Documentation requirements imposed on the purchaser
by Jeffrey S. Baird

Assume that a DME supplier purchases the assets of another DME supplier. In addition to transferring its “hard” assets to the purchaser, the seller will transfer its “intangible” assets to the purchaser. These include patient files. Assume that a large number of the patients are on rental equipment and/or receive supplies on a regular basis. A common question is this: What new documentation should the purchaser obtain? 


The Medicare Program Integrity Manual indicates that a new physician order is required “when there is a change in the supplier” (Ch. 5 § 5.2.4). Further, in communications with our firm, a CMS representative has stated explicitly that new orders are required where one supplier purchases the assets of another. Some authority suggests that a merger may not require a new order (National Government Services, Jurisdiction B Supplier Manual, chap. 8, 2012). The line between an asset sale and a merger depends upon state law. 


The Program Integrity Manual states: “In cases where two or more suppliers merge, the resultant supplier should make all reasonable attempts to secure copies of all active certificates of medical necessity (CMNs) or DME information forms (DIFs) from the supplier(s) purchased. This document should be kept on file by the resultant supplier for future presentation to the DME MACs, DME PSCs, or ZPICs (Ch. 5 § 5.3).”

Because a CMN normally also serves as the detailed written order, it would appear to be counterintuitive to require a new order after an asset purchase but not a new CMN. Because there is no clear guidance on when new CMNs are required, and because the purchaser will be contacting physicians for new orders anyway, a conservative approach is for the purchaser to request new CMNs as well. 


The Claims Processing Manual states that “an assignment is an agreement between a physician (or other supplier of services) and an enrollee where the enrollee transfers to the physician his/her right to benefits based on covered services specified on the assigned claim” (Ch. 1 § 30.2.2.C). Because an assignment of benefits (AOB) is an agreement between a beneficiary and a particular supplier, a nonparticipating supplier that purchases the assets of another must obtain a new AOB.

If a purchasing supplier is a participating supplier, however, it will not be required to obtain a new AOB. The Medicare payment regulations state that “when payment is for services furnished by a participating physician or supplier, the beneficiary (or the person authorized to request payment on the beneficiary’s behalf) is not required to assign the claim to the supplier in order for an assignment to be effective” (42 C.F.R. § 424.55c). 

Delivery Tickets

The Program Integrity Manual states: “Suppliers are required to maintain proof of delivery documentation in their files... The three methods of delivery are:  Supplier delivering directly to the beneficiary or authorized representative;

Supplier utilizing a delivery/shipping service to deliver items; and Delivery of items to a nursing facility on behalf of the beneficiary (Ch. 5 § 5.8).” 

No written guidance can be located that specifically addresses whether new delivery tickets must be obtained by a supplier after an asset purchase. However, it stands to reason that it would not be possible as delivery of an item is a discrete event that can only be documented at the time of occurrence by the one who carried it out.