Moving the HME Industry Forward


Billing Non-Assigned – Frequently Asked Questions – Part 2

May 15, 2017

AMARILLO, TX – The DME industry, as we know it today, has been around for about 40 years. It is a young industry. For the first 30 years of its existence, there was little government oversight on the DME industry. This has changed. Over the last 10 years, it feels like the government is making up for lost time.

Today, the DME industry is caught in a “perfect storm”: competitive bidding, reimbursement cuts, stringent documentation requirements, aggressive audits, and the proliferation of “whistleblowers.” Some DME suppliers will implement “economies of scale” that will allow them to succeed in the Medicare fee-for-service (“FFS”) arena. However, these suppliers will be the exception. Most DME suppliers can no longer build their business model on Medicare FFS. Most suppliers need to go outside their comfort zone and look for new sources of income. Said another way, suppliers need to lessen their dependence on Medicare FFS.

For the last four decades, suppliers have primarily provided DME on an assigned basis. Medicare paid the suppliers directly and the patients only had to pay their copayments and deductibles. Until the last several years, this worked out for DME suppliers. Until the last several years, reimbursement was high enough and audits were not onerous…..meaning that the “assignment model” worked well for suppliers. Under this “assignment model,” on the relatively rare occasion when a supplier did bill non-assigned and Medicare was asked to reimburse the patient, such reimbursement was usually made. All of this is changing.

It is becoming cost-prohibitive for many suppliers to continue with the “assignment model.” Up to now, DME supplies have shouldered the burden of the increasingly onerous Medicare policies. The suppliers have shielded their patients from the pain inflicted by Medicare policies. Financially, most DME suppliers can no longer do this. The industry is having to shift the burden (of complying with the increasingly onerous Medicare policies) to the DME suppliers’ patients. While this may be unnerving, it is the “new normal.”

What we are now witnessing are (i) DME suppliers are electing to be non-participating and (ii) DME suppliers are billing non-assigned. If a non-participating supplier provides a product on a non-assigned basis, this means that the supplier is not agreeing to accept the Medicare allowable as payment in full, can collect directly from the patient, and can charge more than the Medicare allowable in such cases.

The supplier must file the claim with Medicare on behalf of the patient and any Medicare reimbursement will go directly to the patient. The bottom line is that the non-participating supplier (that is not a competitive bid contract supplier taking care of competitive bid patients) can collect up-front from the patient (i.e., bill non-assigned). But as is often the case, the “devil is in the details.”

And so let’s talk about the “details.” Set out below is Part 2 of a 3 Part series that discusses frequently asked questions (“FAQs”) pertaining to billing non-assigned.

Crossover to Secondary/Supplement
Question – Will a non-assigned claim cross over to secondary/supplemental insurance and will the insurer pay the 20%?
Answer – Non-assigned claims process the same way as assigned claims. If it is a non-assigned claim, the supplier has no obligation to file secondary claims. There is no guaranty that the payor will pay the patient the same way that Medicare does. A DME supplier will be obligated to send any secondary payment to the patient.

Billing the Concentrator and the Portable
Question – If we get a brand new oxygen referral needing both a concentrator and a portable, can we elect to bill the concentrator assigned and the portable non-assigned? If not, how can we restrict the amount of cylinders that a patient receives?
Answer – A supplier cannot restrict the number of cylinders a patient receives per month. Portable contents are reimbursed in the amount paid for the concentrator. It is Brown & Fortunato’s position that DME suppliers should have the ability to bill equipment assigned or non-assigned if provided on the same date of service without it being considered a fragmented claim.

Ordering a Brand Name Product
Question – If a physician orders a product, and has a brand name on the order, can we provide a generic brand? Or do we need to obtain a new order with the generic name?
Answer – A new order would be required to supply a product other than the brand ordered. A new order, that does not specify any brand, should be obtained.

Payment of Copayments
Question – If a patient pays all of his copayments up front, can we bill the recurring rental each month and do we have to obtain a signature each month? We do not currently obtain a signature each month for recurring rentals.
Answer – The DME 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 monthly rentals. A one-time claim authorization is effective for future monthly rentals when assignment is accepted. A separate authorization is required for each monthly rental filled on a non-assigned basis.

Billing the Copayment After Medicare Pays
Question – We are trying to come up with a model in which the Medicare patient does not pay up front. We want to send the patient a bill after Medicare pays its portion.
Answer – If the DME supplies chooses to file the claim non-assigned, it is its decision when and how to collect from the patient. If the supplier wants to wait to collect from the patient until after Medicare pays the patient, it can do so. However, it may be unwise to do so since the supplier’s best opportunity to collect from the patient is before it hands the product to the patient.

Commercial Insurer Requiring Assignment
Question – The majority of our commercial payors do not allow non-assigned claims. If we decide to make the item non-assigned for Medicare, are we in violation of the anti-discrimination rule?
Answer – The DME supplier will not be discriminating against a Medicare patient so long as the supplier only makes the product available to patients for whom the supplier is paid the threshold price set, whether that payment amount is collected from the patient on a non-assigned claim, or from the payor (with patient co-pay) for assigned claims.

Percentage Above Cost as Threshold
Question – Can we set a percentage above our cost as our threshold for accepting non-assignment rather than a specific dollar amount?
Answer – A DME supplier can establish any pricing it desires as long as it is the same for all. Suppliers can make decisions on what to take assignment on based on any algorithm as long as it is the same for all payors.

Requirements Imposed on Competitive Bid Supplier
Question – Does a competitive bid supplier have to offer the complete product selection to Medicare beneficiaries regarding the HCPCS number that the supplier stocks?
Answer – A competitive bid supplier is required to be able to provide products in every HCPCS code in the product category. If a physician orders a particular brand of an item within a HCPCS code, a competitive bid supplier is required to provide it, go back to a physician to have the brand order changed, or assist the patient in obtaining the specific brand from another contracted supplier.

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, PC, a law firm based in Amarillo, Tex. He represents pharmacies, infusion companies, HME companies 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