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General Healthcare

Adjusting to Reduced Reimbursement in Non-CBAs

February 22, 2016

AMARILLO, TX – Assume that XYZ Medical Equipment, Inc. (“XYZ”) is enrolled in Medicare as a non-participating supplier.  As such, XYZ may choose either to accept or not accept assignment on Medicare claims on a claim-by-claim basis. If XYZ accepts assignment, it may not charge the beneficiary more than the Medicare fee schedule amount.

Under the Affordable Care Act, beginning January 1, 2016, CMS must use the competitive bidding (“CB”) program pricing information to reduce DME fee schedule amounts for DME beneficiaries located outside of CBAs.  Because of the reduction in reimbursement rates, XYZ may want to consider alternative business models.

The Age Discrimination Act of 1975  generally prohibits age discrimination under any program receiving Federal financial assistance.  Additionally, CMS has a specific anti-discrimination rule which states that CMS may terminate the agreement with any provider if CMS finds that the provider “places restriction on the persons it will accept for treatment and it fails either to exempt Medicare beneficiaries from those restrictions or apply them to Medicare beneficiaries the same as to all other persons seeking care.”   Although the CMS anti-discrimination rule appears to only apply to “providers,” it is wise for “suppliers” to also adhere to its requirements.

Business Model No. 1

XYZ may desire to continue to offer the same products that it currently offers.  For example, assume that XYZ currently offers products A, B, C, D, E, and F and accepts assignment from all payors, including Medicare, on items A through F.  XYZ may desire to no longer accept Medicare assignment on products A, B, and C, but will continue to accept assignment from all non-Medicare payors for these items.  XYZ may desire to continue to accept assignment from all payors, including Medicare, on items D, E, and F.  Although XYZ will no longer accept Medicare assignment for items A, B, and C, it must still submit non-assigned claims on behalf of the Medicare beneficiary for these “cash pay” items.  

Under this approach, the only criteria for determining when assignment for items A, B, and C will be accepted is based on the beneficiary’s payor.  If the payor is Medicare, then XYZ will require that the beneficiary pay cash for items A, B, or C and will submit a non-assigned claim on the beneficiary’s behalf.  If the payor is not Medicare, then XYZ will accept assignment for items A, B, or C from the payor.  Structured in this manner, this approach poses significant risk of being found to discriminate against Medicare beneficiaries since the decision is based solely on the fact that Medicare is the payor.  Therefore, it is unwise for XYZ to pursue this approach.

As an alternative, XYZ can create a policy that bases the acceptance of assignment decision on the expected amount of reimbursement for the particular item, not who the payor is.  For example, XYZ’s policy for accepting assignment on item A may require a minimum reimbursement rate of $100, otherwise, the item will be treated as a “cash pay” item, regardless of the payor.  Because the policy is being applied to Medicare beneficiaries the same as to all other persons seeking care, this model does not discriminate against Medicare patients.

Business Model No. 2
XYZ can reduce the range of items it offers, regardless of payor.  In other words, XYZ will no longer offer items A, B, and C to any patient, but will continue to offer items D, E, and F and accept assignment as usual.  Because this model treats Medicare beneficiaries the same as non-Medicare beneficiaries, this model does not pose any risk of discrimination against Medicare patients.  

Business Model No. 3
XYZ can continue to offer the same products that are currently offered, but would only accept assignment on specific items regardless of payor.  For instance, items A, B, and C would be assignment items, regardless of payor, and the remaining items, items D, E, and F, would be “cash pay” items, regardless of payor.  This model treats Medicare and non-Medicare beneficiaries the same and, therefore, does not pose a risk of discrimination against Medicare patients.  It is important to note again that if XYZ does not accept assignment for certain items it supplies to Medicare beneficiaries, it must still submit non-assigned claims for reimbursement on behalf of those patients as a non-participating supplier.  Commercial payor provider agreements may also require that a claim be submitted even if assignment is not accepted.

Other Issues
Although XYZ, as a non-participating supplier, can decide whether or not to accept assignment, it cannot discriminate against Medicare beneficiaries and treat them differently than patients of other payors.   If XYZ changes its practices on accepting assignment or decides to reduce the items it offers, beneficiaries should be given at least 30 days advance notice of such changes, along with the options available to them under the new policies.  

If assignment will no longer be accepted going forward for items that patients currently use, they should be given the options of switching to another item that XYZ does accept assignment for, paying cash for their current item on a non-assigned basis going forward, or finding another supplier that accepts assignment for their current item.  If items currently offered will no longer be available, XYZ should give beneficiaries the options of switching to another product.  If the patient refuses to switch to another item, the patient will have to find another supplier that carries their current item.  

Additionally, if a patient’s order specifies a particular brand or feature of an item, a new order may need to be obtained before XYZ will be able to supply the patient with a different item.  In such instance, the patient may be required to see his physician again to obtain a new prescription.

Jeff Baird will be presenting the following webinar:

Baird and Stark Webinar (Feb 23) sponsored by HME News
A Look Ahead: Legal & Reimbursement – Headliners & Guidance for 2016
Presented by: Jeffrey S. Baird & Andrea Stark, Reimbursement Consultant, MiraVista, LLC
Tuesday, Feb 23, 2016
2:00-3:30 p.m. EASTERN TIME – Click Here to Register

Looking Ahead to 2016
2016 finds many HME suppliers uncertain about the future. But don’t let this uncertainty prevent you from moving forward. The first quarter is a critical time for planning your next steps for the year ahead. Experts Andrea Stark and Jeffrey Baird are here to help you tackle the reimbursement and legal headliners that should be on your radar. This “Look Ahead” webcast has become an annual tradition to provide suppliers with expert advice on some hot DME topics. This year, Andrea and Jeff will discuss:

• The impact of national pricing – let’s talk numbers.
• A look at the audit landscape for 2016, including national RAC program improvements, contract extensions and what the SMRC is up to.
• New contract awards for the DME MACs – who is in, who is out and what it all means.
• Talking through the 2019 Medicaid cuts outlined in the recently passed omnibus bill.

• Steps being taken to address ventilator coding and reimbursement changes.
• Consideration for suppliers looking to absorb locations (documentation, restarting of rental period, PTANs, etc.).
• “Carve out” of portions of Round Two Recompete contracts.
• Collaborative arrangements with hospitals and physicians.

You’ll also get the opportunity to participate in our live question and answer session following the presentation. Reserve your seat for this event today!

Jeff Baird will be presenting the following sessions at Medtrade Spring:
Arrangements With, Gifts To, and Payment of Expenses for Physicians
Mon, Feb 29, 2016 – 1:30 PM to 2:30 PM
Location: Islander C

Building a Retail Model Within Legal Guidelines
Tue, Mar 1, 2016 – 1:00 PM to 2:30 PM
Location: Islander F

M + A Management
Tue, Mar 1, 2016 – 4:00 PM to 5:00 PM
Moderator:  Jeff Baird
Panelist: Bradley Smith, ATP, Managing Director/Partner, Vertess
Speaker: Sean Timmons, Shareholder, Polsinelli P.C.
Location: Islander H

Andrea Stark will be presenting the following sessions at Medtrade:
Using your Data (panel)
March 1, 2016 1:30-2:30 PM
Location: Islander E
Other panelist: Bryan Hines, COO, Lab Tactical and Robert Steedley, President, Barnes Healthcare

Unraveling the Mystery of the ABN
March 1, 2016 2:45-3:45 PM
Location: Islander G

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