby Boomers to pay cash for “Cadillac” products, an increasing number of DME suppliers are electing to become “non-participating” suppliers and are providing Medicare-covered items on a non-assigned basis. This means that the Medicare beneficiaries pay cash up front to the suppliers. This program will discuss the multiple issues arising out of transitioning from billing assigned to billing on a non-assigned basis, including the following: (i) What does it mean to bill non-assigned? (ii) If the supplier bills an item non-assigned, can the supplier set the price without limitation? (iii) Must the supplier submit a claim to Medicare so that the beneficiary can be reimbursed? (iv) Can the supplier sell a capped rental item for cash? (v) Does the supplier need to obtain documentation supporting medical necessity? (vi) Is the supplier at risk of having to repay Medicare and/or the beneficiary in the event of a subsequent audit?

Register for Billing Nonassigned:  Steps to Succeed on Tuesday, April 18, 2023, 1:30-2:30 p.m. CT, with Jeffrey S. Baird, Esq., and Lisa K. Smith, Esq., of  Brown & Fortunato.

Members:  $99
Non-Members:  $129

AAHOMECARE’S EDUCATIONAL WEBINAR

Negotiating Managed Care Contracts

Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato & Colleen T. Byrom, Esq., Brown & Fortunato

Tuesday, April 25, 2023

1:30-2:30 p.m. CENTRAL TIME
Approximately 50% of Medicare beneficiaries are signed up with Medicare Advantage Plans (“MAPs”), while approximately 70% of Medicaid beneficiaries are signed up with Medicaid Managed Care Plans (“MMCPs”). These percentages are increasing. MAPs and MMCPs 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; and (iv) the government program pays the Plan that, in turn, pays the providers. In order to serve MAP and MMCP patients, DME suppliers must 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, such as covered services, medical necessity, passive amendments, incorporation of collateral documents, set-off, remedy for delay in payment, and payment forfeiture for late claims. 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 Negotiating Managed Care Contracts on Tuesday, April 25, 2023, 1:30-2:30 p.m. CT, with Jeffrey S. Baird, Esq., and Colleen T. Byrom, Esq., of  Brown & Fortunato.

Members:  $99
Non-Members:  $129

[1] Certificate of Medical Necessity.
[2] Medicare Program integrity Manual (PIM) (Pub 100-8) Chapter 5, Section 5.9 (emphasis added).
[3] Title XVIII Section 1842(p)(4) of the Social Security Act (emphasis added).