Can You Sell Portable Oxygen Concentrator Accessories for Cash?

Assume that a durable medical equipment (DME) supplier rents a portable oxygen concentrator to a Medicare beneficiary, takes assignment and bills Medicare. Can the provider sell accessories (extra batteries, backpacks, replacement cords) to the same person for cash?   

In answering this question, we must look to the Oxygen Local Coverage Determination (LCD) and Oxygen Policy Article. The Oxygen LCD states:

MISCELLANEOUS:

Oxygen reimbursement is a bundled payment. All options, supplies and accessories are considered included in the monthly rental payment for oxygen equipment. Oxygen rental is billed using the appropriate code for the provided oxygen equipment. Separately billed options, accessories or supply items will be denied as unbundling.

The Oxygen Policy Article states:

Months 37-60

There is no further payment for oxygen equipment during the five-year reasonable useful lifetime of the equipment after 36 rental payments have been made. If use of portable equipment (E0431, E0433, E0434, E1392, K0738) begins after the use of stationary equipment begins, payment for the portable equipment can continue after payment for the stationary equipment ends until 36 rental payments have been made for the portable equipment …

The supplier who provided the equipment during the 36th rental month is required to continue to provide the equipment, accessories, contents (if applicable), maintenance, and repair of the oxygen equipment during the five-year reasonable useful lifetime of the equipment.

Months 61 and after

After the end of the five-year reasonable useful lifetime for oxygen equipment, the beneficiary may elect to receive new equipment, thus beginning a new 36-month rental period. If the beneficiary elects not to receive new equipment after the end of the five-year reasonable useful lifetime and if the supplier retains title to the equipment, all elements of the payment policy for months 37-60 remain in effect. There is no separate payment for accessories or repairs. If the beneficiary was using gaseous or liquid oxygen equipment during the 36th rental month, payment can continue to be made for oxygen contents.

If the beneficiary elects not to receive new equipment after the end of the five-year reasonable useful lifetime and if the supplier transfers title of the equipment to the beneficiary, accessories, maintenance, and repairs are statutorily non-covered by Medicare.

OXYGEN ACCESSORIES:

Accessories, including but not limited to, trans-tracheal catheters (A4608), cannulas (A4615), tubing (A4616), mouthpieces (A4617), face tent (A4619), masks (A4620, A7525), oxygen conserving devices (A9900), oxygen tent (E0455), humidifiers (E0555), nebulizer for humidification (E0580), regulators (E1353), and stand/rack (E1355) are included in the allowance for rented oxygen equipment. The supplier must provide any accessory ordered by the treating practitioner. Accessories used with beneficiary-owned oxygen equipment will be denied as noncovered. Code E1392 describes an oxygen concentrator which is designed to be portable, is capable of delivering 85% or greater oxygen concentration, and is capable of operating on either AC or DC (e.g., auto accessory outlet) power. Code E1392 includes the device itself, an integrated battery or beneficiary-replaceable batteries that are capable of providing at least two hours of remote portability at a minimum of 2 liters per minute (LPM) equivalency, a battery charger, an AC power adapter, a DC power adapter, and a carry bag and/or cart. The combined weight of the concentrator and the battery/batteries capable of two hours of portability must be 20 pounds or less. If a concentrator meets all of these criteria and is also capable of functioning as a stationary concentrator, operating 24/7, the stationary concentrator code (E1390) is billed in addition to code E1392.

Waiver Required

To the extent that the accessory requested by the beneficiary is included as a component of the E1392 HCPCS description, the supplier cannot charge the beneficiary separately for the item unless the five-year reasonable useful lifetime has expired and the supplier has transferred the title of the oxygen equipment to the beneficiary. If, however, the accessory is in addition to the items required to be provided by the supplier, the supplier can charge the beneficiary for the item, but the supplier should obtain a signed Advance Beneficiary Notice (ABN) disclosing that the item requested exceeds the quantity covered by Medicare.

For example, if the supplier provides the required battery that generates at least two hours portability at two liters per minute, and the beneficiary wants an additional battery, then the DME supplier can obtain a signed ABN and charge the beneficiary for it. If, however, the beneficiary wants a replacement DC power adapter because the one originally provided to them no longer works, the supplier cannot charge the beneficiary because the supplier is required to repair and replace covered rental items unless the five-year reasonable useful lifetime period has expired and the supplier has transferred title to the oxygen equipment to the beneficiary.

Nonparticipating Suppliers

Would the answers above change if the supplier is not a participating Medicare supplier and does not accept assignment on the rental of the portable oxygen concentrator?

DME suppliers enrolled with Medicare can choose whether to be participating or nonparticipating. Participating suppliers have signed a contract with Medicare agreeing to accept assignment on all services rendered to Medicare beneficiaries. Nonparticipating suppliers have the option of accepting assignment on a claim-by-claim basis, except where Medicare regulations require mandatory assignment (e.g., Medicare-covered drugs, competitive bidding contracts, etc.). If a nonparticipating supplier does not accept assignment, the supplier can charge more than the Medicare allowable and will collect directly from the beneficiary. In this instance, the supplier is required to file the claim with Medicare on a nonassigned basis on behalf of the beneficiary, and any Medicare reimbursement is sent directly to the beneficiary.

Medicare regulations also state:

Before furnishing oxygen equipment, the supplier must disclose to the beneficiary its intentions regarding whether it will accept assignment of all monthly rental claims for the duration of the rental period. A supplier’s intentions could be expressed in the form of a written agreement between the supplier and the beneficiary.

Some have interpreted this language to mean that if a nonparticipating supplier informs the beneficiary that it intends to accept assignment for all monthly rentals, it is required to do so. However, in the comments published in the Federal Register on Nov. 9, 2006, related to the adoption of the final rule, the Centers for Medicare & Medicaid Services (CMS) stated:

“While we proposed to require an up-front declaration on assignment intentions, a supplier would not be bound by such declaration unless the supplier chooses to do so. … While we proposed that a supplier’s intentions could be expressed in the form of a written agreement between the supplier and a beneficiary, we did not propose to require a binding written agreement. A supplier could select the form of the declaration. If a supplier chose to offer a written agreement, the nature of such agreement would be between the supplier and the beneficiary.”

Therefore, absent a written agreement with the beneficiary to the contrary, a supplier can choose whether to accept assignment on claims for oxygen equipment on a claim-by-claim basis.

To the extent that the accessory requested by the beneficiary is included as a component of the E1392 HCPCS description (for example, the beneficiary needs a replacement battery or charger), a nonparticipating supplier cannot charge the beneficiary separately for the item regardless of whether the supplier has accepted assignment on the equipment rental claims or not, unless the five-year reasonable useful lifetime has expired and the supplier has transferred the title of the oxygen equipment to the beneficiary. While the nonparticipating supplier cannot usually charge the beneficiary separately for such items, the supplier can choose not to accept assignment for one or more of the oxygen equipment rental claims. In this situation, the supplier will collect from the beneficiary its usual and customary charge for the rental of a portable oxygen concentrator which can be more than the Medicare allowable.

When a supplier submits a Medicare claim on a nonassigned basis, it must have the beneficiary sign a claim authorization. While normally this can be a one-time claim authorization specifying the item (such as for supplies billed monthly on a nonassigned basis), a separate signed claim authorization is required for each month that a rental item is billed on a nonassigned basis.