AMARILLO, TX – When a DME supplier sells/rents a product to a customer, the supplier faces the same challenge that non-health care businesses (e.g., sporting goods stores) face when they sell products: What should the DME supplier do when a customer wants to return a product and either (i) receive a replacement product or (ii) get his money back?
The answer depends on whether the customer (i) is a cash-pay customer, (ii) is covered by a commercial insurer, or (iii) is covered by a government health care program.
Cash-Pay Customer
With a cash-pay customer, the DME supplier is not required to adhere to contractual provisions or government guidelines. The supplier needs to be governed by sound business principles. What is fair to the customer…and what is fair to the DME supplier? For example, the supplier may want to adopt the following policies:
• The customer can return the product to the supplier within ___ days for a full refund, no questions asked.
• If the product is defective, then the customer can return the product to the supplier within ___ days and obtain a replacement product.
Customer Covered by Commercial Insurance
The commercial insurance can be (i) standard employer-based health coverage, (ii) a Medicare Advantage Plan, or (iii) a Medicaid Managed Care Plan. The written contract between the DME supplier and the commercial insurer may contain a provision addressing returns and refunds and the insurer’s policy manual (incorporated by reference into the contract) will almost certainly address returns and refunds. The provisions in the contract/policy are the “minimum necessary” steps that the supplier needs to take. The supplier can choose to be more generous than the requirements set out in the contract/manual.
Traditional Medicare
The Medicare DMEPOS supplier standards require suppliers to “accept returns of substandard or unsuitable items from beneficiaries.” For purposes of this standard, “substandard” means “less than full quality for the particular item;” and “unsuitable” means “inappropriate for the beneficiary at the time it was fitted, rented, or sold.” Medicare guidance does not make clear whether the DME supplier is required to provide a refund upon the return of a product or simply provide a replacement product.
If the DME supplier has already billed and been reimbursed for the returned product and a replacement product is not provided, an overpayment would occur. Therefore, the DME supplier should issue a refund to Medicare and the beneficiary for the return of a purchased product when a replacement product is not provided. For rental products, the DME supplier should discontinue billing for subsequent rental months upon return of the product if a replacement product is not provided. If the beneficiary has used the item for one or more months but then decides he no longer wants the item, there is no obligation to refund the previous months’ payments as long as medical need existed and the beneficiary had use of the product and had not expressed a desire to return the product.
Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, 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 U.S. 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].
