Medicare Compliance & Reimbursement

It's more often than you might think.

Some suppliers might be scared off from furnishing so-called "free" upgrades due to fraud and abuse fears, but that precaution could be costing them big in inventory expenses.

It's OK to furnish free durable medical equipment upgrades in some cases, says the Centers for Medicare & Medicaid Services in July 18 Transmittal No. 1809, an addition to the Medicare Carriers Manual.

"Instead of using [advance beneficiary notices] and charging beneficiaries for upgraded items, suppliers in certain circumstances may decide to furnish beneficiaries with upgraded equipment but charge the Medicare program and the beneficiary the same price they would charge for a non-upgraded item," CMS says in the transmittal.

Suppliers do this because they prefer to carry only higher-level models of DME to reduce the costs of maintaining an inventory that includes a wide variety of different models and products. "Also, a supplier may be able to reduce its costs for replacement parts and repairs if it includes in its inventory only certain product lines," CMS adds.

"It is a common practice," says Roberta Domos of Redmond, CA-based Domos HME Consulting. "Keeping the inventory lower keeps costs down, so dealers like to be able to keep one model in stock instead of two or three slightly different models when they can."

"This policy allows suppliers to furnish to beneficiaries, at no extra costs to the Medicare program or the beneficiary, a DMEPOS item that exceeds ... the non-upgraded item that Medicare considers to be medically necessary," CMS reassures in the transmittal.

In these free upgrade cases, the supplier must bill only for the non-upgraded item rather than the item actually furnished, CMS instructs. The single line item on the claim should include the HCPCS code for the originally ordered, non-upgraded item, the charge for that item, and a modifier (GL) that indicates "Medically Unnecessary Upgrade Provided Instead of Non-upgraded Item, No Charge, No ABN."