A (K)notes Plus subscriber recently sought our advice on a rock vs hard place situation in which DME suppliers often find themselves:
“Our customers are upset about having to make extra rental payments after a change in insurance where their prior insurance made partial payments toward a cap. Do we have to reset equipment caps after a change in insurance?”
The short answer to this question is yes. I could even argue that suppliers are bound to reset all incomplete capped rental and oxygen billings after a change in insurance.

Next Episode: Thursday, August 22, 2024

Changing insurance is like changing patients. The foundation for my answer starts with a concept introduced in the Standard Documentation Requirements Article. When a patient switches to Medicare coverage while actively renting a covered item – where title did not transfer to the patient before the policy change – the supplier’s first claim submitted to Medicare is treated as an initial claim. Said another way, Medicare suppliers must reset active rental counters back to month one. It makes sense because the equipment is changing hands. In this case it is from one insurance company to another, but the situation is quite similar to what happens when one patient returns equipment that is subsequently delivered to another patient. In both cases, Medicare requires suppliers to complete certain steps and reset the rental counter. Changing insurance doesn’t feel like a change to the patient … The rules clearly impose additional costs for the supplier and resetting the rental clock compensates suppliers accordingly. It is less obvious that doing so also imposes additional costs for the patient through additional deductibles and co-insurance amounts. That is where the upset patient comes into play. … but suppliers are bound to the rules as they are written. Some suppliers feel pressured to stop billing once the rental reaches its original cap. I totally understand the temptation, but giving in could violate Medicare policy and expose the supplier to overpayment liabilities. Crazy, I know, but consider the following provisions of the Social Security Act:
  1. Section 1834(g)(4) requires suppliers to file claims for all potentially covered services to Medicare for consideration, and
  2. Section 1128(a)(5) prohibits suppliers from offering customers anything of value.
Practically speaking:
  1. Medicare rules stipulate coverage for an entire rental cycle after a change in insurance, and
  2. Because the entire rental is a covered service, suppliers must submit claims to Medicare, and
  3. If suppliers submit the covered claims … and those claims generate co-payments …the supplier is obligated to pursue the patient portion.
Routinely waiving patient co-insurance – or failing to file claims for complete rental cycles – may constitute remuneration … a kick back. When found under payment review, audit contractors may pursue actual or even extrapolated penalties and overpayment amounts. I am sympathetic to the patient and the supplier, but this is how Medicare wrote the policy. Suppliers should reset rental counts after an insurance policy change because doing otherwise could create problems with Medicare (or Medicare Advantage). I hope this makes it easier to talk to patients about this complex twist of insurance policy. Take care, Andrea