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Medicare Compliance & Reimbursement

Home Health:

ABNs Vital To DME Upgrade Payments

Published on Tue Aug 12, 2003

Medicare now gives beneficiaries the option of paying for the difference between a Medicare-covered piece of DME and one with extra features. But suppliers and beneficiaries alike often are fuzzy on the new concept.

"It's very confusing," says Sarah Lott with Texas Star Medical Billing in Vidor, TX. And the Centers for Medicare & Medicaid Services hasn't been very forthcoming with clear directions, adds Nicole Thiroux with DMExpress Billing Service in Northridge, CA.

Even when suppliers understand the procedures, they often don't want the paperwork hassle that accompanies an upgrade, Thiroux says. "They are set in their ways."

Many suppliers simply don't think of offering a patient an upgrade, observes Roberta Domos with Domos HME Consulting in Redmond, CA. "They aren't in the habit of trying to up-sell the patient, particularly when there isn't an obvious need," Domos believes.

But suppliers may change their tune now that CMS has issued detailed new instructions that clarify how DME upgrades work. Every upgrade should include the following elements, CMS says in July 18 Transmittal No. 1809, an addition to the Medicare Carriers Manual:

  • ABNs. To ensure the beneficiary must pay for the difference between a Medicare-covered item and an upgraded one, a supplier must obtain a signed advance beneficiary notice from the customer. "The ABN allows the beneficiary to make an informed consumer decision on whether to accept an item for which he or she may have to pay out of pocket or through supplementary insurance," CMS says in the transmittal. Without an ABN signed in advance, the supplier can't hold a beneficiary liable for the upgrade's cost, CMS stresses.

    Suppliers should write on the ABN the additional features of the upgraded item, a CMS official said in a June 25 special Open Door Forum for DME.

  • Physician orders. The upgrade provision doesn't allow beneficiaries and suppliers to get around normal Medicare coverage or payment rules, CMS stressed in the forum. Suppliers must have physician orders for the original, non-upgraded DME item.

    "ABNs may not be used to substitute a different item or service that is not medically appropriate for the beneficiary's medical condition for the original item or service that the physician originally ordered," CMS explains in the transmittal. "The upgraded item must still meet the intended medical purpose of the item the physician ordered."

  • HCPCS codes. To bill for the upgrade, suppliers must have the HCPCS codes for the originally ordered piece of DME and the upgraded item.

    "An upgrade may be from one item to another within a single Heath Insurance Common Procedure Coding System (HCPCS) code, or may be from one HCPCS code to another," CMS clarifies in the transmittal.

  • Payment category. Likewise, an upgrade can be within one payment category (such as "routinely purchased"), or can be from one payment category to another, CMS says.

    However, the supplier must furnish the upgraded item on whatever category the originally ordered piece of equipment is in.

    Thus, if the originally ordered item is in the capped rental category and the upgraded item is in the routinely purchased category, a supplier must use the rules for the capped rental category.

    That includes not collecting the full amount for the difference between the original and upgraded items up front, the CMS official explained in the forum. If the original item was a rental, a supplier should collect the amount for the upgraded item incrementally over the period of the rental.

    This confusing rule is likely to trip up suppliers who aren't well versed in upgrade procedures, worries Domos. "It's fairly counterintuitive."

    Editor's Note: The upgrade memo is at www.cms.gov/manuals/pm_trans/R1809B3.pdf.

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