The pros and cons for and against billing Medicare claims on a non-assigned basis are numerous and complex. For this week, however, I thought it might help to address one specific question we get often:

Is the choice of assignment for the first rental claim on a capped rental item binding on the subsequent rental months?

The answer is no, it is not binding … and of course it is more complicated than that.

Next Episode: Thursday, February 22, 2024

Non-Assigned Claims in General

The only way to uncouple payment for a covered Medicare item from the fee schedule is to file the claim as non-assigned. By not accepting assignment, non-participating DME suppliers can charge the beneficiary their usual and customary charge for covered items. Thereafter, the supplier files a claim with Medicare on a non-assigned basis, and Medicare pays the (usually lesser) allowable amount directly to the beneficiary.

Capped rental items complicate matters. There is no option to bill a capped rental item as an outright purchase, even on a non-assigned basis. That means suppliers need a separate authorization from the patient to file each rental claim on the beneficiary’s behalf.

Fortunately, suppliers can make assignment decisions on a claim-by-claim basis. Some suppliers choose to bill the first service date’s claim as non-assigned, collecting an initial cash payment from the patient equal to their full usual and customary charge. The supplier then accepts assignment on the subsequent monthly rental claims. The larger patient payment from the first claim helps partially offset the low margin claims billed through the rest of the capped rental period.

For example, assume the supplier’s usual and customary charge for a CPAP rental is $150 per month. Medicare’s monthly rental rate is $68. Using the strategy above, a suppliers could bill the first rental claim as non-assigned:

  • The supplier would collect $150 from the patient up front,
  • File a non-assigned claim with Medicare on the patient’s behalf, and
  • Medicare would pay the patient $54.40 directly ($68 less 20 percent co-insurance).

The supplier can then accept assignment on the remaining rental claims and receive the payment directly.

In this case, suppliers can use the extra money from the first month to supplement the low reimbursement rate for the remaining rental months. By securing one more authorization to file assigned claims, the supplier would not need separate beneficiary authorizations for subsequent rental months.

Suppliers Cannot Change Their Standard Charges Willy Nilly

While suppliers have exclusive control over setting their usual and customary charge amounts, they must be usual and customary. Suppliers should not change the charge amounts to suit each case. Medicare would consider doing so a discriminatory billing practice in violation of its rules.

Suppliers Cannot Accept Assignment at the Item Level

Assignment is a claim level election. That means all items billed on the claim, and more broadly, on the same day, must be consistent with the assignment election.

Using the earlier example, if a supplier decides not to accept assignment on the first rental claim for the CPAP device, they would also have to bill any supplies or other equipment billed on that day as non-assigned, charging the patient the full usual and customary charge for those items, too.

A Word About Non-Participating Status

The above strategies only apply to non-participating suppliers. Medicare requires participating suppliers to accept assignment on all claims. Participation is an annual election, and December 31, 2023, is the deadline to change participation status for 2024. To do so, suppliers must send a written request on company letterhead to the NPE contractors.

No action is required for suppliers that do not wish to change the current participation status.

A change to participation status affects all lines of business attached to the company’s tax identification number. Suppliers should speak with general counsel before making any changes, especially suppliers that share ownership with hospitals or physician practices.

I hope this helps as you consider your own internal policies related to assignment decisions on capped rental items.

Take care,

Andrea