Moving the HME Industry Forward


Billing Non-Assigned – Further Guidance

October 24, 2016

AMARILLO, TX – In August, Medtrade Monday published a four part series of articles I prepared entitled “Responding to Medicare Cuts.” A key topic in these articles is how a non-participating supplier can bill Medicare beneficiaries on a non-assigned basis. As DME suppliers move into the non-assigned arena, many issues arise. This article addresses some of the key issues.

Recoupment Risk to DME Supplier
Assume that the supplier provides the item non-assigned and submits a claim to Medicare on behalf of the patient. Assume that Medicare reimburses the patient but subsequently audits the claim. Assume that following the audit, Medicare demands recoupment of the claim. Is the supplier at risk of being required to repay the patient? Unfortunately, there is little published guidance from Medicare on the risk of liability for non-assigned claims. The DME supplier’s intake process should be the same for assigned and non-assigned items. If the patient does not meet medical necessity criteria and the supplier chooses to provide and bill non-assigned, an ABN should be issued. Assuming the ABN is valid, the supplier should not have recoupment exposure. If the patient did meet medical necessity criteria and the supplier chooses to file a non-assigned claim, then the supplier may be liable if the claim is audited and a recoupment action ensues. The supplier should not routinely be obtaining an ABN for all non-assigned claims. An ABN should be issued only when the supplier reasonably believes that the claim will be denied. In the instance that a non-assigned claim is reviewed and payment denied, the supplier will likely be required to refund the amount collected back to the Medicare beneficiary.  

Retail Supplier With No PTAN
Items that require a prescription prior to dispensing should be labeled as such. Any item labeled as a prescription device or supply requires a prescription prior to dispensing, regardless of whether it is being sold by a Medicare supplier or “retail” company (e.g., online company) with no PTAN. State licensing requirements govern who can/cannot sell prescription items. The seller of a prescription-only item should retain the prescription in its records. If the supplier is not a Medicare supplier, it does not need to meet Medicare requirements; however, Medicare requirements are different than state licensure requirements.

Electronic Signatures for Monthly Rental
Medicare should accept an electronic signature that meets the requirements of the Uniform Electronic Transactions Act (“UETA”).  In the past, there were instances when CMS took the approach that electronic signatures are not sufficient for certain documents and attempted to require blue ink documents. Notwithstanding what has happened in the past, as long as the UETA is followed, CMS should be required to accept electronic documentation. However, there is some risk that CMS may still question the use of an electronic signature.

Collecting Rent on Non-Assigned Basis
A non-participating supplier can choose to not accept assignment for a Medicare rental item, and can collect its usual rental charge up front from the patient and submit a claim to Medicare on a non-assigned basis. This results in Medicare paying 80% of the Medicare allowable to the patient. The supplier needs to follow Medicare requirements when filing non-assigned claims.

Obligation to Service Oxygen Patient During 60 Months
The DME supplier can choose not to service oxygen for Medicare beneficiaries after the initial five years. However, suppliers are obligated to provide oxygen equipment once they submit the first rental claim through the five year mark, unless the patient chooses to change suppliers. A DME supplier cannot force patients to go to another supplier mid-rental.  

PTAN Required to Bill Commercial Insurers?
Suppliers that do not bill the Medicare program will lose their supplier number after 12 months of no billing. Commercial insurers determine what their criteria are for a DME supplier to be able to participate with that insurance. Many commercial insurers require suppliers to have a PTAN. The DME supplier needs to review the commercial insurer’s DME supplier requirements. Most state Medicaid programs require that DME suppliers be enrolled with Medicare.    

Paying Cash for Capped Rental Item
A DME supplier can only use an ABN and sell a capped rental item on a non-assigned basis if the patient chooses option 2 on the ABN to NOT have the claim submitted to Medicare. A claim with a capped rental HCPCS code and the NU modifier will reject and never be processed by Medicare. If a patient chooses to have the claim filed with Medicare, then the supplier cannot sell the capped rental item and must follow Medicare rules.  

Billing Commercial Insurance Patients Non-Assigned
ABNs do not apply to commercial payers. The DME supplier needs to review its contract (with the commercial insurer) to determine if the supplier can provide products to the commercial insurer’s covered lives on a non-assigned basis. As a general rule, a supplier cannot provide products to commercial insurance covered lives on a non-assigned basis.      

Signed Authorization for Submission of Claim
The DME supplier must have a signed authorization for submission of a claim. There is no “set” form for this authorization; it can be language included as part of the delivery ticket … or for monthly rentals on a non-assigned basis, a separate form can be signed. The supplier can use language from the 1500 form on a document created by supplier as follows: “I authorize the release of any medical or other information necessary to process this claim. I also request payment of government benefits to me.”   

Commercial Insurer Prohibition Against Billing Non-Assigned
The DME supplier will not be discriminating against a Medicare patient so long as the supplier only makes a particular product available to patients for whom the supplier is paid a threshold price, whether that payment amount is collected from the patient on a non-assigned claim, or from the payer (with patient co-pay) for assigned claims. In the circumstance that a commercial payer requires that the supplier accept assignment, the supplier can decline to make a particular product available unless the reimbursement meets the threshold amount established for that item (unless the insurance contract requires otherwise).

Jeff Baird will be presenting the following webinars:
Webinar sponsored by Mediware Information Systems, Inc.
Home Sleep Testing and the CPAP Supplier: What Kind of Relationship Can There Be?

Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato, P.C.
Wednesday, October 26, 2016
1:00-2:00 p.m. CENTRAL TIME
Recent data suggests that nearly 20 million Americans are affected by obstructive sleep apnea. While testing for this disorder has primarily taken place in sleep labs, where patients stay overnight, new home sleep tests have proven more cost effective and patient friendly. Obviously, providing both home sleep tests and CPAP devices is a natural fit for DME suppliers. However, Medicare restrictions may prevent suppliers from doing both.

Join Jeffrey S. Baird, Esq., Chairman of the Health Care Group of Brown & Fortunato, P.C., to learn how your DME business can expand coverage to CPAP patients while remaining compliant with CPAP payment prohibition regulations.

This presentation will help attendees:
• Understand the restrictions that CMS has placed on DME suppliers
• Analyze the consequences of failing to adhere to the federal regulations
• Understand the relationship that DME suppliers can have with home sleep testing entities
• Learn what restrictions apply to DME suppliers owned by hospitals that also conduct home sleep testing

Register for “Home Sleep Testing and the CPAP Supplier: What Kind of Relationship Can There Be?” on Wednesday, October 26, 2016, 1:00-2:00 pm CT, with Jeffrey S. Baird, Esq., of  Brown & Fortunato, PC.

Please contact Kolby Wegener at if you experience any difficulties registering.

This webinar is free for attendees.

Value-Added Services vs. Prohibited Beneficiary Inducement: When is the Line Crossed?
Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato, P.C.
Tuesday, November 8, 2016
2:30-4:00 p.m. EASTERN TIME
It is perfectly acceptable for the DME supplier to provide services to its patients that the supplier’s competitors do not provide. This is good business. These are classified as “value-added services.” On the other hand, when a supplier offers “something of value” to induce a prospective customer (a Medicare beneficiary) to buy something from the supplier (as opposed to buying something from the supplier’s competitor), then this may result in a prohibited inducement in violation of the beneficiary inducement statute and the Medicare anti-kickback statute. The line between a value-added service and a prohibited inducement can be unclear. This program will discuss the difference between “value-added services” and “prohibited inducements” and how the supplier can be aggressive in providing great services without “crossing the line.”

Register for “Value-Added Services vs. Prohibited Beneficiary Inducement: When is the Line Crossed?” on Tuesday, November 8, 2016, 2:30-4:00 pm ET, with Jeffrey S. Baird, Esq., of  Brown & Fortunato, PC.

Please contact Ika Sukh at if you experience any difficulties registering.

Member: $99.00    
Non-Member: $129.00

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. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization, and can be reached at (806) 345-6320 or