Commercial insurance and anti-discrimination restrictions apply
by Jeffrey S. Baird
January 17, 2018

Up to now, HME suppliers have shouldered the burden of increasingly harsh Medicare policies. Suppliers have shielded their patients from the pain being inflicted by competitive bidding, plummeting reimbursement, and out-of-control audits. Out of necessity, suppliers are having to shift the burden of complying with the Medicare policies, to their patients. What we are now witnessing are HME suppliers 1) electing to be non-participating and 2) “billing non-assigned.”

Anti-Discrimination Rule

CMS has an anti-discrimination rule that states that CMS can terminate an HME 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.” A supplier can set up any pricing it wants as long as it is the same for all.

Participating vs. Non-Participating

When an HME supplier elects to become a participating supplier, the supplier agrees to accept assignment on all claims for Medicare products and services. When an HME 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 collect directly from the patient for Medicare covered products and services. 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.

Competitive Bid Items

If a non-participating supplier without a competitive bid (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 CBA, the item is not covered and the patient will not be reimbursed by Medicare. The noncontract supplier is required to notify the beneficiary that it is not a contract supplier for the CB item in the CBA, and the supplier must obtain a signed advanced beneficiary notice of noncoverage (ABN).

Renting a Capped Rental Item

Assume that a non-participating, noncontract supplier rents a “capped rental item” on a non-assigned basis, to a patient not residing in a CBA. 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 percent of the Medicare fee schedule rental payment to the patient on a monthly basis.

Supplies and Accessories

For supplies and accessories used with beneficiary-owned equipment (equipment that is owned by the beneficiary, but was not paid for by Medicare fee-for-service), Medicare will pay for them. The following information must be submitted with the initial claim in Item 19 on the CMS-1500 claim form or in the NTE segment for electronic claims: 1) HCPCS code of base equipment; 2) a notation that this equipment is beneficiary-owned; and 3) the date that the patient obtained the equipment.

Commercial Insurance Mandates

Assignment Under the anti-discrimination provision, the supplier can adopt a policy in which, for example, 1) it bills non-assigned for Products A, B and C and/or 2) it bills non-assigned for all products in which third-party reimbursement is $100 or less. This policy does not discriminate against Medicare patients because the policy applies across the board.

If the insurance company requires the supplier to bill on an assigned basis for all products, including Product A, then the supplier has the right (under the anti-discrimination provision) to sell/rent Product A to the Medicare patient on a non-assigned basis. Rather than saying it will only take assignment on claims based on a certain dollar figure, the supplier can adopt a policy that a particular item will be available to a patient if the reimbursement received meets a certain dollar threshold. The supplier can always make that item available to a Medicare patient on a non-assigned basis. If the commercial insurance does not allow non-assigned claims, the item is only available to the patient if the insurance reimbursement meets the threshold dollar amount.

Switching to Medicare Advantage

Suppliers will need to look to the Medicare Advantage plan to see if the plan requires the supplier to take assignment or allows the supplier to bill non-assigned. If the plan requires assignment, then the supplier can make the item available to the patient only if the insurance reimbursement meets the threshold dollar amount.

Claim Authorization

A request for payment signed by the beneficiary must be filed with each claim for charge-based reimbursement. Generally, suppliers may retain in their files a one-time payment authorization. Once the supplier has obtained the beneficiary’s one-time authorization, later claims can be filed without obtaining an additional signature from the beneficiary. These claims may be on an assigned or non-assigned basis with the exception of HME rentals. The one-time authorization for HME rental claims is limited to assigned claims. The supplier will have to get a beneficiary signature authorization each month for items rented on a non-assigned basis.

What the Supplier Can Charge

The supplier can charge the patient an amount higher than the Medicare fee schedule. While the supplier can charge the patient an amount lower than the Medicare fee schedule, the supplier needs to be aware of the federal statute that says that a supplier is prohibited from charging Medicare substantially in excess of the supplier’s usual and customary charges, unless there is good cause shown. In addition, the supplier needs to be aware of 1) Medicaid statutes that say that the supplier must bill Medicaid its “usual and customary,” and 2) provisions in commercial insurance contracts that state that the supplier must give its “best price” to the insurer.

Changing from Assigned to Non-Assigned

If the supplier is non-participating, then it can change 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 from assigned to non-assigned during the course of the 36 month oxygen rental. Brown & Fortunato disagrees. Language from the Federal Register makes it clear that the supplier’s notice regarding acceptance of assignment is not binding. It is expected that CMS will issue an FAQ that addresses this issue.

Post-Payment Audits

If a non-assigned claim is audited, the supplier will be responsible to produce the documents justifying medical necessity.

ABN

If the patient does not meet medical necessity criteria and the supplier chooses to provide and bill non-assigned, an ABN should be issued. The supplier should not routinely be obtaining an ABN for non-assigned claims. An ABN should be issued only when the supplier reasonably believes that the claim will be denied.

Rental Copayments

The supplier cannot collect all rental “copayments” up front because a copayment is tied to the monthly rental charge. A supplier can charge its regular charge for the equipment and collect the full amount from the patient on a non-assigned basis for the first month, and then take assignment for all subsequent month rentals.