Reimbursement Page
Check, Please!
By Sean Peterson, AOPA Government Affairs Department
Determining who should be billed for services
provided to Medicare beneficiaries can often get complicated. However, AOPA has
worked to make the job easier for you. This article is designed to help you
fully understand who is responsible for your reimbursement.
Two general rules
The location where an item will be used is what usually determines who is responsible for paying the claim. In most cases, a Medicare beneficiary will come to your office to receive an orthotic or prosthetic device and take the completed device home. Your claim should then list the place of service as 12 (Home) and be submitted to the appropriate Durable Medical Equipment Medicare Administrative Contractor (DME MAC).
Sometimes, however, you will treat a patient during a hospital or Medicare Part A covered Skilled Nursing Facility (SNF) stay. Usually, when this occurs, you may not submit your claim to the DME MAC.
Hospitals and SNFs are paid for Medicare Part A services through a prospective payment system (PPS). This system pays the facility a daily rate to cover the cost of all medically necessary services for the patient. Hospitals or SNFs use outside suppliers when they are unable to provide a particular service directly. They then must pay the outside supplier for their services, since they have already received payment in full for the patient’s care under the PPS.
Bill the hospital or SNF in these cases. Since there is not a set reimbursement schedule for these facilities as there is with DME MACs, it is a good idea to negotiate the payment terms before you agree to provide service to its patients.
In a perfect world, these two situations would cover all of the possible billing scenarios involving O&P devices, and this would be the end of the article. Since we do not live in a perfect world, please read on. There are some important exceptions to the general rules discussed above.
The location where an item will be used is what usually determines who is responsible for paying the claim. In most cases, a Medicare beneficiary will come to your office to receive an orthotic or prosthetic device and take the completed device home. Your claim should then list the place of service as 12 (Home) and be submitted to the appropriate Durable Medical Equipment Medicare Administrative Contractor (DME MAC).
Sometimes, however, you will treat a patient during a hospital or Medicare Part A covered Skilled Nursing Facility (SNF) stay. Usually, when this occurs, you may not submit your claim to the DME MAC.
Hospitals and SNFs are paid for Medicare Part A services through a prospective payment system (PPS). This system pays the facility a daily rate to cover the cost of all medically necessary services for the patient. Hospitals or SNFs use outside suppliers when they are unable to provide a particular service directly. They then must pay the outside supplier for their services, since they have already received payment in full for the patient’s care under the PPS.
Bill the hospital or SNF in these cases. Since there is not a set reimbursement schedule for these facilities as there is with DME MACs, it is a good idea to negotiate the payment terms before you agree to provide service to its patients.
In a perfect world, these two situations would cover all of the possible billing scenarios involving O&P devices, and this would be the end of the article. Since we do not live in a perfect world, please read on. There are some important exceptions to the general rules discussed above.
The two-day rule
One exception to the general rule for billing the hospital or SNF is called the two-day rule. The two-day rule states that a supplier may deliver a completed O&P device to a Medicare beneficiary during a Part A hospital or SNF stay within 48 hours (two days) of the patient’s anticipated discharge.
As long as the device is not medically necessary during the remainder of his or her stay, and the patient is being discharged to his or her home, the supplier may bill the DME MAC directly for the device.
However, the supplier must only be delivering the item in order to provide basic instruction on how to use and care for the device. The intent of the two-day rule is not to circumvent the responsibility of the hospital or SNF to provide its patients with medically necessary services. If an O&P device is needed as part of the patient’s recovery or rehabilitation in the facility, it must be paid for by the facility regardless of when it was delivered.
If you deliver an O&P device to a patient during a Medicare Part A hospital or SNF stay and all of the criteria to bill under the two-day rule have been met, here is how you must fill out the date and place of service when submitting the claim to the DME MAC.
Date of service. Under normal billing circumstances, the date of service is usually the date that the completed device is delivered. However, when submitting a claim under the two-day rule, the date of service is the patient’s discharge date from the inpatient facility. Without this exception, the DME MAC would improperly deny the claim as the responsibility of the inpatient facility.
While the two-day rule allows you to use the date of discharge as your date of service, the actual date of delivery should be documented in the patient’s chart in case there are questions later on.
Place of service. Generally, the code selected should correspond with where the item will be used. This holds true under the two-day rule. When billing under this rule, indicate a place of service code of 12 (Home).
Prosthetic device exceptions
As discussed above, SNFs receive a per diem PPS payment to provide all medically necessary care for patients in a Medicare covered Part A stay. Beginning in April 2000, however, most prosthetic devices were excluded from the SNF PPS system, because the high cost and relatively low volume of most prosthetic services provided in SNF settings had resulted in an undue financial burden on SNFs.
Excluding most prosthetic devices from the PPS allowed suppliers to bill their DME MAC directly, instead of looking to the SNF for payment. While most prosthetic services have been excluded from the SNF PPS system, certain services, such as prosthetic socks, shrinkers, partial hand and partial feet prostheses, and immediate post-surgical prostheses continue to be included in the SNF PPS payment. These items, as well as all orthoses, must be paid for by the SNF.
A list of codes excluded from the SNF PPS can be found at www.cms.hhs.gov/SNFConsolidatedBilling/02l_2007Update.asp#TopOfPage .
Once at this page, scroll down to “Downloads” and select File 1—Part A
Stay—Physician Services. (Although the file says “physician services,” this list
is still applicable to O&P suppliers.) Open the file. The list of exempt L
codes begins at row 365. If a particular L code does not appear on this list, it
is not exempt and you will therefore have to look to the SNF for payment of this
code.
One exception to the general rule for billing the hospital or SNF is called the two-day rule. The two-day rule states that a supplier may deliver a completed O&P device to a Medicare beneficiary during a Part A hospital or SNF stay within 48 hours (two days) of the patient’s anticipated discharge.
As long as the device is not medically necessary during the remainder of his or her stay, and the patient is being discharged to his or her home, the supplier may bill the DME MAC directly for the device.
However, the supplier must only be delivering the item in order to provide basic instruction on how to use and care for the device. The intent of the two-day rule is not to circumvent the responsibility of the hospital or SNF to provide its patients with medically necessary services. If an O&P device is needed as part of the patient’s recovery or rehabilitation in the facility, it must be paid for by the facility regardless of when it was delivered.
If you deliver an O&P device to a patient during a Medicare Part A hospital or SNF stay and all of the criteria to bill under the two-day rule have been met, here is how you must fill out the date and place of service when submitting the claim to the DME MAC.
Date of service. Under normal billing circumstances, the date of service is usually the date that the completed device is delivered. However, when submitting a claim under the two-day rule, the date of service is the patient’s discharge date from the inpatient facility. Without this exception, the DME MAC would improperly deny the claim as the responsibility of the inpatient facility.
While the two-day rule allows you to use the date of discharge as your date of service, the actual date of delivery should be documented in the patient’s chart in case there are questions later on.
Place of service. Generally, the code selected should correspond with where the item will be used. This holds true under the two-day rule. When billing under this rule, indicate a place of service code of 12 (Home).
Prosthetic device exceptions
As discussed above, SNFs receive a per diem PPS payment to provide all medically necessary care for patients in a Medicare covered Part A stay. Beginning in April 2000, however, most prosthetic devices were excluded from the SNF PPS system, because the high cost and relatively low volume of most prosthetic services provided in SNF settings had resulted in an undue financial burden on SNFs.
Excluding most prosthetic devices from the PPS allowed suppliers to bill their DME MAC directly, instead of looking to the SNF for payment. While most prosthetic services have been excluded from the SNF PPS system, certain services, such as prosthetic socks, shrinkers, partial hand and partial feet prostheses, and immediate post-surgical prostheses continue to be included in the SNF PPS payment. These items, as well as all orthoses, must be paid for by the SNF.
A list of codes excluded from the SNF PPS can be found at www.cms.hhs.gov/SNFConsolidated
From hospital to SNF
But suppose a patient is being transferred from a hospital to a SNF. A custom O&P device is ordered for the patient while she is still in the hospital, but due to fabrication time, it is not delivered until after she arrives at the SNF. Who is responsible for payment, the hospital or the SNF?
Per CMS, the hospital remains financially responsible for the item. Medical necessity for the custom device was established while the patient was in the hospital, not in the SNF, so the SNF should not be billed. The two-day rule would not apply in this particular scenario, either, because the patient is not being discharged to her home.
But suppose a patient is being transferred from a hospital to a SNF. A custom O&P device is ordered for the patient while she is still in the hospital, but due to fabrication time, it is not delivered until after she arrives at the SNF. Who is responsible for payment, the hospital or the SNF?
Per CMS, the hospital remains financially responsible for the item. Medical necessity for the custom device was established while the patient was in the hospital, not in the SNF, so the SNF should not be billed. The two-day rule would not apply in this particular scenario, either, because the patient is not being discharged to her home.
Other unique billing situations
Now that the billing scenarios involving Part A covered hospital and SNF stays have been addressed, let’s take a look at some other unusual billing scenarios where standard rules may not apply.
Custom items ordered but not furnished. Another exception involves custom items that are partially or fully completed, but cannot be delivered due to unforeseen circumstances.
In general, you cannot bill for items you have not delivered to a patient. However, when an item has been custom-made for a specific patient, there are three situations in which you can be reimbursed by Medicare for part or all of your work:
• if the patient dies prior to delivery,
• if there is a change in the patient’s condition that makes the custom item no longer reasonable, necessary or appropriate, or
• if the patient cancels the order prior to delivery.
When one of these situations exists, Medicare will reimburse you for the completed device minus any salvage value of reusable parts. The nature of the custom device will determine if any components are salvageable.
When submitting a claim for a custom device that cannot be delivered, the date of service should be the day that the patient cancelled the order, the day that you learned that the item was no longer necessary, or the date of the patient’s death.
Beneficiary receiving hospice care. A Medicare beneficiary who is terminally ill may elect to receive hospice care. Hospice care no longer attempts to cure patients, but attempts to manage their pain and symptoms with the goal of maintaining their comfort.
Hospice care is covered under the patient’s Medicare Part A benefit and provides coverage only for treatment that is palliative in nature. Medicare services for anything unrelated to the patient’s terminal condition remain covered as a Medicare Part B benefit.
This means that if an O&P item is medically necessary for a hospice patient, but not related directly to the patient’s terminal illness, you may supply that item and bill the DME MAC directly under the patient’s Part B benefits, even though the patient is receiving hospice care through their Medicare Part A benefits.
Now that the billing scenarios involving Part A covered hospital and SNF stays have been addressed, let’s take a look at some other unusual billing scenarios where standard rules may not apply.
Custom items ordered but not furnished. Another exception involves custom items that are partially or fully completed, but cannot be delivered due to unforeseen circumstances.
In general, you cannot bill for items you have not delivered to a patient. However, when an item has been custom-made for a specific patient, there are three situations in which you can be reimbursed by Medicare for part or all of your work:
• if the patient dies prior to delivery,
• if there is a change in the patient’s condition that makes the custom item no longer reasonable, necessary or appropriate, or
• if the patient cancels the order prior to delivery.
When one of these situations exists, Medicare will reimburse you for the completed device minus any salvage value of reusable parts. The nature of the custom device will determine if any components are salvageable.
When submitting a claim for a custom device that cannot be delivered, the date of service should be the day that the patient cancelled the order, the day that you learned that the item was no longer necessary, or the date of the patient’s death.
Beneficiary receiving hospice care. A Medicare beneficiary who is terminally ill may elect to receive hospice care. Hospice care no longer attempts to cure patients, but attempts to manage their pain and symptoms with the goal of maintaining their comfort.
Hospice care is covered under the patient’s Medicare Part A benefit and provides coverage only for treatment that is palliative in nature. Medicare services for anything unrelated to the patient’s terminal condition remain covered as a Medicare Part B benefit.
This means that if an O&P item is medically necessary for a hospice patient, but not related directly to the patient’s terminal illness, you may supply that item and bill the DME MAC directly under the patient’s Part B benefits, even though the patient is receiving hospice care through their Medicare Part A benefits.
Get paid
It is important to note that when a SNF requires the services of an outside supplier for items subject to the SNF PPS, it is the SNF’s responsibility to specify, either orally or in writing, items for which it assumes responsibility, and how it will pay for them.
While the absence of such an agreement does not in any way relieve the SNF from its responsibility to pay for such items, making such an agreement prior to providing services will help avoid misunderstandings.
Understanding who should be billed, and under what circumstances, is very important for all Medicare suppliers. Your time, costly materials, and hard work are extremely valuable and deserve to be compensated. Arming yourself with this knowledge will help eliminate confusion and ensure proper reimbursement.
It is important to note that when a SNF requires the services of an outside supplier for items subject to the SNF PPS, it is the SNF’s responsibility to specify, either orally or in writing, items for which it assumes responsibility, and how it will pay for them.
While the absence of such an agreement does not in any way relieve the SNF from its responsibility to pay for such items, making such an agreement prior to providing services will help avoid misunderstandings.
Understanding who should be billed, and under what circumstances, is very important for all Medicare suppliers. Your time, costly materials, and hard work are extremely valuable and deserve to be compensated. Arming yourself with this knowledge will help eliminate confusion and ensure proper reimbursement.
Sean Peterson is reimbursement services coordinator
for AOPA.
