Jurisdiction DME MAC Supplier Manual

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1 Jurisdiction DME MAC Supplier Manual

2 [ SEPTEMBER 2007] M arch 2010 Update Enclosed is the March 2010 Jurisdiction B DME MAC Supplier Manual update. The Jurisdiction B DME MAC Supplier Manual is designed to assist suppliers in the transmission of claims for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). National Government Services will continue to advise suppliers and physicians filing DMEPOS claims in Jurisdiction B of procedural changes implemented by the Centers for Medicare & Medicaid Services (CMS), including general Medicare information and claims processing issues. In addition to this update, be sure to read the Jurisdiction B Connections quarterly supplier bulletin for more information on changes in policy and claims submission. Questions regarding the March 2010 update should be directed through the National Government Services Jurisdiction B Durable Medical Equipment Medicare Administrative Contractor (DME MAC) Provider Contact Center. The National Government Services Jurisdiction B DME MAC Provider Contact Center is available from 8:30 a.m. 5:30 p.m. eastern time (ET), Monday through Friday. The toll-free number for the National Government Services Jurisdiction B DME MAC Provider Contact Center is Additionally, the National Government Services Jurisdiction B DME MAC Provider Contact Center offers text telephone (TTY) capabilities, which is a special device that enables people that are deaf, hard of hearing, or speech impaired to use the telephone to communicate by allowing them to type messages instead of talking and listening. Jurisdiction B DME MAC suppliers who utilize the TTY should call the following toll-free number: The interactive voice response (IVR) system is available from 6:00 a.m. 7:00 p.m. ET, Monday through Friday, and 7:00 a.m. 3:00 p.m. ET most Saturdays. However, The IVR system is not available during system upgrades or routine maintenance. The IVR can be accessed toll free at The following chapters have been revised with the March 2010 update: Foreword Table of Contents Chapter 3 Chapter 13 Chapter 15 Chapter 20 Chapter 21 Chapter 22 Chapter 23 Note: Suppliers should refer to the TriCenturion Web site ( for fraud and abuse information. 132_0310

3 Table of Contents [MARCH 2010] T able of Contents 1 General Information The Medicare Program 1 The Medicare Card 1 The Common Working File 2 Deductible and Coinsurance 3 The CMS Internet-Only Manuals 3 The Privacy Act of 1974 and Health Insurance Portability and Accountability Act 3 Privacy Rule 2 Enrollment Process National Provider Identifier 1 Obtaining and Retaining Medicare DMEPOS Billing Privileges 2 Change of Information 6 Directory of Medicare Suppliers 7 Supplier Standards 7 Change of Ownership 11 Resources Available to Assist Suppliers with the Enrollment Process 12 3 Reserved for future assignment 4 Participation Program Enrollment 1 Benefits of Participation 2 Assignment of Claims 2 132_0310 1

4 Table of Contents [ MARCH 2010] 5 Coordination of Benefits and Medicare Secondary Payer Coordination of Benefits Contractor 1 Medicare s Role 2 Medicare Secondary Payer Programs 3 Billing Requirements 9 Claim Liability Calculation 11 Medicare Secondary Payer Overpayments 12 Sample MSP Jurisdiction B DME MAC Voluntary Refund Form Sample MSP Jurisdiction B DME MAC Offset Request Form Sample Admission Questions to Ask Medicare Beneficiaries 16 6 Medical Policy Information General Medical Policy Information 1 Current DMEPOS Medical Policies 6 7 Certificates of Medical Necessity/DME Information Forms Overview 1 DME Forms 1 CMN Completion Instructions 2 DIF Completion Instructions 5 Additional CMN/DIF Information 6 Cover Letters 7 Sample CMN Forms 7 HCPCS Codes Requiring a CMN or DIF 7 8 Documentation Orders 1 Certificates of Medical Necessity 4 Documentation in the Patient s Medical Record 4 Proof of Delivery Requirements 5 Requests for Additional Information 7 Sample Break-in-Service Form 132_0310 2

5 Table of Contents [ MARCH 2010] 9 Advance Determination of Medicare Coverage Eligible Items 1 Submitting ADMC Requests 1 ADMC Requirements 2 ADMC Determination 5 Sample ADMC Request Form 10 Advance Beneficiary Notice of Noncoverage General Guidelines 1 Financial Liability Protection Provisions 2 Billing Requirements Specific to the ABN 3 Upgrades 4 Advance Beneficiary Notice of Noncoverage Completion 6 Sample CMS-R-131 Advance Beneficiary Notice of Noncoverage (ABN) (03/08) 11 Claim Filing Jurisdiction Claim Filing Based on Beneficiary Address 1 Disposition of Incorrectly Filed Claims 1 Durable Medical Equipment Medicare Administrative Contractors and Jurisdictions 2 12 Claim Submission Acceptable Claim Formats 1 Claim Filing Time Limits 1 Signature on File Requirements 3 Ordering Claim Forms 5 Claim Completion Hints and Tips 6 CMS-1500 Claim Form (Version 08-05) 7 Sample CMS-1500 Claim Form (Version 08-05) CMS-1500 Claim Form Field Descriptions and Instructions 11 Mailing Address 23 Resources _0310 3

6 Table of Contents [ MARCH 2010] 13 Electronic Data Interchange Electronic Media Claims 1 Administrative Simplification Compliance Act 2 Common Electronic Data Interchange 2 Electronic Format 4 How to Become an Electronic Submitter 4 Front-End Edit Report 5 Electronic Remittance Advice 6 Electronic Funds Transfer 7 Claim Status Inquiry/Beneficiary Eligibility 7 Jurisdiction B DME MAC EDI Help Desk 11 E-Commerce Consultants 11 National Government Services Web Site 11 Listserv Level II HCPCS Codes and HCPCS Modifiers Level II HCPCS Codes 1 HCPCS Modifiers 3 The Pricing, Data Analysis, and Coding Contractor DMEPOS Payment Categories Inexpensive or Other Routinely Purchased DME 1 Transcutaneous Electrical Nerve Stimulators 2 Items Requiring Frequent and Substantial Servicing 2 Customized Items 2 Other Prosthetic and Orthotic Devices 3 Parenteral and Enteral Nutrition Pumps 4 Therapeutic Shoes and Inserts 7 Surgical Dressings 8 Home Dialysis Supplies 9 Capped Rental Items 10 Interruptions in a Period of Continuous Use 13 Oxygen and Oxygen Equipment 16 Repairs, Maintenance, and Replacement 19 Sample Rent/Purchase Option for Power Wheelchairs Letter 26 Sample Medicare Capped Rental and Inexpensive or Routinely Purchased Items 27 Notification for Services On or After 01/01/2006 Letter 132_0310 4

7 Table of Contents [ MARCH 2010] Sample ESRD-382 Form Sample Break-in-Service Form 16 Pricing Fee Schedules 1 Reasonable Charges 2 Drug Pricing 4 Individual Consideration 5 Inherent Reasonableness 5 17 Medicare Benefit and Denial Categories Benefit Categories 1 Denial Categories 3 Prevention of Common Claim Submission Errors 6 18 Supplier Remittance Notice General Information 1 Tips for Reading the Remittance Notice 1 Sample Remittance Notice 3 Remittance Notice Key 4 Resources 6 19 Medicare Summary Notice Sample MSN 2 Summary of Numbered Fields on Sample MSN 4 Resources 5 20 Reopenings and Appeals Reopenings for Minor Errors and Omissions 1 Appeals 4 Jurisdiction B DME MAC Request for Clerical Error and Omission Reopening Form Jurisdiction B DME MAC Request for Redetermination Form Jurisdiction B DME MAC Reconsideration Request Form 132_0310 5

8 Table of Contents [ MARCH 2010] Form CMS Request for Part B Medicare Hearing by an ALJ Form CMS-1696 Appointment of Representative 21 Overpayments DME MAC Initiated Demand Letters 1 The Offset Process 1 Immediate Offset by Fax 2 Appealing a Refund 2 Supplier Voluntary Refunds 2 Lost or Mutilated Checks 3 Change of Address 4 ORU Jurisdiction B DME MAC Voluntary Refund Form ORU Jurisdiction B DME MAC Offset Request Form MSP Jurisdiction B DME MAC Voluntary Refund Form MSP Jurisdiction B DME MAC Offset Request Form 22 Customer Care Interactive Voice Response System 1 Provider Contact Center 2 Telephone Inquiries 4 Written Inquiries 5 Sample Medicare Correspondence Request Form 23 Resources Education and Support 1 National Government Services Events Calendar 2 Jurisdiction B DME MAC Contact Information 4 Jurisdiction B DME MAC Forms Index 7 Acronyms _0310 6

9 Foreword [ MARCH 2010] J urisdiction B DME MAC Supplier Manual ABOUT THIS MANUAL The Jurisdiction B DME MAC Supplier Manual is designed to assist suppliers in claim submission of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) to the Jurisdiction B durable medical equipment Medicare administrative contractor (DME MAC). National Government Services, Inc. will continue to advise suppliers and physicians filing DMEPOS claims in the Jurisdiction B geographical area of Medicare policy and procedure changes that are implemented by the Centers for Medicare & Medicaid Services (CMS). In addition to the Jurisdiction B DME MAC Supplier Manual, be sure to read the Jurisdiction B Connections, published on a quarterly basis, for more detailed information concerning Medicare program updates and changes. The Jurisdiction B Connections is available at All Jurisdiction B suppliers may contact the Provider Contact Center toll free at , 8:30 a.m. to 5:30 p.m. eastern time (ET), Monday Friday; for text telephone (TTY) capabilities, call The interactive voice response (IVR) system is also available toll free at from 7:00 a.m. 6:00 p.m. ET, Monday Friday, and 7:00 a.m. 3:00 p.m. ET most Saturdays. ABOUT NATIONAL GOVERNMENT SERVICES Throughout the country, National Government Services, Inc. has efficient operational, financial, and human resources in place, positioning the organization as a national leader in the Medicare industry. National Government Services (with its corporate predecessors) maintains the following contracts: Medicare Part A Fiscal Intermediary for: Illinois, Indiana, Kentucky, Michigan, Ohio, Virginia, West Virginia, and Wisconsin. Medicare Part A Regional Home Health Intermediary for: Alaska, Arizona, California, Hawaii, Idaho, Michigan, Minnesota, Nevada, New Jersey, New York, Oregon, Washington, Wisconsin, and the U.S. Territories of American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and U.S. Virgin Islands. Part B Carrier for: Connecticut, Indiana, Kentucky, and New York Jurisdiction 13 Part A/B Medicare Administrative Contractor for: Connecticut and New York Jurisdiction B Durable Medical Equipment Medicare Administrative Contractor (DME MAC) for: Illinois, Indiana, Kentucky, Michigan, Minnesota, Ohio, and Wisconsin 132_0310 i

10 Chapter 1: General Information [DECEMBER 2009] 1 General Information THE MEDICARE PROGRAM The Medicare Program is a federal health insurance program whose beneficiaries include persons 65 years of age or older, disabled persons, and persons with chronic renal disorders. It is governed by the Centers for Medicare & Medicaid Service (CMS) of the U.S. Department of Health and Human Services. The Social Security Administration (SSA) offices across the country take applications for Medicare and provide general information about the program. The SSA is also responsible for any changes or termination of a patient s Medicare enrollment. The program was established by Congress in 1965 when it enacted Title XVIII of the Social Security Act, hereafter referred to as the Act. The Medicare Program consists of two distinct parts. Part A Hospital Insurance Hospital insurance (Part A) helps pay for inpatient care in hospitals, critical access hospitals and skilled nursing facilities. It also covers hospice care and some home health care. Part B Medical Insurance Medical insurance (Part B) covers items and/or services that are medically necessary by a physician, outpatient hospital services, home health care, and a number of other medical services not covered by Part A benefits including durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). Enrollment for Part B coverage is voluntary. Individuals pay a monthly premium which can be deducted from monthly Social Security benefits. Individuals must meet an annual deductible* each calendar year before Part B benefits are paid. *The Part B deductible is subject to change each year. For 2010, the Part B deductible is $155. For 2008 and 2009, the deductible was $135. By law, Medicare does not cover supplies or services received outside of the United States. The United States includes the 50 states, District of Columbia, Commonwealth of Puerto Rico, Virgin Islands, Guam, American Samoa and the territorial waters adjoining these land areas. Review the Claim Filing Jurisdiction chapter of the Jurisdiction B DME MAC Supplier Manual for details on the geographical locations included in Jurisdiction B. THE MEDICARE CARD All beneficiaries receive a health insurance card showing whether they have hospital insurance (Part A), medical insurance (Part B), or both, and the effective date(s) of coverage. When a husband and wife are both covered, each will have a separate card and Medicare Claim Number (i.e., Health Insurance Claim number [HICN]). 132_1209 1

11 Chapter 1: General Information [DECEMBER 2009] Sample Medicare Card: Medicare HICN In order for Medicare claims to process correctly, the patient s complete name, as it appears on the card, and the HICN should be correctly entered on all Medicare claims. To ensure accuracy, the supplier should view the actual card and record the information or make a photocopy for their records. Each patient s health insurance card should be rechecked at least once a year since HIC numbers can change depending on the type of benefits a beneficiary is currently entitled to under the SSA. If the beneficiary insists the Medicare card is incorrect, the supplier should advise the beneficiary to contact their local servicing Social Security Field Office to obtain a new Medicare card. Information that does not match eligibility records will cause suspension or denial of claims. Note: The letters at the end of the beneficiary s HIC # do not necessarily indicate the type of coverage they have. Example: A does not mean the beneficiary has Part A only, or B does not indicate that this beneficiary has elected Part B benefits. THE COMMON WORKING FILE The Common Working File (CWF) is the system used by the CMS to verify entitlement and correct utilization of benefits. The CWF houses the records of all claims processed for all beneficiaries assigned to that site. When a claim is processed, the CWF checks its records to verify eligibility, days used, deductible and coinsurance status and other utilization edits. The CWF contains information regarding the beneficiary s date of birth, date of death (if applicable), health maintenance organization (HMO) and hospice elections and other information used to determine the correct utilization of benefits. When a contractor receives a claim, a query is sent to the CWF to verify the HICN and the name of the patient, as well as the appropriate utilization of benefits. Accurate reporting of the HICN is critical to the CWF. 132_1209 2

12 Chapter 1: General Information [DECEMBER 2009] DEDUCTIBLE AND COINSURANCE Deductible Each calendar year the patient must satisfy a deductible* before Medicare Part B payments can be made. The Part B deductible is subject to change each year. The total Medicare allowed amount on a claim is reduced by the amount of any remaining deductible prior to payment. Charges that are denied, or that are noncovered, do not count toward the deductible. All individuals covered under Medicare are required to satisfy the full deductible amount regardless of when during the year their eligibility began. In other words, individuals who become eligible for Medicare in December are responsible for the full deductible amount. * The Part B deductible for 2008 and 2009 is $135. The Part B deductible for 2010 is $155. Coinsurance For most services, Medicare pays 80 percent of the allowed amount for covered services after subtracting any remaining deductible. Medicare beneficiaries are responsible for the remaining 20 percent of the allowed amount (i.e., coinsurance payment) and any deductible subtracted on the claim. In some cases, a beneficiary s supplemental insurance coverage will pay these amounts. On assigned claims, it is recommended the supplier only collect the 20 percent coinsurance from the beneficiary at the time of delivery. This will allow for the accurate calculation of deductible status by Medicare and prevent any refund to the beneficiary of over-collected deductible amounts. THE CMS INTERNET-ONLY MANUALS The CMS Internet-Only Manuals (IOMs), part of the CMS Online Manual System, is used by the various CMS program components, partners, contractors, and state survey agencies to administer CMS programs. They are the CMS program issuances, day-to-day operating instructions, policies, and procedures that are based on statutes, regulations, guidelines, models, and directives. The IOMs are also a good source of Medicare and Medicaid information for the general public. To view the IOMs, go to THE PRIVACY ACT OF 1974 AND HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT PRIVACY RULE The Privacy Act of 1974 is the basis for CMS privacy policy. It is a law that ensures confidentiality and protects a beneficiary s rights and information. The purpose of the Privacy Act is to balance the government s need to maintain information with the rights of individuals to their privacy. 132_1209 3

13 Chapter 1: General Information [DECEMBER 2009] Like the Privacy Act of 1974, the Privacy Rule issued under the Health Insurance Portability and Accountability Act (HIPAA) strikes a balance between permitting important uses of information and protecting the privacy of people who seek care and healing. The HIPAA required the Department of Health and Human Services (DHHS) to issue privacy regulations governing the use and disclosure of individuals health information. The Privacy Rule established, for the first time, a set of national standards for the protection of certain health information. The Privacy Rule: addresses the use and disclosure of an individual s health information (called protected health information [PHI]) by organizations subject to it; and sets standards for an individual s right to understand and control how his or her health information is used. A major goal of the Privacy Rule is to ensure that an individual s health information is properly protected while allowing for the flow of health information needed to provide and promote high-quality health care and protect the public s health and well-being. The Privacy Act of 1974 and the Privacy Rule issued under the HIPAA, govern the requirements for how, when, and to whom the CMS staff (including contractors and agencies) can release beneficiaryspecific information. Additionally, Medicare providers must abide by the HIPAA guidelines and protect their patients identifiable health information. This information is also known as PHI. Examples of PHI include, but are not limited to: Name Social Security Number Birth date Address HICN Medical history Medical claim information Provider facility information Note: communication has not been approved by CMS as secure for the transfer of PHI. Suppliers should never send Medicare contractor staff any PHI through communication. 132_1209 4

14 Chapter 2 : Enrollment Process [ SEPTEMBER 2009 ] 2 Enrollment Process All DMEPOS suppliers who serve Medicare beneficiaries and meet the supplier standards listed in this chapter must enroll and obtain a Provider Transaction Access Number (PTAN) with the National Supplier Clearinghouse (NSC). Before enrolling with the NSC, suppliers must obtain a National Provider Identifier (NPI). Applying for an NPI is a separate process from enrollment with NSC. NATIONAL PROVIDER IDENTIFIER The Administrative Simplification provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) mandated the adoption of standard unique identifiers for health care providers, as well as the adoption of standard unique identifiers for health plans. For health care providers, the NPI is the standard unique identifier. The Centers for Medicare & Medicaid Services (CMS) has developed the National Plan and Provider Enumeration System (NPPES) to assign the NPIs. Suppliers can apply for an NPI one of three ways. For the most efficient application processing and the fastest receipts of NPIs, use the web-based application process. Simply log onto the NPPES at and apply online. Suppliers can agree to have an electronic file interchange (EFI) organization (EFIO) submit application data on their behalf (i.e., through a bulk enumeration process) if an EFIO requests their permission to do so. Suppliers may wish to obtain a copy of the paper NPI Application/Update Form (CMS-10114) and mail the completed, signed application to the NPI Enumerator. This form is available on the CMS Web site at or by requesting a copy from the NPI Enumerator. Suppliers who wish to obtain a copy of this form from the NPI Enumerator may do so in any of these ways: Phone: or TTY Mail: NPI Enumerator P.O. Box 6059 Fargo, North Dakota Note: Suppliers may only apply for an NPI using only one of the methods described above. For more information about NPI enumeration, visit 132_0909 1

15 Chapter 2 : Enrollment Process [ SEPTEMBER 2009 ] OBTAINING AND RETAINING MEDICARE DMEPOS BILLING PRIVILEGES Under durable medical equipment (DME) jurisdictional processing, every supplier of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) must obtain billing privileges from the National Supplier Clearinghouse (NSC). A supplier is an entity or individual, which provides, sells or rents DMEPOS to Medicare beneficiaries. The NSC is the organizational entity contracted by CMS to issue Medicare billing privileges to suppliers of DMEPOS and to maintain a supplier file that contains information collected via the CMS-855S enrollment form. The NSC verifies data submitted on the CMS-855S enrollment application, issues billing privileges to approved suppliers, and maintains a national DMEPOS supplier file. The NSC must process supplier data and issue billing privileges before a supplier may start submitting claims to a durable medical equipment Medicare administrative contractor (DME MAC). The NSC will verify all information submitted. The supplier must complete the CMS-855S application and meet one of the following conditions if they plan to bill Medicare for DMEPOS: Enrolling in Medicare for the first time as a DMEPOS supplier Currently enrolled in Medicare as a DMEPOS supplier and need to report changes to their business, other than enrolling a new business location (e.g., they are adding, deleting or changing existing information under this Medicare Provider Transaction Access Number [PTAN]) Currently enrolled in Medicare as a DMEPOS supplier but need to enroll a new business location. Note: This is to add a new location to an organization with a tax identification number already listed with the NSC (this differs from changing information on an already existing location). Note: 42 Code of Federal Regulations (C.F.R.) (b)(1) requires suppliers to enroll separate physical locations other than warehouses or repair facilities. Currently enrolled in Medicare as a DMEPOS supplier and have been asked to reenroll in order to verify or update their information (includes situations where the supplier has been asked to attest that their organization is still eligible to receive Medicare payments) Reactivating their Medicare DMEPOS supplier billing privileges (e.g., their Medicare supplier billing privileges were deactivated because of no billing activity and they wish to receive payment from Medicare for future claims) Voluntarily terminating their Medicare DMEPOS supplier billing privileges Instructions on how to obtain and complete the CMS-855S may be found under the Supplier Enrollment/Forms/CMS-855S Form section of the NSC Web site at or on the CMS Web site at 132_0909 2

16 Chapter 2 : Enrollment Process [ SEPTEMBER 2009 ] The supplier is accountable for the accuracy of the information on the CMS-855S form. Any deliberate misrepresentation or concealment of material information may subject the supplier to liability under civil and criminal laws. The NSC will contact a supplier via or fax, or mail if the CMS-855S form is incomplete or has inconsistent information. Suppliers will be allowed 30 days from the date of notification to return all required information. If the information is not received within the 30-day time frame, the application will be closed. Suppliers enrolling with Medicare have the option to participate in the program. Suppliers who agree to the Medicare participation guidelines will be required to complete the CMS-460 Medicare Participating Supplier Agreement form. This form is available at Additional information on participation with Medicare can be found in the Participation Program chapter of this manual. Further, all suppliers are subject to a site visit in order to determine compliance with the supplier standards. Suppliers found in noncompliance with the supplier standards are subject to denial or revocation of their NSC issued billing privileges. The denial/revocation notification outlines the appeals process available to suppliers, including instructions on requesting an appeal. According to the CMS Internet-Only Manual (IOM) Publication , Medicare Program Integrity Manual, Chapter 10, Section 6.2, a supplier that is denied enrollment in the Medicare program cannot submit a new enrollment application until one of the following has occurred: If the denial was not appealed, the provider or supplier may reapply 90 days after the denial/revocation date. If the denial was appealed, the provider or supplier may reapply after it received notification the determination was upheld. On June 27, 2008, CMS published a final rule titled, Appeals of CMS or CMS Contractor Determinations When a Provider or Supplier Fails to Meet the Requirements for Medicare Billing Privileges (CMS F) in the Federal Register. This final rule establishes an enrollment bar for those providers and suppliers whose billing privileges are revoked. The enrollment bar will require that providers and suppliers whose billing privileges are revoked wait from one to three years before reapplying to participate in the Medicare program depending on the severity of the infraction. Each DMEPOS supplier applying for Medicare billing privileges must disclose ownership on the CMS-855S form in accordance with Section 1124A of the Social Security Act and Section 4313 of the Balanced Budget Act of 1997, by including the following information: The names and social security numbers of the owners, managing employees, those with controlling interest of five percent or more, and/or authorized representatives/members of the board of directors (including nonprofit corporations) as well as any partnership regardless of the percentage of ownership. 132_0909 3

17 Chapter 2 : Enrollment Process [ SEPTEMBER 2009 ] The names of all owners, managing employees and/or authorized representatives/members of the board of directors who have received penalties, been sanctioned, or excluded by the Medicare, Medicaid and/or other federal and state authorities or programs. The term managing employee is defined as any individual, including a general manager, business manager, or administrator, who exercises operational or managerial control over the DMEPOS supplier, or who conducts the day-to-day operations of the DMEPOS supplier. For Medicare enrollment purposes, managing employee also includes individuals who are not actual employees of the DMEPOS supplier but, either under contract or through some other arrangement, manage the day-to-day operations of the DMEPOS supplier. An authorized official must be an owner, general partner, chairman of the board, chief financial officer, chief executive officer, or president or must hold a position of similar status and authority within the supplier s organization. This individual must have the authorization to legally bind the organization to a contract. The authorized official has the authority to sign the initial CMS-855S application on behalf of the supplier and to notify the NSC of any change or that the billing privileges are no longer valid due to sale of the entity. Only the authorized official can add, change or delete delegated officials or sign off on the change of the authorized official. Adding delegated officials is an option and is not required. Delegated officials may either be a managing employee of the supplier, or hold a five percent direct-ownership interest or partnership interest in the supplier. Managing employees include general managers, business managers, or administrators individuals who exercise operational or managerial control over the supplier, or who conduct the day-to-day operations of the supplier. A delegated official must be an employee of the supplier, and proof, such as a W-2 form, may be requested. Delegated officials may not delegate their authority to any other individual. Once a delegated official has been designated, he/she may make any changes and/or updates to the provider status including enrolling additional locations, reenrolling the supplier, reactivating the supplier, or adding new part-owners. Suppliers may have as many authorized and delegated officials as desired as long as the individual meets the respective definition. These officials are not location specific, but rather are supplier specific. For example, if a supplier has multiple locations under one tax ID number, the authorized and delegated officials appointed will be the authorized signers for all locations. On May 1, 2006, CMS issued the revised CMS-855 Medicare enrollment applications. Listed below are changes and enhancements made specifically to the CMS-855S. DMEPOS suppliers should review and become familiar with this information. Requires the submission of the NPI and a copy of the NPI notification furnished by the NPPES. Suppliers should provide their NPI where requested and submit a copy of the notification verifying the NPI. Suppliers unable to locate their NPI notification should contact the NPPES at or send an to 132_0909 4

18 Chapter 2 : Enrollment Process [ SEPTEMBER 2009 ] Note: Each enrolled supplier of DMEPOS that is a covered entity under Health Insurance Portability and Accountability Act (HIPAA) must designate each practice location (if they have more than one) as a subpart and ensure that each subpart obtains its own unique NPI. Federal regulations require that each location of a Medicare DMEPOS supplier have its own unique billing number. In order to comply with that regulation, each location must have its own unique NPI. In addition, the address listed on the NPI notification must match the address listed on the CMS-855S. CMS requires a copy of the notification to be submitted with all enrollment documentation, which includes initial applications, changes of information, reenrollments and reactivations. Requires suppliers to complete the Authorization Agreement for Electronic Funds Transfer (CMS-588). With regards to DMEPOS enrollment, suppliers should submit the CMS-588 electronic funds transfer (EFT) form when initially enrolling or submitting an application for an additional location. Suppliers must list the proper Medicare contractor and ensure the form has the original signature of the authorized or delegated official. Also, suppliers should submit a separate form for each Medicare contractor where it submits claims. Along with the completed form, suppliers must include one of the following verifying the account information: Voided check Deposit slip Notification on bank letterhead verifying the account information The role of the NSC is to verify the form is complete, confirm the correct DME MAC has been indicated (based on the information the supplier has provided on the CMS-855S) and to ensure the agreement is signed properly. Once verified, the NSC will send the agreements to the appropriate DME MAC for processing. Again, suppliers should only submit the CMS-588 form to the NSC when submitting the CMS-855S for initial enrollment when enrolling an additional location or reenrolling and not currently enrolled in the EFT program. The NSC does not enroll suppliers into the EFT program. Any changes to EFT information should be submitted following existing procedures. A new section was added for suppliers to provide a specific address of where the NSC should mail their reenrollment packages. If a supplier would like to receive their reenrollment at an address other than the address where correspondences are received, the supplier should list this address in Section 2.A.3. This enhancement was made to provide all suppliers, especially those suppliers with multiple locations, a single address where they would like their reenrollment packages mailed. Requires suppliers to provide the name and phone number of the insurance underwriter. The NSC is required by CMS to verify coverage. Section 2.D requires suppliers to provide identifying information for both the insurance agent and the underwriter. Providing this information will assist in facilitating the verification process. On April 2, 2007, CMS issued a Final Rule on accreditation for DMEPOS suppliers. Because of the Final Rule, Section 2.G was added for suppliers to provide information concerning accreditation. 132_0909 5

19 Chapter 2 : Enrollment Process [ SEPTEMBER 2009 ] As of June 1, 2009, DMEPOS suppliers must submit all initial enrollment, change of information, or reenrollment requests on the revised CMS-855S enrollment application (version 03/09). This version includes Supplier Standards regarding accreditation and/or surety bond requirements to obtain/maintain Medicare billing privileges. All DMEPOS suppliers must submit accreditation information and/or a surety bond to the NSC to obtain/maintain Medicare billing privileges unless the supplier type has been exempted by CMS. Requires suppliers list the state(s) where items or services are being provided. Section 4 is where suppliers will indicate what jurisdiction the majority of claims will be submitted and list the individual states where items and services are provided. This information is being collected in order to ensure suppliers are properly licensed in the states where they provide Medicare-covered items to beneficiaries. CHANGE OF INFORMATION Any changes or updates to information provided on the CMS-855S form must be reported to the NSC within 30 days after such changes have taken place. Updated information should be submitted on the CMS-855S form. Suppliers found noncompliant are subject to the revocation or inactivation of their Medicare billing privileges. In order to receive timely information from the DME MAC, the NSC must have the supplier s correct address. The NSC maintains the supplier s correspondence address information and transmits this information to the DME MAC. All changes, including changes in address, must be reported to the NSC. Be sure to attach all location specific licenses to any Change of Information form that includes a change of physical location. This will be required before any changes can be made to the supplier file. This serves as notice to suppliers that they should apply for any new location-specific licenses from the specific licensing board (e.g., the Board of Pharmacy, business license offices, etc.) as quickly as possible to ensure compliance with supplier standard #1. Further instructions on how to complete a change of information for various reasons may be found in the Supplier Enrollment/Change of Information section of the NSC Web site at All CMS-855S forms and changes to previously submitted information must be sent to: Regular Mail Address National Supplier Clearinghouse AG-495 P.O. Box Columbia, South Carolina Overnight Mail Address National Supplier Clearinghouse AG Springdale Drive, Bldg 1 Camden, South Carolina _0909 6

20 Chapter 2 : Enrollment Process [ SEPTEMBER 2009 ] DIRECTORY OF MEDICARE SUPPLIERS The Centers for Medicare & Medicaid (CMS) is responsible for producing a directory of all Medicare suppliers. This directory will not include physicians or ambulatory surgical centers that furnish supplies, except optometrists. The directory of Medicare suppliers can be found online at SUPPLIER STANDARDS Medicare regulations have defined standards a supplier must meet to receive and maintain billing privileges. These standards can be found in the Supplier Enrollment/Standards & Compliance/Supplier Standards section of the NSC Web site at The Medicare DMEPOS supplier standards were finalized and became effective December 11, 2000 and are included in this chapter. Source: Section Special payment rules for items furnished by DMEPOS suppliers and issuance of DMEPOS supplier billing privileges. (A) Definitions As used in this Section, the following definitions apply: DMEPOS DMEPOS supplier Stands for durable medical equipment, prosthetics, orthotics, and supplies. An entity or individual, including a physician or a Part A provider, which sells or rents Part B covered items to Medicare beneficiaries and which meets the standards in paragraph (c) of this section. Medicare covered items means medical equipment and supplies as defined in Section 1834(j)(5) of the Social Security Act. (B) General Rule A DMEPOS supplier must meet the following conditions in order to be eligible to receive payment for a Medicare-covered item: 1) The supplier has submitted a completed application to CMS to furnish Medicare-covered items including required enrollment forms. (The supplier must enroll separate physical locations it uses to furnish Medicare-covered DMEPOS, with the exception of locations that it uses solely as warehouses or repair facilities.) 2) The item was furnished on or after the date CMS conveyed billing privileges to the supplier. 3) The CMS has not revoked or excluded the DMEPOS supplier s privileges during the period which the item was furnished has not been revoked or excluded. 132_0909 7

21 Chapter 2 : Enrollment Process [ SEPTEMBER 2009 ] 4) A supplier that furnishes a drug used as a Medicare-covered supply with durable medical equipment or prosthetic devices must be licensed by the state to dispense drugs (A supplier of drugs must bill and receive payment for the drug in its own name. A physician, who is enrolled as a DMEPOS supplier, may dispense, and bill for, drugs under this standard if authorized by the state as part of the physician's license.) 5) The supplier has furnished to CMS all information or documentation required to process the claim. (C) Application Certification Standards The supplier must meet and must certify in its application for billing privileges that it meets and will continue to meet the following standards: 1) Operates its business and furnishes Medicare-covered items in compliance with all applicable federal and state licensure and regulatory requirements. 2) Has not made, or caused to be made, any false statement or misrepresentation of a material fact on its application for billing privileges. (The supplier must provide complete and accurate information in response to questions on its application for billing privileges. The supplier must report to CMS any changes in information supplied on the application within 30 days of the change.) 3) Must have the application for billing privileges signed by an individual whose signature binds a supplier. 4) Fills orders, fabricates, or fits items from its own inventory or by contracting with other companies for the purchase of items necessary to fill the order. If it does, it must provide, upon request, copies of contracts or other documentation showing compliance with this standard. A supplier may not contract with any entity that is currently excluded from the Medicare program, any state health care programs, or from any other federal government executive branch procurement or nonprocurement program or activity. 5) Advises beneficiaries that they may either rent or purchase inexpensive or routinely purchased durable medical equipment, and of the purchase option for capped rental durable medical equipment, as defined in Section (a) of this subchapter. (The supplier must provide, upon request, documentation that it has provided beneficiaries with this information, in the form of copies of letters, logs, or signed notices.) 6) Honors all warranties expressed and implied under applicable state law. A supplier must not charge the beneficiary or the Medicare program for the repair or replacement of Medicare-covered items or for services covered under warranty. This standard applies to all purchased and rented items, including capped rental items, as described in Section of this subchapter. The supplier must provide, upon request, documentation that it has provided beneficiaries with information about Medicare-covered items covered under warranty, in the form of copies of letters, logs, or signed notices. 132_0909 8

22 Chapter 2 : Enrollment Process [ SEPTEMBER 2009 ] 7) Maintains a physical facility on an appropriate site. The physical facility must contain space for storing business records including the supplier s delivery, maintenance, and beneficiary communication records. For purposes of this standard, a post office box or commercial mailbox is not considered a physical facility. In the case of a multisite supplier, records may be maintained at a centralized location. 8) Permits CMS, or its agents to conduct on-site inspections to ascertain supplier compliance with the requirements of this section. The supplier location must be accessible during reasonable business hours to beneficiaries and to CMS, and must maintain a visible sign and posted hours of operation. 9) Maintains a primary business telephone listed under the name of the business locally or toll-free for beneficiaries. The supplier must furnish information to beneficiaries at the time of delivery of items on how the beneficiary can contact the supplier by telephone. The exclusive use of a beeper number, answering service, pager, facsimile machine, car phone, or an answering machine may not be used as the primary business telephone for purposes of this regulation. 10) Has a comprehensive liability insurance policy in the amount of at least $300,000 that covers both the supplier s place of business and all customers and employees of the supplier. In the case of a supplier that manufactures its own items, this insurance must also cover product liability and completed operations. Failure to maintain required insurance at all times will result in revocation of the supplier s billing privileges retroactive to the date the insurance lapsed. 11) Must agree not to contact a beneficiary by telephone when supplying a Medicare-covered item unless one of the following applies: (i) The individual has given written permission to the supplier to contact them by telephone concerning the furnishing of a Medicare-covered item that is to be rented or purchased. (ii) The supplier has furnished a Medicare-covered item to the individual and the supplier is contacting the individual to coordinate the delivery of the item. (iii) If the contact concerns the furnishing of a Medicare-covered item other than a covered item already furnished to the individual, the supplier has furnished at least one covered item to the individual during the 15-month period proceeding the date on which the supplier makes such contact. 12) Must be responsible for the delivery of Medicare-covered items to beneficiaries and maintain proof of delivery. (The supplier must document that it or another qualified party has at an appropriate time, provided beneficiaries with necessary information and instructions on how to use Medicare covered items safely and effectively). 13) Must answer questions and respond to complaints a beneficiary has about the Medicare-covered item that was sold or rented. A supplier must refer beneficiaries with Medicare questions to the appropriate carrier. A supplier must maintain documentation of contacts with beneficiaries regarding complaints or questions. 132_0909 9

23 Chapter 2 : Enrollment Process [ SEPTEMBER 2009 ] 14) Must maintain and replace at no charge or repair directly, or through a service contract with another company, Medicare-covered items it has rented to beneficiaries. The item must function as required and intended after being repaired or replaced. 15) Must accept returns from beneficiaries of substandard (less than full quality for the particular item) or unsuitable items (i.e., inappropriate for the beneficiary at the time it was fitted and rented or sold) from beneficiaries. 16) Must disclose these supplier standards to each beneficiary to whom it supplies a Medicare-covered item. 17) Must comply with the disclosure provisions in Section of this subchapter. 18) Must not convey or reassign a supplier s billing privileges. 19) Must have a complaint-resolution protocol to address beneficiary complaints that relate to supplier standards in paragraph (c) of this section and keep written complaints, related correspondence, and any notes of actions taken in response to written and oral complaints. Failure to maintain such information may be considered evidence that supplier standards have not been met. (This information must be kept at its physical facility and made available to CMS, upon request.) 20) Must maintain the following information on all written and oral beneficiary complaints, including telephone complaints, it receives: (i) Name, address, telephone number, and Health Insurance Claim number of the beneficiary. (ii) A summary of the complaint; the date it was received; the name of the person receiving the complaint, and a summary of actions taken to resolve the complaint. (iii) If an investigation was not conducted, the name of the person making the decision and the reason for the decision. 21) Provides to CMS, upon request, any information required by the Medicare statute and implementing regulations. 22) All suppliers of DMEPOS and other items and services must be accredited by a CMS-approved accreditation organization in order to receive and retain a supplier billing number. The accreditation must indicate the specific products and services, for which the supplier is accredited in order for the supplier to receive payment for those specific products and services. 23) All DMEPOS suppliers must notify their accreditation organization when a DMEPOS location is opened. The accreditation organization may accredit the new supplier location for three month months after it is operational without requiring a new site visit. 24) All DMEPOS supplier locations, whether owned or subcontracted, must meet the DMEPOS quality standards and be separately accredited in order to bill Medicare. An accredited supplier may be denied enrollment or their enrollment may be revoked, if CMS determines that they are not in compliance with the DMEPOS quality standards. 132_

24 Chapter 2 : Enrollment Process [ SEPTEMBER 2009 ] 25) All DMEPOS suppliers must disclose upon enrollment all products and services, including the addition of new product lines for which they are seeking accreditation. If a new product line is added after enrollment, the DMEPOS supplier will be responsible for notifying the accrediting body of the new product so that the DMEPOS supplier can be resurveyed and accredited for these new products. 26) All DMEPOS suppliers must obtain a surety bond in order to receive and retain a supplier billing number. (D) Failure to Meet Standards The CMS will revoke a supplier s billing privileges if it is found not to meet the standards in paragraphs (b) and (c) of this section. (The revocation is effective 15 days after the entity is sent notice of the revocation, as specified in Section of this subchapter.) (E) Renewal of Billing Privileges A supplier must renew its application for billing privileges every three years after the billing privileges are first granted. Each supplier must complete a new application for billing privileges three years after its last renewal of privileges. The NSC will notify suppliers via mail when a new renewal application is due. CHANGE OF OWNERSHIP When there is a change of ownership, new billing privileges must be issued unless the new owners assume all liabilities and the tax identification number of the existing supplier. Otherwise, the new owner may not use the existing supplier s billing privileges (supplier standard #18). The new owner must submit form CMS-855S to the NSC within 30 days of the change of ownership, along with a bill of sale, articles of incorporation filed with the state and any other documents that show the exact nature of the transaction. If there is a change in the tax identification number, the outgoing owner must notify the NSC by completing the CMS-855S as a Voluntary Termination of Billing Number. The request to voluntarily terminate the supplier s billing privileges must be submitted on the CMS-855S. Per Chapter 10, Section 7 of the CMS IOM Publication , Medicare Program Integrity Manual, all changes must be reported on the CMS-855S. The old billing privileges will be inactivated. If the NSC determines the new owners have met all requirements, the new privileges will be effective from the date of the change of ownership. Claims for items furnished between the date of the change of ownership and the issuance of the new privileges may be submitted to the DME MAC once the supplier has received the new privileges. Further information about change in ownership, including instructions on how to submit a voluntary termination, may be found in the Supplier Enrollment/Standards & Compliance/Change of Information section of the NSC Web site at 132_

25 Chapter 2 : Enrollment Process [ SEPTEMBER 2009 ] RESOURCES AVAILABLE TO ASSIST SUPPLIERS WITH THE ENROLLMENT PROCESS The NSC Web Site Helpful hints for completing the CMS-855S Numerous frequently asked questions (FAQs) regarding the enrollment process Information regarding the NSC site visit process Licensure information A checklist to ensure the CMS-855S was completed properly and that all required documentation has been provided NSC Customer Service Line The National Supplier Clearinghouse (NSC) analysts are available Monday through Friday from 9:00 a.m. until 5:00 p.m. eastern time (ET) to answer questions regarding the enrollment process. If the supplier has questions regarding supplier specific information, please be sure the caller is listed on the supplier file. NSC analysts will not be able to give supplier specific information to someone who is not listed on the supplier file. The NSC also has a voice mailbox available to Spanish suppliers who do not speak English. NSC Address If preferred, suppliers can their questions to this address. Questions received will be answered within a reasonable time frame. The NSC suggests suppliers do not submit protected health care information via . NSC Interactive Voice Response Unit The NSC interactive voice response (IVR) unit allows suppliers to obtain: General information regarding the enrollment process Information on the appeals process Status of a new application, reenrollment, reactivation or change of information Instructions on how to obtain a CMS-855S Contact information for the NSC, DME MACs, and CMS The IVR is available 24-hours a day, seven days a week (except for routine system maintenance) and can be accessed by calling the NSC Customer Service line at _

26 Chapter 3: [MARCH 2010] 3 Reserved for future assignment The contents of this chapter have been removed. 132_0310 1

27 Chapter 4: Participation Program [DECEMBER 2009] 4 Participation Program The Medicare participation program involves a voluntary agreement between a supplier and Medicare. Under the agreement, the supplier agrees to accept assignment for all services rendered to Medicare beneficiaries and to accept the Medicare-allowed amount as the total charge for any covered item. Any Medicare-enrolled supplier may choose to participate in the program. Participation is not automatic; the assignment of a durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) Provider Transaction Access Number (PTAN) does not enroll a supplier in the program. A separate participation agreement, the CMS-460 form, must be filed with the National Supplier Clearinghouse (NSC). Once a supplier is enrolled in the program, the agreement applies to locations enrolled under the same tax identification number. Participation is not location specific. This is true whether the supplier is an individual, partnership or corporation. ENROLLMENT The participation enrollment form is available on the NSC Web site at or on the Centers for Medicare & Medicaid Services (CMS) Web site at Suppliers may also obtain an enrollment form by calling the NSC toll free at or by writing to: National Supplier Clearinghouse Palmetto GBA AG-495 P.O. Box Columbia, South Carolina If preferred, suppliers can their questions to Questions received will be answered within a reasonable time frame. The NSC suggests that suppliers refrain from submitting protected healthcare information via . The Centers for Medicare & Medicaid Services (CMS) offers an open-enrollment period each year when suppliers may enroll in the program or provide notice of the termination of their participation agreement. The open enrollment period usually takes place mid-november to the end of December. The NSC notifies suppliers of the specific dates for the enrollment period each year. In order to terminate a participation agreement, the supplier must notify the NSC in writing during the enrollment period. The written notice must be postmarked before the end of the enrollment period and have the original signature of the authorized official. The termination will be effective January 1 of the following year. 132_1209 1

28 Chapter 4: Participation Program [DECEMBER 2009] The NSC will acknowledge receipt of a request, which has been appropriately completed and has the proper original signature, to enroll or to terminate enrollment in the participation program. Suppliers who do not receive an acknowledgement within a reasonable time should contact the NSC. BENEFITS OF PARTICIPATION By agreeing to accept assignment on all claims, a participating provider receives certain advantages. By accepting assignment, a supplier: requests direct payment from Medicare for covered items; accepts the Medicare-allowed amount as the full charge for the item or service; and has the right to appeal claim determination by the durable medical equipment Medicare administrative contractor (DME MAC). Medicare also advertises the participation status of providers to beneficiaries by providing a directory of participating providers to senior citizens groups and, upon request, to individual Medicare beneficiaries. The participating provider directory is available at Medicare provides for the automatic crossover of claims to Medigap insurers for participating providers. In other words, when a participating supplier provides the appropriate information on a claim for a beneficiary who has a Medigap insurance policy, Medicare will transfer the claim information to the Medigap insurer after processing, reducing paperwork for the supplier. Refer to the Claim Submission chapter of this manual for CMS-1500 claim form completion instructions to ensure automatic crossover. ASSIGNMENT OF CLAIMS It should be noted that the terms participating and nonparticipating refer to suppliers. The terms assigned and nonassigned refer to claims. By accepting assignment on a claim a supplier agrees to accept Medicare s allowed amount as the full charge for the items or services provided. This means that for covered services, the supplier may collect only the deductible and remaining coinsurance amounts from the beneficiary. A claim for an assigned item is considered paid in full when the DME MACs allowed amount is paid. On an assigned claim that was denied because the beneficiary did not meet Medicare s medical necessity criteria, the beneficiary may be held financially responsible for Medicare s allowed amount if an acceptable Advance Beneficiary Notice of Noncoverage (ABN) was obtained. Refer to the Advanced Beneficiary Notice of Noncoverage chapter of this manual for detailed ABN requirements. For noncovered items, the beneficiary may be held financially responsible for the supplier s entire charge regardless of whether the claim is filed assigned or nonassigned. 132_1209 2

29 Chapter 4: Participation Program [DECEMBER 2009] Assignment for Nonparticipating Suppliers Suppliers who have not enrolled in the participation program (i.e., nonparticipating suppliers) may accept assignment on a claim-by-claim basis. On a nonassigned claim that was denied because the beneficiary did not meet Medicare s medical necessity criteria, the beneficiary may be held financially responsible for the supplier s entire charge if an acceptable ABN was obtained prior to rendering the services. A nonparticipating supplier may not file assigned claims for some items and nonassigned claims for other items when they were provided to the same beneficiary on the same date. Once a claim has been filed as assigned, it may not be changed to nonassigned without the consent of both the beneficiary and the supplier. The notice to rescind must be received by the DME MAC prior to payment determination. Assignment Violation When an assignment violation is noted by the DME MAC through the review of a claim or through a beneficiary complaint, the DME MAC will educate the supplier on the terms of the assignment agreement. The supplier may be required to return a refund and provide a corrected statement to the beneficiary. Where there are repeated violations of the assignment agreement, the DME MAC may suspend further payment to the supplier on assigned claims as directed by the CMS. For payable claims, payment will be made directly to the beneficiary. The beneficiary will be advised that the supplier has not complied with the requirements for receiving payment from Medicare. 132_1209 3

30 Chapter 5: Coordination of Benefits and Medicare Secondary Payer [DECEMBER 2009] 5 Coordination of Benefits and Medicare Secondary Payer COORDINATION OF BENEFITS CONTRACTOR Reference: Centers for Medicare & Medicaid Services (CMS) Internet-Only Manual (IOM) Publication , Medicare Secondary Payer Manual, Chapter 4, Coordination of Benefits Contractor (COBC) Requirements, The Coordination of Benefits Contractor (COBC) consolidates the activities that support the collection, management and reporting of other insurance coverage for Medicare beneficiaries. The COBC is primarily an information gathering entity whose purpose is to identify the health benefits available to a Medicare beneficiary and to coordinate the payment process to prevent mistaken payment of Medicare benefits. The COBC is dependent upon various sources to collect this information, including beneficiaries, providers, suppliers, and Medicare contractors. The COBC is virtually responsible for all initial Medicare Secondary Payer (MSP) development activities formerly performed by contractors. COBC responsibilities include: Ensuring the accuracy and timeliness of updates to the Common Working File (CWF) MSP auxiliary file Developing claims to determine the existence or validity of MSP for Medicare beneficiaries. Handling all MSP-related inquiries, including those seeking general MSP information, but not those related to specific claims or recoveries. These inquiries (verbal and written) can come from any source, including but not limited to beneficiaries, attorneys/beneficiary representatives, employers, insurers, providers, suppliers, and contractors. Assigning new Medigap claim-based Coordination of Benefits Agreement (COBA) identifiers to Medigap insurers On October 1, 2007, the COBC assumed responsibility for the Medigap claim-based crossover, which will be driven by information that participating providers enter on the incoming claim. Participating providers that are permitted under the Administrative Simplification Compliance Act (ASCA) to bill Medicare on paper should include the newly assigned five-digit COBA Medigap claimbased ID within Item 9 D of the CMS-1500 claim form. In accordance with Public Law and 45 Code of Federal Regulations (CFR) 160, the COBC will only transmit claim to Medigap claim-based crossover recipient in the Health Insurance Portability and Accountability Act (HIPAA) American National Standards Institute (ANSI) X12-N 837 professional (version 4010A1) coordination of benefits (COB) claim format, or in the National Council for Prescription Drug Program (NCPDP) version 5.1 batch standard 1.1 format. 132_1209 1

31 Chapter 5: Coordination of Benefits and Medicare Secondary Payer [DECEMBER 2009] Note: Providers may reference a weekly-updated listing of the newly assigned COBA Medigap claim-based IDs for Medicare billing purposes at The COBC does not process claims, nor does it handle any mistaken payment recoveries or claims specific inquiries. The Medicare intermediaries and carriers are responsible for processing claims submitted for primary or secondary payment. Refer to the information below to determine whom to contact to resolve specific MSP-related questions. Contact the COBC to: report employment changes or any other insurance coverage information; report a liability, auto/no-fault or Workers Compensation case; ask general MSP questions/concerns; and ask questions regarding MSP letters and questionnaires. Contact your local Medicare intermediary or carrier to: answer questions regarding Medicare claim or service denials and adjustments; answer questions concerning how to bill for payment; process claims for primary or secondary payment; and accept the return of inappropriate Medicare payment. The COBC Customer Service number is Hours of operation are 8:00 a.m. 8:00 p.m. eastern time, Monday Friday, except holidays. Direct general written inquiries to: Medicare Coordination of Benefits P.O. Box 5041 New York, New York MEDICARE S ROLE Reference: CMS IOM Publication , Medicare Secondary Payer Manual, Since the Medicare program s inception, Congress has enacted a number of laws that have made Medicare a secondary payer to other insurance in certain situations. The role of MSP in particular situations is similar to the coordination of benefits clauses in private health insurance policies. Ordinarily, Medicare should be viewed as a secondary payer when a beneficiary can reasonably be expected to receive medical benefits through one or more of the following situations: Group health plan (GHP) meeting MSP provisions for Age, Disability, or End-Stage Renal Disease (ESRD) 132_1209 2

32 Chapter 5: Coordination of Benefits and Medicare Secondary Payer [DECEMBER 2009] Accidents with available no-fault (i.e., nonliability, med-pay) or liability insurance Workers Compensation Federal Black Lung Program Veterans Administration Please note that Medigap, Medicaid, and TRICARE are not among the programs primary to Medicare. Upon initial contact with the patient, providers/suppliers determine if there are any other payers that may be primary to Medicare. A sample MSP questionnaire is included at the end of this chapter. Suppliers are encouraged to use this questionnaire or a similar form of their own to help identify payers that may be primary to Medicare. Once a supplier has identified the primary payer, the supplier should bill that payer first. Medicare should not be billed until the supplier has received notice of payment or rejection by the primary insurer. Once the notice is received, the supplier must include the primary payer information on the Medicare claim (see the Billing Requirements section of this chapter for instructions). When Medicare is the secondary payer, certain information is needed to determine Medicare liability. Medicare must know how much the primary insurer allowed and how much the primary insurer paid. Many Medicare patients have other insurance that is primary to Medicare. Suppliers who fail to identify payers that are primary to Medicare may have their claims denied. Early detection of an MSP situation and proper billing will result in improved claims flow. MEDICARE SECONDARY PAYER PROGRAMS Reference: CMS IOM Publication , Medicare Secondary Payer Manual, Chapter 2, MSP Provisions, During the registration process, suppliers should screen their patients to determine if there are other payers that may be primary to Medicare. The following information provides details about the various MSP programs. Employer Group Health Plans Medicare is secondary payer for some beneficiaries who are enrolled in an employer group health plan (EGHP). Medicare defines an EGHP as any health plan that is offered to employees and their families by an employer of 20 or more full-time and/or part-time employees. This definition includes a multiemployer GHP that has at least one employer with 20 or more employees. The durable medical equipment Medicare administrative contractor (DME MAC) assumes, in the absence of contrary evidence, that EGHPs meet the 20-employee test. If the beneficiary has appealed or is protesting an EGHP denial, conditional primary benefits may be paid for any reason other than the following: 1) The EGHP offers only secondary coverage of services covered by Medicare, or 2) The EGHP denied the claim because the time limit for filing the claim with Medicare expired, or 132_1209 3

33 Chapter 5: Coordination of Benefits and Medicare Secondary Payer [DECEMBER 2009] 3) The EGHP denied the claim because the time limit for filing the claim with the EGHP expired (whether appealed or not) Working Aged In 1982, Congress created the MSP category known as Working Aged. The current rules regarding the Working Aged have been in effect since May 1, For services rendered on or after this date, Medicare will be secondary for those people age 65 and over who are covered under an EGHP. The EGHP must be through the current employment of the beneficiary or his/her spouse, and the employer must have a minimum of 20 employees. There are no longer any age ceilings for the beneficiary, as long as he/she is at least 65. Similarly, a working spouse of the beneficiary may be any age. Example: Mr. Patrick is 71 years old and retired. Mrs. Patrick is employed at a real estate office that employs 24 people, and carries group insurance on both her and Mr. Patrick. Medicare is secondary. The employer insurance should be billed first for all durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) items. Individuals with End-Stage Renal Disease Medicare is secondary to benefits payable under a GHP for individuals of any age who are entitled to Medicare benefits due to end-stage renal disease (ESRD). The GHP may be through a current or former employer of the beneficiary or through coverage of another family member who covers the beneficiary on their group health plan. (Exception: A retirement plan which has become secondary payer to Medicare does not have to revert to being primary payer.) Medicare is secondary payer for a period of 30 months. This 30-month period (the ESRD coordination period) begins with the first month of Medicare eligibility. After the 30-month period has been completed, Medicare will be primary regardless of other available GHPs. For patients undertaking hemodialysis, there is a three-month waiting period before they are eligible for Medicare benefits. Patients who undertake peritoneal dialysis may waive the three-month waiting period. In the case of a kidney transplant, Medicare coverage can begin the month an individual is admitted to an approved hospital for a kidney transplant or procedures preliminary to a transplant if the transplant takes place in that month or within the two following months. If the transplant is delayed more than two months after the individual is admitted to the hospital, Medicare coverage will begin two months before the month the actual transplant takes place, or if earlier, the first day of the third month after the monthly maintenance dialysis began. Example 1: An individual begins routine hemodialysis in April He/she would have a threemonth waiting period (April, May, and June) and would then be eligible for Medicare benefits on July 1, His/her 30-month ESRD coordination period would be from July 2005 through December Example 2: An individual begins routine peritoneal dialysis in April He/she could waive the three-month waiting period and Medicare eligibility would begin immediately. His/her 30-month ESRD coordination period would be from April 2005 through September _1209 4

34 Chapter 5: Coordination of Benefits and Medicare Secondary Payer [DECEMBER 2009] Note: In the examples above, if the individual was covered under a GHP through their own or another family member s current or former employment with an employer of any size, the GHP would be the primary payer throughout the 30-month ESRD coordination period. For beneficiaries entitled to Medicare solely on the basis of ESRD, Medicare coverage ends 12 months after the month they no longer require maintenance dialysis treatments or 36 months after the month of a successful kidney transplant. If the transplant fails during or after that 36-month period and the beneficiary resumes maintenance dialysis or receives another transplant, Medicare coverage will continue or be reinstated immediately without any waiting period. If an individual has more than one period of entitlement based solely upon ESRD, a coordination period is determined for each period of entitlement. In the case where a kidney transplant fails and the individual requires dialysis after the 36-month period of Medicare entitlement, the 30-month coordination period begins with the month in which renal dialysis begins, not three months after the month dialysis is reinstated. This is because a second waiting period is not required for re-entitlement to Medicare for situations involving kidney transplant failure. However in the case where a kidney transplant fails and the individual requires dialysis before the 36-month period of entitlement ends, there is no break in Medicare entitlement and thus no new coordination period. Individuals with Disability Medicare is secondary payer for a beneficiary entitled to Medicare due to a disability other than ESRD who also meets the following criteria: 1) He/she is under age 65, and 2) Covered under a large group health plan (LGHP) due to either his/her own employment or the employment of a family member with an employer of 100 or more employees. (Note: Employers must comply with the disability provisions when they have met the criteria of having 100 or more full and/or part-time employees for at least 50 percent of their business year.) Medicare Secondary Payer (MSP) status for a disabled Medicare beneficiary is determined by the existence of LGHP coverage based upon the beneficiary s or a family member s current employment status (per the Omnibus Budget Reconciliation Act [OBRA 1993] effective August 10, 1993). An individual has current employment status with an employer if: 1) the individual is actively working as an employee; or 2) the individual is the employer (including self-employed persons); or 3) the individual is associated with the employer in a business relationship. Dual Entitlement When a beneficiary s entitlement to Medicare can be based upon more than one provision, Dual Entitlement exists. Under prior MSP law, Medicare became the primary payer when a Medicare beneficiary became dually entitled to Medicare, e.g., disability and ESRD or age and ESRD. This changed with the passage of OBRA It is no longer mandatory for Medicare to be the primary payer in cases of dual entitlement. Section 13561(c) of OBRA 1993 (effective August 10, 1993) provided that Medicare will remain the secondary payer throughout a coordination period. Even if the 132_1209 5

35 Chapter 5: Coordination of Benefits and Medicare Secondary Payer [DECEMBER 2009] beneficiary becomes entitled to Medicare based on disability or age before the ESRD coordination period ends, Medicare will remain secondary payer. Additionally, a coordination period applies when Medicare is secondary due to the Age or Disability provision and the beneficiary then becomes entitled due to ESRD. If the beneficiary loses entitlement due to ESRD but retains Medicare coverage due to age or disability, then the MSP Age or Disability provisions will apply. Note: A beneficiary is not dually entitled to Medicare by age and disability. When a disabled beneficiary reaches age 65, he/she becomes entitled to Medicare by age and is no longer covered under the Medicare Disability provision. If the beneficiary or their spouse is working, the Working Aged provision would apply. Accidents Medicare may revert to secondary payer for covered items when payment may reasonably be expected to be made under a no-fault insurance (i.e., nonliability, med-pay), or a liability insurance. Note: Medicare will be secondary payer regarding claims involving the conditions related to the accident. Medicare would retain its normal payment status on other claims. Additional Documentation When filing a claim for conditions which result from an accident, additional documentation is necessary, such as: The specific location of the accident A statement of whether or not the beneficiary feels someone else is liable The name and address of the liable party The name, address and policy number of the liable party s insurance (this may be information for the beneficiary s automobile insurance company if the beneficiary was involved in and responsible for an automobile accident) The names and addresses of any attorneys involved No-fault Insurance No-fault (or nonliability) insurance may include motor vehicle medical coverage, premises medical coverage, homeowner s medical coverage or no-fault insurance. The supplier must pursue billing with a no-fault insurance company before it may bill Medicare. The supplier and the beneficiary are responsible for taking whatever action is necessary to obtain any payment that can reasonably be expected under no-fault insurance. Medicare does not pay until the beneficiary has exhausted his/her remedies under no-fault insurance. Medicare does not pay for services that would have been covered by the nonliability no-fault insurance if the beneficiary had filed a proper claim with those insurers. An exception is when the beneficiary, because of a physical or mental incapacity, failed to meet a claim filing requirement stipulated by the policy. Note: If the no-fault insurance pays the beneficiary directly, the supplier must seek payment of those funds from the beneficiary and should not bill Medicare for those amounts. 132_1209 6

36 Chapter 5: Coordination of Benefits and Medicare Secondary Payer [DECEMBER 2009] Liability Insurance Liability insurance (including a self-insured plan) provides payment based upon legal liability for injury or illness or damage to property or person. It may include automobile liability, uninsured motorist, underinsured motorist, homeowner s liability, malpractice, product liability, and general casualty insurances. For purposes of billing Medicare, liability involvement is determined by the beneficiary statement as to whether or not he/she feels someone else is responsible for the accident/incident. If the beneficiary feels that someone else is responsible for the accident (not the claim), the supplier must also identify and pursue the liability insurance company before billing Medicare. The liability insurance must be pursued for the first 120 days. If the supplier receives a denial notice from the insurance company before 120 days have passed, or the 120 days have passed without resolution, they may bill Medicare conditionally. Example 1 (No-fault): A Medicare beneficiary falls at their neighbor s home. They are not holding the neighbor responsible for the fall. However, the neighbor has no-fault (medical payments) coverage under their homeowner s policy. The supplier would need to bill the homeowner s policy for all claims related to this accident. The beneficiary does not have a choice in whether or not this policy is billed. Example 2 (No-fault): A Medicare beneficiary is involved in an automobile accident. They are not holding anyone else responsible for the accident. However, they have no-fault (medical payments) coverage under their automobile policy. The supplier would need to bill the beneficiary s automobile policy for all claims related to this accident. Example 3 (Liability): A Medicare beneficiary falls in a grocery store. The grocery store does not carry no-fault (premises medical) insurance. However, the beneficiary is holding the grocery store responsible for the accident. The supplier would need to bill the grocery store s liability insurance for all claims related to this accident. Note: If the injury resulted from an automobile accident and there is indication of primary coverage under an EGHP, the supplier bills the automobile medical or no-fault insurer or employer plan before requesting conditional Medicare payments. Workers Compensation Medicare payment may not be made if payment can reasonably be expected to be made under a Workers Compensation (WC) plan including plans provided under the Federal Employee s Compensation Act and the U.S. Longshoremen s and Harbor Workers Compensation Act. The beneficiary s WC carrier should be billed first for all DMEPOS items related to the injury while at work. Conditional Medicare Benefits Conditional Medicare benefits may be paid while a WC claim is being contested. The beneficiary s WC carrier must be pursued for the first 120 days. If the supplier receives a denial from the insurance company before 120 days or the 120 days have passed without resolution, the supplier may file the claim with Medicare conditionally. Frequently, there is a long delay between the occurrence of an injury or illness and the decision by the state WC agency. A denial of Medicare benefits pending the 132_1209 7

37 Chapter 5: Coordination of Benefits and Medicare Secondary Payer [DECEMBER 2009] outcome of the appeal would mean individuals might be required to advance their own funds to pay for expenses which would eventually be borne by either Medicare or WC. To avoid imposing hardship on Medicare beneficiaries, conditional Medicare payments may be made pending a final decision on the WC claim. Note: Medicare will not make conditional payments if a WC Medicare Set-Aside has been approved by CMS. Federal Black Lung Program Some Medicare beneficiaries are entitled to receive medical benefits under the Federal Black Lung Program when DMEPOS items are provided for a condition attributable to lung diseases or conditions caused by mining. The Department of Labor (DOL) administers the Federal Black Lung Program. If the supplier is aware that the beneficiary is entitled to benefits under this program, the DOL should be billed first for all DMEPOS items related to a black lung diagnosis. Mail claims to: Federal Black Lung Program CSC Correspondence Unit P.O. Box 740 Lanham, Maryland Medicare will continue to be primary payer for services not related to Black Lung disease. Suppliers identify the diagnosis, signs, or symptoms that caused the services to be rendered. Medicare secondary benefits may be available for services related to Black Lung disease. A copy of DOL s benefits explanation must accompany a claim to Medicare for secondary payment. Veterans Administration Veterans who are entitled to Medicare may choose which program will be responsible for payment of DMEPOS covered by both programs. Submit claims for which the veteran elects Medicare coverage to Medicare in the normal manner. A denial from the Veterans Administration (VA) is not needed prior to submitting a claim to Medicare. Claims cannot be submitted to both programs for the same dates and items. If a veteran elects Medicare coverage, a claim should not be submitted to VA for any portion of that claim. If a veteran elects VA coverage, a claim should not be submitted to Medicare for any portion of that claim. Medicare and VA perform periodic computer data matches to identify duplicate payments. When duplicate payments are found, Medicare will pursue recovery of its payment and will request information for potential referral to the Internal Revenue Service or the Office of the Inspector General. Submit DMEPOS claims to VA in situations such as: 1) Outpatient medical services were authorized by VA in advance. (Note: A VA fee-basis identification [ID] card is not considered by Medicare to be an authorization. The veteran retains his/her right to elect VA or Medicare coverage.) 132_1209 8

38 Chapter 5: Coordination of Benefits and Medicare Secondary Payer [DECEMBER 2009] 2) Care is not authorized by VA in advance; the veteran is eligible for payment for care as unauthorized service; the veteran chooses to submit a claim to VA for unauthorized services rather than utilizing Medicare benefits. Submit DMEPOS claims to Medicare in situations such as: 1) A veteran is eligible for Medicare benefits and hospital care is not authorized by VA in advance or within 72-hours of admission. 2) A veteran is eligible for Medicare benefits, has a VA Fee-Basis ID Card and elects Medicare coverage over VA. 3) A veteran is eligible for Medicare benefits and has no prior authorization from VA for care unless the veteran is eligible for payment for care as an unauthorized service and the veteran chooses to submit a claim to VA for unauthorized services rather than utilizing Medicare benefits. 4) A veteran is eligible for Medicare benefits and the VA has authorized payment for only a part of the hospital treatment period. CMS MSP Questionnaire CMS has created a questionnaire that contains questions that can be used to ask Medicare beneficiaries upon each inpatient and outpatient admission. The questionnaire is located in the CMS IOM Publication , Medicare Secondary Payer Manual, Chapter 3, at A sample of the CMS MSP Questionnaire is located at the end of this chapter. Suppliers are encouraged to use the CMS MSP Questionnaire to screen for payers primary to Medicare. Note: Suppliers should begin using the CMS MSP questionnaire effective September 11, BILLING REQUIREMENTS Medicare Secondary Payer claims must be filed electronically unless an ASCA exception is met. Suppliers submitting MSP claims electronically must comply with all ANSI X Version 4010A1 implementation guide requirements. Submit all appropriate MSP information using the following ANSI 4010A1 loops and segments when reporting at a claim level. This information is provided as a technical reference and should be given to the supplier s software vendor or programmer. 2000B.SBR Medicar e payer information 2300.CN1 Obligated to accept amount (CN102) if there is a contractual obligation known, it must be submitted, otherwise it will cause an overpayment on the claim SBR Primary payer information 2320.CAS Primary payer claim level adjustments (adjustment reason codes and adjusted amounts) 132_1209 9

39 Chapter 5: Coordination of Benefits and Medicare Secondary Payer [DECEMBER 2009] 2320.AMT Payer amount paid (AMT01=D) Approved amount (AMT01=AAE) Amount allowed (AMT01=B6) 2320.DMG Subscriber demographic information 2320.OI Primary health insurance information 2320.MOA Medicare outpatient adjudication information would use if provided on the remittance from the primary 2330A.NM1 Insured or subscriber name 2330A.N3 Insured or subscriber address 2330A.N4 Insured or subscriber city, state, ZIP code 2330B.NM1 Other primary payer information NM109 must be the same as the 2430.SVD01 Submit all appropriate MSP information using the following ANSI 4010A1 loops and segments when reporting at a line level. This information is provided as a technical reference and should be given to the supplier s software vendor or programmer CN1 Obligated to accept amount (CN102) if there is a contractual obligation known, it must be submitted, otherwise it will cause an overpayment on the claim AMT Approved amount (AMT01=AAE) 2430.SVD Service line information from primary explanation of benefits (EOB) Payer amount paid (SVD02) 2430.CAS Primary payer line level adjustment information (adjustment reason codes and adjusted amounts) 2430.DTP Date claim paid from primary payer information Note: MSP information/amounts should only be reported at either the claim or line level but not both. The adjustment/payments should be reported as they are indicated on the remittance notice from the primary insurance payer. Note: Suppliers that qualify for an ASCA exception, and are therefore submitting their claims hardcopy, must attach the EOB to the CMS-1500 claim form. Medicare Secondary Claim Filing Tips A claim should be submitted to the primary insurer first. An EOB or payment determination from the primary insurer must accompany each paper claim submitted to Medicare. In an electronic claim, loop 2330B is used for primary payer information, not supplemental insurance (i.e., Medicaid or Medigap). If a primary insurance lists a reason code other than an ANSI reason code, it should be translated to an ANSI reason code. These codes can be found at If Medicare is secondary to a GHP, Items 11 and 11a 11c of the CMS-1500 claim form must be completed. If the claim is due to an accident, Items 10a 10c of the CMS-1500 claim form should be completed. Do not enter the primary insurer s payment amount in Item 29 of the CMS Complete this field only if payment is received from the beneficiary. 132_

40 Chapter 5: Coordination of Benefits and Medicare Secondary Payer [DECEMBER 2009] Submit the total charge, not the difference between your usual charge and the primary insurer's payment (i.e., coinsurance payment). The total charge should not be reduced to reflect the Medicare or primary insurer s allowed amounts. Refer to the patient responsibility (PT RESP) field on the Medicare remittance notice to determine how much to bill the beneficiary. The coinsurance (COINS) and deductible (DEDUCT) fields are calculated based on the Medicare primary payment and do not apply to a secondary claim. CLAIM LIABILITY CALCULATION When Medicare receives a claim as the secondary payer, Medicare s liability is the lower amount derived from three calculations. The first calculation determines how much Medicare would pay without regard to any primary insurer. The second calculation subtracts the primary insurer s payment from the higher of the Medicare allowance or primary insurer s allowance. The third calculation is the actual charge submitted by the supplier minus the primary payment. Note: Suppliers should report to Medicare the obligated to accept amount from the primary insurance. If the supplier does not report this amount, the payment calculations listed above could be incorrect. For instance, if the supplier submits a charge for $500, the primary allows $350, but the supplier is obligated to accept $400, the supplier should submit to Medicare all figures, i.e., the submitted amount, the primary allowed amount, the primary paid amount, and the obligated to accept in full amount. Example 1: Assigned claim Submitted charge = $500 Primary insurer s allowance = $500 Primary insurer s payment = $000 Medicare allowance = $380 Supplier obligated to accept from primary insurance = $500 This example assumes the $135 Medicare deductible had not been met. This example also assumes the primary insurer applied $500 to their deductible. Medicare Liability Without Regard to Other Medicare Liability Considering Other Insurance: Insurer s Payment: $ = % = $196 $500 0 = $500 Solution: Medicare would pay $196. The combined primary insurer s payment and Medicare payment equals $196. Since this is an assigned claim, the beneficiary may be billed for $184, the $135 Medicare deductible, and $49 of coinsurance. The provider will then have received $380. Example 2: Nonassigned claim Submitted charge = $500 Primary insurer s allowance = $400 Primary insurer s payment = $ _

41 Chapter 5: Coordination of Benefits and Medicare Secondary Payer [DECEMBER 2009] Medicare allowance = $380 Supplier obligated to accept = $500 This example assumes the $135 Medicare deductible has been met. Medicare Liability Without Regard to Other Medicare Liability Considering Other Insurance: Insurer s Payment: $380 80% = $304 $ = $180 Solution: Medicare would pay $180. The combined primary insurer s payment and Medicare payment equals $500, thus no balance is due from the patient. The claim is paid in full. Example 3: Assigned Claim Submitted Charge = $500 Primary Insurer s Allowance = $400 Primary Insurer s Payment = $000 Medicare Allowance = $380 This example assumes the $135 Medicare deductible had been met. This example also assumes the primary insurer applied $400 to their deductible. Medicare Liability Without Regard to Other Medicare Liability Considering Other Insurance: Insurer s Payment: $380 80% = $304 $400 0 = $400 Solution: Medicare would pay $304. The combined primary insurer s payment and Medicare payment equals $304. Since this is an assigned claim, the beneficiary may be billed for $76, the Medicare coinsurance amount. The provider will then have received $380. MEDICARE SECONDARY PAYER OVERPAYMENTS If a provider, physician or supplier receives an overpayment that is a result of Medicare paying primary on a claim when the beneficiary has primary insurance coverage through another insurer, the provider, physician or supplier must refund Medicare s overpayment. Suppliers are also required to refund Medicare if the Medicare secondary payment was an overpayment due to the obligated to accept field not being completed. There are two methods suppliers may use to return Medicare s overpayment in an MSP situation. The supplier may complete an MSP Voluntary Refund form and mail it, along with a copy of the primary payer s Explanation of Benefits (EOB) and a check for the amount that is owed Medicare, to our office. Or, the supplier may complete an MSP Offset by Fax Request form and fax it, along with a copy of the primary payer s EOB to our office. When an offset is requested, Medicare will calculate the amount of the overpayment based upon the information provided by the supplier and recoup the overpayment amount from a future supplier payment. Calculating Medicare s portion of a claim payment in MSP situations can be complicated. For this reason, suppliers may prefer to use the MSP offset by fax process. 132_

42 Chapter 5: Coordination of Benefits and Medicare Secondary Payer [DECEMBER 2009] Note: If a supplier receives money from a liability insurer after having billed Medicare, the supplier may retain only the amount of any unpaid deductible, coinsurance, and noncovered items and must return the balance of the liability payment to the liability insurer, the attorney, or the Medicare beneficiary. Refund Forms The following pages include the approved MSP-related refund forms. Suppliers should use these forms only if an MSP-related voluntary refund needs to be submitted or if they need to request an offset by fax. The Medicare Secondary Payer Jurisdiction B DME MAC Voluntary Refund Form and Medicare Secondary Payer Jurisdiction B DME MAC Offset Request Form are located on the National Government Services Web site: Go to Select Durable Medical Equipment (DME) as your Business Type Select Jurisdiction B as your Region Select the Resources navigation category from the dark blue menu bar Select the Forms subnavigation option 132_

43 Medicare Overpayment Recovery Unit Jurisdiction B DME MAC Voluntary Refund Form To Be Completed By Medicare Contractor Date: Contractor Deposit Control #: Date of Deposit: Contractor Contact Name: Phone #: Contractor Fax: Contractor Address: To Be Completed By Provider/Physician/Supplier, Or Other Entity Please complete and forward to your Medicare contractor. This form, or a similar document containing the following information, should accompany every unsolicited/voluntary refund so that receipt of check is properly recorded and applied. Physician/Supplier or Other Entity Name: Address: Provider/Physician/Supplier # or NPI #: Tax ID #: Contact Person: Phone #: Amount of Check $: Check #: Check Date: Refund Information For each claim, provide the following: Patient Name: HICN: Date of Service: Medicare Claim Number: Claim Amount Refunded $: Reason Code for Claim Adjustment: (Reason codes are listed below. Use one reason per claim.) (Please list all claim numbers involved. Attach separate sheet, if necessary) Note: If specific patient/health Insurance Claim (HIC)/claim #/claim amount data not available for all claims due to statistical sampling, please indicate methodology and formula used to determine amount and reason for overpayment: Note: If specific patient/hic/claim # information is not provided, no appeal rights can be afforded with respect to this refund. Providers/physicians/suppliers, and other entities who are submitting a refund under the Office of the Inspector General s (OIG s) Self Disclosure Protocol are not afforded appeal rights as stated in the signed agreement presented by the OIG. For Institutional Facilities Only: Cost report year(s): (If multiple cost report years are involved, provide a breakdown by amount and corresponding cost report year.) For OIG Reporting Requirements Do you have a Corporate Integrity Agreement with OIG? Yes No Are you a participant in the OIG Self Disclosure Protocol? Yes No Reason Codes Billing/Clerical: MSP/Other Payer Involvement: Miscellaneous: 01 Corrected date of service 07 MSP group health plan insurance 12 Insufficient documentation 02 Duplicate 08 MSP no fault insurance 13 Patient enrolled in HMO 03 Corrected CPT code 09 MSP liability insurance 14 Services not rendered 04 Not our patient(s) 10 MSP, Workers Comp. (including Black Lung) 15 Medical necessity 05 Modifier add/remove 11 Veterans Administration 16 Other Be specific: 06 Billed in error Mail Completed Form To National Government Services, Inc. Medicare Secondary Payer Jurisdiction B DME MAC P.O. Box Indianapolis, Indiana National Government Services, Inc. Page: 1 of 1 Form #: (519_0309)

44 Instructions Medicare Overpayment Recovery Unit Jurisdiction B DME MAC Offset Request Form This form should be used to initiate a request for immediate offset of an overpayment. There are two types of overpayments: (1) Demanded (i.e., Medicare identified), and (2) Voluntary (i.e., provider identified). Please fill out the appropriate section in its entirety and fax the completed form to Type of Refund Medicare identified Section I (demand letter has been received) Provider identified Section II (no letter has been received) I. Complete This Section for Medicare Identified Refunds Date of Request: Amount of Overpayment $: Claim Control Number: Accounts Receivable (AR) Number: Notes: All of the above information can be found on the Medicare demand letter. Please make sure you attach a copy of the first page of the original demand letter. II. Complete This Section for Provider Identified Refunds Date of Service: Beneficiary HICN: Claim Control Number: Amount of Overpayment $: Specific Reason for Refund: Notes: All of the information in the section above is required to ensure proper processing. A demand letter will be generated once this request has been fulfilled. You may disregard that letter. Provider Information (Required) Name: Provider #: Address: NPI #: City/State/Zip: Contact Name: Phone #: Signature of Requestor: National Government Services, Inc. Page: 1 of 1 Form #: _0409

45 Chapter 5: Coordination of Benefits and Medicare Secondary Payer [DECEMBER 2009] SAMPLE ADMISSION QUESTIONS TO ASK MEDICARE BENEFICIARIES Revision 53, Issued June 9, 2006, Effective September 11, 2006, Implementation September 11, The following sample questionnaire contains questions that can be used to ask Medicare beneficiaries upon each inpatient and outpatient admission. Providers may use this as a guide to help identify other payers that may be primary to Medicare. This questionnaire is a model of the type of questions that may be asked to help identify MSP situations. Suppliers that choose to use this questionnaire should note that it was developed to be used in sequence. Instructions are listed after the questions to facilitate transition between questions. The instructions will direct the patient to the next appropriate question to determine MSP situations. Part I 1) Are you receiving Black Lung (BL) benefits? Yes; Date benefits began (MM/DD/CCYY): BL is primary payer only for claims related to BL. No. 2) Are the services to be paid by a government research program? Yes. Government research program will pay primary benefits for these services No. 3) Has the Department of Veterans Affairs (DVA) authorized and agreed to pay for your care at this facility? Yes. DVA is primary for these services. No. 4) Was the illness/injury due to a work-related accident/condition? Yes; Date of injury/illness (MM/DD/CCYY): Name and address of Workers Compensation (WC) plan: Policy or identification number: Name and address of your employer: WC is primary payer only for claims for work-related injuries or illness, go to Part III. No. Go to Part II. Part II 1) Was illness/injury due to a nonwork-related accident? Yes; Date of accident (MM/DD/CCYY): No. Go to Part III 132_

46 Chapter 5: Coordination of Benefits and Medicare Secondary Payer [DECEMBER 2009] 2) Is no-fault insurance available? (No-fault insurance is insurance that pays for health care services resulting from injury to you or damage to your property regardless of who is at fault for causing the accident.) Yes. Name and address of no-fault insurer(s) and no-fault insurance policy owner: Insurance claim number(s): No. 3) Is liability insurance available? (Liability insurance is insurance that protects against claims based on negligence, inappropriate action or inaction, which results in injury to someone or damage to property.) Yes. Name and address of liability insurer(s) and responsible party: Insurance claim number(s): No. No-fault insurer is primary payer only for those services related to the accident. Liability insurance is primary payer only for those services related to the liability settlement, judgment, or award. Go to part III. Part III 1) Are you entitled to Medicare based on: Age. Go to Part IV Disability. Go to Part V ESRD. Go to Part VI Please note that both Age and ESRD OR Disability and ESRD may be selected simultaneously. An individual cannot be entitled to Medicare based on Age and Disability simultaneously. Please complete ALL PARTS associated with the patient s selections. Part IV Age 1) Are you currently employed? Yes. Name and address of your employer: No. If applicable, date of retirement: (MM/DD/CCYY): No. Never employed. 2) Do you have a spouse who is currently employed? Yes. 132_

47 Chapter 5: Coordination of Benefits and Medicare Secondary Payer [DECEMBER 2009] Name and address of your spouse s employer: No. If applicable, date of retirement (MM/DD/CCYY): No. Never employed. If the patient answered No to both questions 1 and 2, Medicare is primary unless the patient answered Yes to questions in Part I or II. Do not proceed further. 3) Do you have group health plan (GHP) coverage based on your own, or a spouse s current employment? Yes, both. Yes, self. Yes, spouse. No. Stop. Medicare is primary payer unless the patient answered yes to the questions in Part I or II. 4) If you have GHP coverage based on your own current employment, does your employer that sponsors or contributes to the GHP employ 20 or more employees? Yes. GHP is primary. Obtain the following information. Name and address of GHP: Policy identification number (this number is sometimes referred to as the health insurance benefit package number): Group identification number: Membership number (prior to the Health Insurance Portability and Accountability Act (HIPAA), this number was frequently the individual s Social Security Number (SSN); it is the unique identifier assigned to the policyholder/patient): Name of policyholder/named insured: Relationship to patient: No. 5) If you have GHP coverage based on your spouse s current employment, does your spouse s employer that sponsors or contributes to the GHP, employ 20 or more employees? Yes. GHP is primary. Obtain the following information. Name and address of GHP: Policy identification number (this number is sometimes referred to as the health insurance benefit package number): Group identification number: Membership number (prior to the HIPAA, this number was frequently the individual s SSN; it is the unique identifier assigned to the policyholder/patient): Name of policyholder/named insured: 132_

48 Chapter 5: Coordination of Benefits and Medicare Secondary Payer [DECEMBER 2009] Relationship to patient: No. If the patient answered no to both questions 4 and 5, Medicare is primary unless the patient answered yes to questions in part I or II. Part V Disability 1) Are you currently employed? Yes. Name and address of your employer: No. If applicable, date of retirement (MM/DD/CCYY): No. Never employed. 2) Do you have a spouse who currently employed? Yes. Name and address of your spouse s employer: No. If applicable, date of retirement (MM/DD/CCYY): No. Never employed. 3) Do you have GHP coverage based on your own, or a spouse s current employment? Yes, both. Yes, self. Yes, spouse. No. 4) Are you covered under the GHP of a family member other than your spouse? Yes. Name and address of your family member s employer: No. If the patient answered no to questions 1, 2, 3 and 4, stop. Medicare is primary unless the patient answered yes to questions in part I or II. 5) If you have GHP coverage based on your own current employment, does your employer that sponsors or contributes to the GHP employ 100 or more employees? Yes. GHP is primary. Obtain the following information. Name and address of GHP: 132_

49 Chapter 5: Coordination of Benefits and Medicare Secondary Payer [DECEMBER 2009] Policy identification number (this number is sometimes referred to as the health insurance benefit package number): Group identification number: Membership number (prior HIPAA, this number was frequently the individual s SSN; it is the unique identifier assigned to the policyholder/patient): Name of policyholder/named insured: Relationship to patient: No. 6) If you have GHP coverage based on your spouse s current employment, does your spouse s current employer that sponsors or contributes to the GHP employ 100 or more employees? Yes. GHP is primary. Obtain the following information. Name and address of GHP: Policy identification number (this number is sometimes referred to as the health insurance benefit package number): Group identification number: Membership number (prior HIPAA, this number was frequently the individual s SSN; it is the unique identifier assigned to the policyholder/patient): Name of policyholder/named insured: Relationship to patient: No. 7) If you have GHP coverage based on a family member s current employment, does your family member s employer that sponsors or contributes to the GHP, employ 100 or more employees? Yes. GHP is primary. Obtain the following information. Name and address of GHP: Policy identification number (this number is sometimes referred to as the health insurance benefit package number): Group identification number: Membership number (prior HIPAA, this number was frequently the individual s SSN; it is the unique identifier assigned to the policyholder/patient): Name of policyholder/named insured: Relationship to patient: No. If the patient answered no to questions 5, 6, and 7, Medicare is primary unless the patient answered yes to questions in part I or II. Part VI ESRD 1) Do you have GHP coverage? Yes. 132_

50 Chapter 5: Coordination of Benefits and Medicare Secondary Payer [DECEMBER 2009] If applicable, your GHP information: Name and address of GHP: Policy identification number (this number is sometimes referred to as the health insurance benefit package number): Group identification number: Membership number (prior to HIPAA, this number was frequently the individual s SSN; it is the unique identifier assigned to the policyholder/patient): Name of policyholder/named insured: Relationship to patient: Name and address of employer, if any, from which you receive GHP coverage: If applicable, your spouse s GHP information: Name and address of GHP: Policy identification number (this number is sometimes referred to as the health insurance benefit package number): Group identification number: Membership number (prior to HIPAA, this number was frequently the individual s SSN; it is the unique identifier assigned to the policyholder/patient): Name of policyholder/named insured: Relationship to patient: Name and address of employer, if any, from which your spouse receives GHP coverage: If applicable, your family members GHP information: Name and address of GHP: Policy identification number (this number is sometimes referred to as the health insurance benefit package number): Group identification number: Membership number (prior to HIPAA, this number was frequently the individual s SSN; it is the unique identifier assigned to the policyholder/patient): Name of policyholder/named insured: Relationship to patient: Name and address of employer, if any, from which your family receives GHP coverage: No. Stop. Medicare is primary. 2) Have you received a kidney transplant? Yes. Date of transplant (MM/DD/CCYY): No. 132_

51 Chapter 5: Coordination of Benefits and Medicare Secondary Payer [DECEMBER 2009] 3) Have you received maintenance dialysis treatments? Yes. Date dialysis began (MM/DD/CCYY): If you participated in a self-dialysis training program, provide date training started (CCYY/MM/DD): No. 4) Are you within the 30-month coordination period that starts MM/DD/CCYY? (The 30-month coordination period starts the first day of the month an individual is eligible for Medicare [even if not yet enrolled in Medicare] because of kidney failure usually the fourth month of dialysis. If the individual is participating in a self-dialysis training program or has a kidney transplant during the three-month waiting period, the 30-month coordination period starts with the first day of the month of dialysis or kidney transplant.) Yes. No. Stop. Medicare is primary. 5) Are you entitled to Medicare on the basis of either ESRD and age or ESRD and disability? Yes. No. 6) Was your initial entitlement to Medicare (including simultaneous or dual entitlement) based on ESRD? Yes. Stop. GHP continues to pay primary during the 30-month coordination period. No. Initial entitlement based on age or disability. 7) Does the working aged or disability MSP provision apply (i.e., is the GHP already primary based on age or disability entitlement? Yes. Stop. GHP continues to pay primary during the 30-month coordination period. No. Medicare continues to pay primary. If no MSP data are found in the Common Working File (CWF) for the beneficiary, the provider still asks the types of questions above and provides any MSP information on the bill using the proper uniform billing codes. This information will then be used to update CWF through the billing process. 132_

52 Chapter 6: Medical Policy Information [DECEMBER 2009] 6 Medical Policy Information GENERAL MEDICAL POLICY INFORMATION Medical policies are a combination of national and regional decisions. The Centers for Medicare & Medicaid Services (CMS) defines national policy in the CMS Internet-Only Manual (IOM) Publication , Medicare National Coverage Determinations Manual, and the CMS IOM Publication , Medicare Program Integrity Manual. The durable medical equipment Medicare administrative contractor (DME MAC) is required to follow national policy where it exists. However, when there is no national policy on a subject, the DME MAC has the authority and responsibility to establish regional policy. A local coverage determination (LCD), as established by Section 522 of the Benefits, Improvements and Protection Act (BIPA) of 2000, is a decision by a fiscal intermediary or carrier on whether to cover a particular service on a fiscal intermediary-wide or carrier-wide basis in accordance with Section 1862(a)(1)(A) of the Social Security Act (i.e., a determination as to whether the service is reasonable and necessary). The Final Rule establishing LCDs was published in the Federal Register on November 7, Medical policies are published as two related documents: the LCD and a policy article (PA). The major sections of the LCD are: Indications and Limitations of Coverage and/or Medical Necessity This section defines coverage criteria based upon a determination of whether an item is reasonable and necessary. It includes information from national coverage determinations (NCDs) when applicable. When an item does not meet these criteria, it will be denied as not medically necessary. HCPCS Codes and Modifiers ICD-9 Codes and Diagnoses That Support Medical Necessity Documentation Requirements Revision History Attachments Certificate of Medical Necessity (CMN) or DME Information Form (DIF), if applicable; other suggested forms if applicable The major sections of the policy article are: Nonmedical Necessity Coverage and Payment Policy This section identifies situations in which an item does not meet the statutory definition of a benefit category (e.g., DME, prosthetic devices, etc.) or when it doesn t meet other requirements specified in regulations. It also identifies situations in which an item is statutorily excluded from coverage for reasons other than medical necessity. In these situations, the policies will continue to identify the denial as noncovered. This section may also include statements defining when an item will be denied as not separately payable or situations in which claim processing for the item is not within the Jurisdiction B DME MAC geographical area. 132_1209 1

53 Chapter 6: Medical Policy Information [DECEMBER 2009] Coding Guidelines ICD-9 Codes That are Covered Revision History Note: The term policy article will have a very specific meaning and will be used in the title of the article to define the document that is related to the LCD. The LCD and PA taken together will be referred to as the medical policy. On the CMS Medicare Coverage Database (MCD), at the end of each LCD, there is a link to the related PA and at the end of each PA is a link to the related LCD. New or revised policies are generally released on a quarterly basis: March, June, September, and December. Posting of new and revised policies will be announced in a Listserv message from National Government Services and posted to the What s New section of the Web site at Medical Policy Development The DME MACs shall ensure that the LCDs are developed and revised in accordance with CMS IOM Publication , Medicare Program Integrity Manual, Chapter 13, Section CMS requires that all LCDs developed by the DME MACs be identical for each jurisdiction to ensure uniformity for durable medical equipment prosthetic, orthotics, and supplies (DMEPOS) suppliers that operate nationally. Durable medical equipment Medicare administrative contractor medical policies are administrative and educational tools designed to inform suppliers and medical professionals about Medicare coverage requirements and to assist suppliers in submitting correct claims for payment. Medical policies are developed as a collaborative effort led by the medical directors of the four DME MACs. The intent of the policy development process is to provide the opportunity for input from the supplier and medical community, to enhance the understanding of the policy by those individuals, and to assure that the final policy is consistent with sound medical practice. The initial stage of the LCD development process is to write a draft policy based on a review of current medical literature and medical practice relating to the item. The medical directors seek input from various individuals and groups during the drafting phase of policy development. Drafts of new medical policies or revised policies that propose more restrictive medical necessity coverage criteria are sent for comment to a wide spectrum of national and regional organizations representing manufacturers, suppliers, physicians, and other health care professionals. These draft medical policies can be found on the National Government Services Web site: Go to Select Durable Medical Equipment (DME) as your Business Type Select Jurisdiction B as your Region Select the Coverage navigation category from the dark blue menu bar Select the Local Medical Policy subnavigation option Below the Active Policies heading, select the link titled: Go to Draft Policies Locate the desired LCD in the Draft Policies index table and select either the link to the LCD (left column) or the Policy Article (right column) 132_1209 2

54 Chapter 6: Medical Policy Information [DECEMBER 2009] At least 45 days are allowed for comments on draft policies after they are published. The DME MAC encourages written comments on the draft policies. Commenters that disagree with any aspects of the policy should offer specific alternative wording and support their suggestions with references from the published medical literature. Comments on new or substantially revised draft medical policies may be submitted by to the National Government Services Jurisdiction B DME MAC comments mailbox at Written comments may be submitted to: National Government Services, Inc. DME MAC Medical Director Attn: Adrian Oleck, MD P.O. Box 6036 Indianapolis, Indiana The DME MAC medical directors review all comments received and make revisions to the draft medical policies as appropriate. The medical directors summarize comments and provide a written response indicating agreement or disagreement with suggestions and reasons for their decision. The comment and response document is posted on the DME MAC Web sites when the final policy is published. Local coverage determinations and PAs are to be published on the CMS MCD and the DME MAC contractors Web sites. Jurisdiction B DME MAC medical policies are published on the National Government Services Web site: Go to Select Durable Medical Equipment (DME) as your Business Type Select Jurisdiction B as your Region Select the Coverage navigation category from the dark blue menu bar Select the Local Medical Policy subnavigation option Locate the desired LCD in the Active Policies index table and select either the link to the LCD (left column) or the Policy Article (right column) A link to all DME MAC medical policies on the CMS MCD is also provided on the Web site under the Coverage navigation category. Note: Final medical policies (LCDs) are published on the National Government Services Web site. Please follow the instructions provided above to locate an LCD or policy article on the Web site. Local Coverage Determination Reconsideration Process The LCD reconsideration process is a mechanism by which interested parties can request a revision of an LCD. In order to be considered a valid request, the following requirements must be met: Requestor must be qualified Subject must be appropriate 132_1209 3

55 Chapter 6: Medical Policy Information [DECEMBER 2009] Information submitted must be adequate Process for submission must be followed Any request for LCD reconsideration that, in the judgment of the DME MAC, does not meet these requirements is invalid. Requestor The DME MAC will consider all LCD reconsideration requests from either: beneficiaries residing in their jurisdiction; or suppliers doing business in their jurisdiction. The DME MAC may consider LCD reconsideration requests from any other interested party doing business in their jurisdiction. Subject The LCD reconsideration process is available only for final LCDs. The whole LCD or any part of the LCD may be reconsidered. Requests are not accepted for other documents including: National coverage decisions (NCD) Coverage provisions in interpretive manuals, e.g., the CMS IOM Draft LCDs Retired LCDs Individual claim determinations Bulletins, articles, training materials Any instance in which no LCD exists, i.e., requests for development of an LCD If modification of the LCD would conflict with an NCD, the request is not valid. Refer to the NCD reconsideration process on the CMS Web site at Information to be Submitted The request must identify the language the requestor wants added to, or deleted from, an LCD. Requests must include a justification supported by new evidence, which may materially affect the LCD s content or basis. When articles or textbooks are cited, copies of the published documents must be included. The level of evidence required for LCD reconsideration is the same as that required for new/revised LCD development. As described in the CMS IOM Publication , Medicare Program Integrity Manual, LCDs are to be based on the strongest evidence available. In order of preference, LCDs are based on the following: Published authoritative evidence derived from definitive randomized clinical trials or other definitive studies General acceptance by the medical community (standard of practice), as supported by sound medical evidence based on: Scientific data or research studies published in peer-reviewed medical journals, or 132_1209 4

56 Chapter 6: Medical Policy Information [DECEMBER 2009] Consensus of expert medical opinion (i.e., recognized authorities in the field), or Medical opinion from medical associations or other health care experts Acceptance by individual health care providers, or even a limited group of health care providers, normally does not indicate general acceptance by the medical community. Testimonials indicating such limited acceptance, and limited case studies distributed by sponsors with financial interest in the outcome, are not sufficient evidence of general acceptance by the medical community. The broad range of available evidence will be considered and its quality will be evaluated before a conclusion is reached. Submission Process In order to be valid, the request for LCD reconsideration must be in writing and must include the name and mailing address of the requestor. Inclusion of a telephone number and/or address is optional. If the requestor is a supplier, the Provider Transaction Access Number (PTAN) or National Provider Identifier (NPI) must be included. If the requestor is neither a beneficiary nor a supplier, the requestor must identify the nature of their business and who they represent (if applicable). Requests may be submitted by mail, , or fax to: National Government Services, Inc. DME MAC Medical Director Attn: Adrian Oleck, MD P.O. Box 6036 Indianapolis, Indiana Or- -Or- Fax: DME MAC Response Within 30 days after the request is received, the DME MAC will determine whether the request is valid or invalid and will notify the requestor of that determination. If the request is invalid, the DME MAC will explain why it was invalid. If the request is valid, within 90 days after the request is received, the DME MAC will make a reconsideration decision and will notify the requestor of the decision with its rationale. Decision options include: No revision Revision to a less restrictive policy Revision to a more restrictive policy, or Retiring the policy 132_1209 5

57 Chapter 6: Medical Policy Information [DECEMBER 2009] Any revision to the policy will then be published in a future update and posted to the DME MAC Web site. Scope of Policies The LCDs and policy articles address many of the most frequently ordered DMEPOS items and services, but clearly not all. If coverage criteria for an item are not defined in a policy, then it means that only general coverage criteria apply, i.e., the item must fall within a benefit category, it must not be excluded by statute or by national CMS policy as described in the CMS IOM Publication , Medicare National Coverage Determinations Manual and CMS IOM Publication , Medicare Program Integrity Manual, and it must be reasonable and necessary in the individual case for the diagnosis or treatment of illness or injury, or to improve the functioning of a malformed body member. When coverage is addressed in the medical policy, it only refers to coverage of claims processed by the DME MAC under specific benefit categories. (Refer to the Benefit Categories section of the policy for more information.) The items described in the policies may be covered under other provisions of the law, e.g., as part of institutional care in a hospital or nursing facility, as an item incident to a physician s service, etc. However, in these circumstances, the claim would not be submitted to the DME MAC and the coverage statements in the DME MAC policy may not apply. CURRENT DMEPOS MEDICAL POLICIES The DMEPOS medical policies are no longer included in the Jurisdiction B DME MAC Supplier Manual. All DMEPOS medical policies can be located on the National Government Services Web site: Go to Select Durable Medical Equipment (DME) as your Business Type Select Jurisdiction B as your Region Select the Coverage navigation category from the dark blue menu bar Select the Local Medical Policy subnavigation option Locate the desired LCD in the Active Policies index table and select either the link to the LCD (left column) or the Policy Article (right column) 132_1209 6

58 Chapter 7: Certificates of Medical Necessity/DME Information Forms [DECEMBER 2009] 7 Certificates of Medical Necessity/DME Information Forms OVERVIEW A Certificate of Medical Necessity (CMN) or DME Information Form (DIF) are forms that help document the medical necessity and other coverage criteria for selected durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) items. The Documentation section of each individual medical policy shows which items require one of these forms. Certificates of Medical Necessity contain Sections A through D; Sections A and C are completed by the supplier and Sections B and D are completed by the physician. A DIF is completed and signed by the supplier. Unlike, the CMN, the DIF does not require a narrative description of the equipment and cost or a physician signature. For certain items or services billed to the durable medical equipment Medicare administrative contractor (DME MAC), the supplier must receive a signed CMN from the treating physician or the supplier must complete and sign a DIF. A supplier must have a faxed, photocopied, an original signed order, or an electronically signed version of a CMN or a completed DIF in their records before they can submit a claim for payment to Medicare. The Centers for Medicare & Medicaid Services (CMS) form number is located in the bottom-left corner of the form. CMNs and DIFs are referred to by their CMS form numbers. DME form numbers identify the CMN on electronic claims submitted to the DME MAC. For example, CMS Form 484 serves as the CMN for oxygen. CMS Form serves as the DIF for External Infusion Pump. The DIF and a faxed, photocopied, an original signed order, or an electronic signed CMN must be maintained by the supplier and be available upon request. When hard-copy CMNs or DIFs are submitted to the DME MAC or program safeguard contractor (PSC), the supplier must include a copy of only the front side. When a CMN is submitted electronically to the DME MAC, only information from Sections A, B, and D is transmitted. For additional requirements and instructions on how to properly complete CMNs and DIFs, please refer to the CMS Internet-Only Manual (IOM) Publication , Medicare Program Integrity Manual, Chapter 5, Sections 5.3, 5.3.1, 5.3.2, 5.3.3, 5.5, and 5.6. In 2006, CMS developed new and improved CMNs and DIFs. The official instruction regarding the form changes are located on the CMS Web site at DME FORMS The following table indicates the DME CMN forms. DME Form CMS Form Items Addresses Oxygen 04.04B 846 Pneumatic compression devices 132_1209 1

59 Chapter 7: Certificates of Medical Necessity/DME Information Forms [DECEMBER 2009] DME Form 04.04C 06.03B 07.03A CMS Form Items Addresses 847 Osteogenesis stimulators 848 Transcutaneous electrical nerve stimulators (TENS) 849 Seat lift mechanisms 854 Section C Continuation Form The following table indicates the DIFs for external infusion pumps and parenteral and enteral nutrition (PEN). These are the only DIF forms accepted by the DME MACs. DME Form CMS Form Items Addresses Enteral/parenteral nutrition External infusion pump CMNs and DIFs are located on the CMS Web site at CMN COMPLETION INSTRUCTIONS A completed CMN must be submitted with the claim for certain items. Even though the physician must complete some of the information, it is the supplier s responsibility to be sure the CMN is accurate and complete before submitting the claim. Section A In Section A, the patient s name, address, telephone, and Health Insurance Claim number (HICN), the supplier s name, address, telephone, and National Provider Identifier (NPI) number, and the Healthcare Common Procedure Coding System (HCPCS) codes must be completed by the supplier before the CMN is sent to the physician. The initial date in Section A should be either the specific date that the physician gives as the start of the medical necessity or, if the physician does not give a specific start date, the initial date should be the date of the verbal or preliminary order. Initial, Revised, or Recertification CMN Initial CMN The first CMN filed for a particular beneficiary and item is the initial CMN. A CMN filed after an interruption in continuous use due to a break in need/medical necessity is also an initial CMN. Revised CMN When changes are made to an initial CMN, a revised CMN must be completed. A revised CMN is required whenever there is a change in supplier, beneficiary information, item dispensed, or medical need. When the only change to the CMN is a change in supplier, the revised CMN must be completed and kept on file. It does not need to be submitted to the DME MAC. Otherwise, submit a revised CMN with the first claim affected by the changes. 132_1209 2

60 Chapter 7: Certificates of Medical Necessity/DME Information Forms [DECEMBER 2009] Recertification CMN The local coverage determination (LCD) for oxygen requires that the physician verify the continued medical need for the item. Documentation of the continued need is done via the recertification process for CMNs. Please refer to the Coverage > Local Medical Policy section of the National Government Services Web site at for all LCDs and policy articles. Section B Suppliers are prohibited from completing Section B on the CMS forms 484, 846, 847, 848, and 849. Section B must be completed by the physician, the physician s employee, or another clinician involved in the care of the patient (e.g., nurse, physical or occupational therapist, etc.) as long as that person is not the supplier. Note: A nurse practitioner, clinical nurse specialist, or physician assistant may complete Section B and sign Section D if they meet all the requirements for them to sign orders as described in the Documentation/Interruptions in a Period of Continuous Use chapter of this manual. Section C Section C on CMS forms 484, 846, 847, 848, and 849 reflects the requirements from the 1994 Amendments to the Social Security Act. It provides an opportunity for the ordering physician to review and confirm a detailed description of the items provided. It also indicates the supplier s charge and what the Medicare fee schedule allowance will be, if applicable. Section C contains a blank space that can be formatted in different ways. However, the following guidelines must be met. The description of the item provided must include not only those items listed in Section A of the CMN, but also any accessories, options, supplies, or drugs which are related to the item and which are provided by the supplier. There should be a narrative description for each related item billed on a separate claim line of the CMS-1500 claim form. The exact HCPCS description is not required; a reasonable, abbreviated descriptor may be substituted. For every item listed, the supplier must always specify their submitted charge. For purchased equipment, accessories, and options, the full charge must be specified. For rental equipment, accessories, and options, the supplier must specify per month or /month. For accessories, supplies, nutrients, or drugs which are replaced regularly, the supplier must specify what time span the charge represents, e.g., per day, per week, per month, etc. The supplier must also list the Medicare fee schedule amount for each item, accessory, and option, if applicable. The fee schedule allowance should reflect the same time span and quantity used in the submitted charge column. If the Medicare allowed amount is determined by methods other than a fee schedule (e.g., miscellaneous codes), the supplier should indicate N/A (not applicable) in the Medicare allowed charge column. Section C must be completed by the supplier before the CMN is sent to the physician. Samples of Section C formats are provided below within this chapter. Suppliers may use other formats as long as the required information is presented. 132_1209 3

61 Chapter 7: Certificates of Medical Necessity/DME Information Forms [DECEMBER 2009] Satisfactory completion of Section C will be assessed in postpayment audits. Civil monetary penalties can be assessed for failure to comply. Section C Example Narrative Description Supplier s Charge Medicare Fee Schedule Allowance E0781: Ambulatory infusion pump, 1/month $ $235.28/month A4222: Supplies for external drug infusion pump, $ $121.44/week per cassette or bag 3/week A4221: Supplies for maintenance of drug infusion $30.00 $20.39/week catheter, per week, 1/week J2270: Morphine sulfate, 10 mg 168/week $ N/A* * A not applicable (N/A) entry means that Medicare payment will be determined by a method other than a fee schedule; it does not indicate that Medicare will deny the item. Section D Section D contains the physician s attestation statement, physician s signature, and date. The physician who signs the CMN must be the physician who is actively/presently treating the patient. Claims submitted with CMNs lacking a physician signature will be denied. Suppliers billing electronically must indicate presence of the physician s signature as specified in the electronic billing instructions. The date in Section D must be the date that the physician signs the CMN. The Signature Date is the date the physician signed and dated Section D of the CMN. This date might not be the same as the Initial Date, since the Signature Date must indicate when the physician signed Section D of the CMN. Medicare requires a legible identifier for services provided/ordered. The method used must be either handwritten or an electronic signature (in accordance with the CMS IOM Publication , Medicare Program Integrity Manual, Chapter 3, Section ), to sign an order or other medical record documentation for medical review purposes. Signature and date stamps are not acceptable for use on CMNs and DIFs. For a CMN that is mailed or delivered to the physician, it must be a two-sided CMN. For a CMN that is faxed or sent electronically to the physician, the supplier must send the back of the CMN form as well as the front. If the supplier is faxing multiple CMNs to the physician at the same time, only one copy of the back of the form needs to be faxed. The physician must review, complete, and correct Section A as needed, complete Section B, review Section C, sign and date Section D, and send the completed CMN to the supplier. If any change is made to a CMN after the physician has completed Section B and signed Section D, the physician must place a line through the correction and initial and date the change or the supplier may choose to have the physician complete a new CMN. For a hard-copy CMN, the physician may either mail or fax the completed CMN to the supplier. When a physician faxes a completed CMN to the supplier or mails a completed CMN that they have received as a fax, the back of the CMN form does not need to be included. Certificate of Medical Necessity forms 484, 846, 847, 848, and 849 can serve as the physician order if the narrative description in Section C is sufficiently detailed. Refer to the Documentation chapter of this manual for the requirements of detailed written orders. 132_1209 4

62 Chapter 7: Certificates of Medical Necessity/DME Information Forms [DECEMBER 2009] Suppliers may utilize the completed and physician-signed CMN to serve as the detailed written order for items which require a CMN and detailed written order prior to delivery (i.e., TENS, seat lift mechanisms). However, the CMN must be signed and dated prior to delivery of the item. Otherwise, a separate detailed written order in addition to a subsequently completed and signed CMN would be necessary. The physician is encouraged, although not required, to keep a copy of the CMN in their patient s medical record. Certificates of Medical Necessity are a standardized means of submitting some medical necessity information to the DME MACs. However, a CMN by itself does not provide sufficient documentation to support medical necessity even though it is signed by the treating physician. There must be clinical information in the patient s medical record which substantiates the answers to the questions in section B on the CMN and supports the medical necessity for the item in the individual case. DIF COMPLETION INSTRUCTIONS A completed DIF must be submitted with the claim for certain items. DIFs are completed and signed by the supplier. They do not require a narrative description of the equipment, the supplier s charge, or a physician signature. Suppliers are required to complete the DIF in its entirety. If suppliers are unable to complete the DIF, contacting the physician for additional medical records or documentation is recommended. A valid DIF is one in which the supplier has attested to and signed supporting the medical need for the item. Signature and date stamps are not acceptable for use on CMNs and DIFs. Initial or Revised DIF Initial DIF The first DIF filed for a particular beneficiary and item is the initial DIF. A DIF filed after an interruption in continuous use due to a break in need/medical necessity is also an initial DIF. Revised DIF When changes are made to an initial DIF, a revised DIF must be completed. A revised DIF is required whenever there is a change in supplier, beneficiary information, item dispensed, or medical need. When the only change to the DIF is a change in supplier, the revised DIF must be completed and kept on file. It does not need to be submitted to the DME MAC. Otherwise, submit a revised DIF with the first claim affected by the changes. Recertification DIF Recertification DIFs are not applicable at this time. 132_1209 5

63 Chapter 7: Certificates of Medical Necessity/DME Information Forms [DECEMBER 2009] ADDITIONAL CMN/DIF INFORMATION For codes requiring a CMN or DIF, the CMN/DIF must accompany claims for purchase of these items (including replacement), for the first month rental of equipment, for the initial provision of parenteral and enteral nutrition (PEN) nutrients and supplies, and for any required revised certifications/recertifications. Submitting CMNs/DIF when they are not required (e.g., subsequent months on rental items, oxygen, or PEN when there is no change in the order and no requirement for recertification) may cause claims processing problems/delays and is discouraged. Because CMS forms 484, 846, 847, 848, 849, 10126, and have been approved by the Office of Management and Budget (OMB), when a CMN/DIF is submitted with a paper claim, the hard-copy CMN/DIF must be an exact reproduction of the CMS form. However, when the CMN/DIF is submitted electronically to the DME MAC, the font on a hard-copy CMN/DIF which the supplier retains in their files may be modified as follows: Pitch may vary from characters per inch (CPI) Line spacing must be six lines per inch Each CMN/DIF must have a minimum ¼-inch margin on all four sides Without exception, these modified hard-copy forms must contain identical questions/wording to the CMS forms, in the same sequence, with the same pagination and identical instructions/definitions printed on the back CMN/DIF question sets may not be combined Upon request by the DME MAC, the supplier must provide in a timely manner the CMN/DIF that they received from the physician in a format that the DME MAC can accept. For medical review or appeals purposes, the DME MAC will accept any of the following forms of a CMN/DIF: An original pen and ink document A photocopy A facsimile image An electronically maintained document (an electronically maintained document is one which has been created, modified, and stored via electronic means, such as commercially available software packages and servers) When a claim is reviewed by the PSC as part of an investigation of potentially fraudulent behavior by a supplier, it will be the supplier s responsibility to prove the authenticity/validity of the claim(s) under investigation. The DME MAC may require the supplier to prove the authenticity/validity of the signature on the CMN/DIF, or any other questionable portion of the claim(s) under investigation. Proof of the authenticity/validity of a signature may take a variety of forms. The PSC will determine the appropriate level of proof needed. When a CMN/DIF is submitted hard copy to the DME MAC, the supplier must include a copy of only the front side. When a CMN/DIF is submitted electronically to the DME MAC, only information from Sections A, B, and D is transmitted. 132_1209 6

64 Chapter 7: Certificates of Medical Necessity/DME Information Forms [ DECEMBER 2009] The date of service on the claim (which corresponds to the delivery date on claims for purchased items or on the first month s claim for rental items) may be different than the initial date on the CMN/DIF. However, if the date of service on a claim is prior to the initial date on the CMN/DIF, the claim line will be denied as not medically necessary. Furthermore, to ensure that an item is still medically necessary when it is delivered, the delivery date must be within three months following the initial date on the CMN or within three months from the date of the physician s signature. Certificates of Medical Necessity/DIFs will be audited periodically to validate proper completion and transmission to the DME MAC and to verify that the answers on CMNs/DIFs are supported by information in the patient s medical record. If the information contained in either the supplier s records or in the patient s medical record fails to substantiate the CMN/DIF, or if it appears that the CMN/DIF has been altered, the item will be considered not medically necessary and a denial or overpayment will be initiated. COVER LETTERS Cover letters may be used by a supplier as a method of communication between themselves and the physician. Suppliers should remind physicians that it is their responsibility to determine the medical need for, and the utilization of, all health care services. Suppliers are also encouraged to remind physicians that it is the physician s responsibility to ensure that the information on the CMN relating to the beneficiary s condition is correct and is supported by information in the patient s medical record. SAMPLE CMN FORMS The DME forms are located on the National Government Services at The new DME forms can also be accessed from the CMS Web site at HCPCS CODES REQUIRING A CMN OR DIF The following HCPCS codes are those which require a CMN/DIF on claims that should be listed in Section A of the CMN/DIF. For narrative descriptions, refer to the specific LCD and policy article, and/or the HCPCS coding page on the National Government Services Web site at B4149 B4150 B4152 B4153 B4154 B4155 B4157 B4158 B4159 B4160 B4161 B4162 B4164 B4168 B4172 B4176 B4178 B4180 B4185 B4189 B4193 B4197 B4199 B4216 B4222 B5000 B5100 B5200 B9000 B9002 B9004 B9006 E0424 E0425 E0430 E0431 E0434 E0435 E0439 E0440 E0441 E0442 E0443 E0444 E0627 E0628 E0629 E0650 E0651 E0652 E0655 E0660 E0665 E0666 E0667 E0668 E0669 E0671 E0672 E0673 E0720 E0730 E0731 E _1209 7

65 Chapter 7: Certificates of Medical Necessity/DME Information Forms [ DECEMBER 2009] E0748 E0760 E0776 E0779 E0780 E0781 E0784 E0791 E1390 E1391 E1392 E1405 E1406 J0133 J0285 J0287 J0288 J0289 J0895 J1170 J1250 J1265 J1325 J1455 J1457 J1562 J1570 J1817 J2175 J2260 J2270 J2271 J2275 J2278 J3010 J3285 J9000 J9040 J9065 J9100 J9110 J9190 J9200 J9360 J9370 J9375 J9380 K0455 K _1209 8

66 Chapter 8: Documentation [SEPTEMBER 2009] 8 Documentation ORDERS Dispensing Orders Before dispensing any durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) item to a beneficiary, the supplier must have an order from the treating physician. Except for items requiring a detailed written order prior to delivery, the dispensing order may be either a verbal order or a preliminary written order (original pen and ink, facsimile image, photocopy, or electronic). Verbal orders must be documented in the patient s file. The dispensing order must contain a description of the item, the name of the beneficiary, the name of the physician, and the start date of the order. The dispensing order does not need to be as comprehensive as the detailed written order, which is required before submitting a claim (see following section). For items that are dispensed based on a verbal order, the supplier must obtain a detailed written order before submitting a claim (see following section). The supplier must maintain written documentation of the dispensing order and this documentation must be available to the durable medical equipment Medicare administrative contractor (DME MAC) upon request. Except for items requiring a detailed written order prior to delivery, if the supplier does not have an order from the treating physician before dispensing an item, it will be denied as not medically necessary. A detailed written order prior to delivery is required for the following: Pressure reducing support surfaces (group 1, 2, and 3), including mattress overlays, air-fluidized beds, and mattresses Seat lift mechanisms Transcutaneous electrical nerve stimulation (TENS) units Power operated vehicles Power wheelchairs Wheelchair seating Negative pressure wound therapy pumps The supplier must have a detailed written order for these items (see following section) original pen and ink, facsimile image, photocopy, or electronic which has been both signed and dated by the treating physician before dispensing the item. For these items, if the supplier does not have a detailed written order prior to delivery, it will be denied as statutorily noncovered. Detailed Written Orders Before submitting a claim for any DMEPOS item to the DME MAC, the supplier must have a detailed written order (original pen and ink, facsimile image, photocopy, or electronic) which has been both signed and dated by the treating physician. This detailed written order is in addition to the dispensing order described above, unless the dispensing order meets all the requirements specified in this section. 132_0909 1

67 Chapter 8: Documentation [SEPTEMBER 2009] The supplier may not submit a claim based only on a verbal order. If an item requires a Certificate of Medical Necessity (CMN), and if the CMN contains all the information described in this section, it may serve as the detailed written order. Except for items requiring a detailed written order prior to delivery, if the supplier does not have a detailed written order for an item prior to submitting a claim, it will be denied as not medically necessary. For items requiring a detailed written order prior to delivery (see Dispensing Orders section), if the order has not been obtained, the item will be denied as statutorily noncovered. Parenteral and enteral nutrition (PEN) and external infusion pumps require a Durable Medical Equipment (DME) Information Form (DIF). DIFs are completed by the supplier and physicians do not have to review and sign them. However, since the CMNs usually served as the detailed written order, suppliers will now have to obtain the detailed written order using a different document for PEN and external infusion pump claims. The detailed written order must contain the beneficiary s name, the signature of the treating physician, and the date that the order is signed. Signature and date stamps are not acceptable. All orders must clearly specify the start date of the order. The date that the order is signed will be considered the start date unless a separate start date is entered. If the order is for an item that has been dispensed before the date that the detailed written order is signed (e.g., a written confirmation of a verbal order), then the order must clearly specify the start date in addition to the signature date. The detailed written order (required before submitting a claim) must be sufficiently detailed, including all options or additional features which will be separately billed or which will require an upgraded code. The description can be either a narrative description (e.g., lightweight wheelchair base) or a brand name/model number. If the order is for a rented item or if the coverage criteria in a policy specify length of need, the order must include the length of need. If the order is for accessories or supplies that will be provided on a periodic basis, the order should include appropriate information on the quantity used, frequency of change or use, and length of need. (For example, an order for surgical dressings might specify one 4 4 hydrocolloid dressing that is changed 12 times per week for one month or until the ulcer heals.) If the supply is a drug, the order must specify the name of the drug, concentration (if applicable), dosage, frequency of administration, and duration of infusion (if applicable). The detailed description of the item may be completed by someone other than the physician. However, the treating physician must review the detailed description and personally sign and date the order to indicate agreement. Upon request by the DME MAC and/or the program safeguard contractor (PSC), the supplier must provide in a timely manner the detailed written order that they received from the physician in a format that the DME MAC and/or PSC can accept. For medical review or appeals purposes, the DME MAC and/or PSC will accept any of the following forms of an order: An original pen and ink document A photocopy A facsimile image, or An electronically maintained document 132_0909 2

68 Chapter 8: Documentation [SEPTEMBER 2009] Note: An electronically maintained document is one that has been created, modified, and stored via electronic means, such as commercially available software packages and servers. When a claim is reviewed by the PSC as part of an investigation of potentially fraudulent behavior by a supplier, it will be the supplier s responsibility to prove the authenticity/validity of the claim(s) under investigation. The PSC may require the supplier to prove the authenticity/validity of the signature on the order, or any other questionable portion of the claim(s) under investigation. Proof of the authenticity/validity of a signature may take a variety of forms. The PSC will determine the appropriate level of proof needed. For additional instructions regarding physician orders, verbal orders, preliminary written orders, and detailed written orders prior to delivery, please refer to the Centers for Medicare & Medicaid Services (CMS) Internet-Only Manual (IOM) Publication , Medicare Program Integrity Manual, Chapter 5, Sections 5.2, 5.2.1, 5.2.2, 5.2.3, Requirements for New Orders A new order is required when there is a change in the order for the accessory, supply, drug, etc. A new order is required on a regular basis (even if there is no change in the order) only if it is so specified in the documentation section of a particular medical policy. A new order is required when an item is replaced. A new order is also required when there is a change in supplier. In cases where two or more suppliers merge, the resultant supplier should make all reasonable attempts to secure copies of all active orders from the supplier(s) purchased. This document should be kept on file by the resultant supplier and be available to the DME MAC on request. For additional requirements for new orders please refer to the CMS IOM Publication , Medicare Program Integrity Manual, Chapter 5, Section Special Rules for Nurse Practitioners and Clinical Nurse Specialists A nurse practitioner or clinical nurse specialist may provide the dispensing order and sign the detailed written order if they satisfy all the following requirements: They are treating the beneficiary for the condition for which the item is needed They are practicing independently of a physician They bill Medicare for other covered services using their own National Provider Identifier (NPI), and They are permitted to do all of the above in the state in which the services are rendered Special Rules for Physician Assistants A physician assistant may provide the dispensing order and may document and sign the detailed written order if they satisfy all the following requirements: They meet the definition of a physician assistant found in Section 1861(aa)(5) of the Social Security Act or Section 2156(A) of the CMS IOM Publication , Medicare Program Integrity Manual, Chapter 5, Section 5.5 and _0909 3

69 Chapter 8: Documentation [SEPTEMBER 2009] They are treating the beneficiary for the condition for which the item is needed They are practicing under the supervision of a doctor of medicine or doctor of osteopathy They have their own NPI, and They are permitted to perform services in accordance with state law For additional requirements regarding nurse practitioners, clinical nurses, and physician assistants please refer to the CMS IOM Publication , Medicare Program Integrity Manual, Chapter 5, Section 5.5 and 5.6. Medical necessity information (e.g., an International Classification of Diseases 9th Edition Clinical Modification [ICD-9-CM] diagnosis code, narrative description of the patient s condition, abilities, limitations, etc.) is not considered part of the order; although it may be entered on the same document as the order. CERTIFICATES OF MEDICAL NECESSITY Please refer to the Certificates of Medical Necessity/DME Information Forms chapter of this manual for detailed information regarding this subject. DOCUMENTATION IN THE PATIENT S MEDICAL RECORD For any DMEPOS item to be covered by Medicare, the patient s medical record must contain sufficient documentation of the patient s medical condition to substantiate the necessity for the type and quantity of items ordered and for the frequency of use or replacement (if applicable). The information should include the patient s diagnosis and other pertinent information including, but not limited to, duration of the patient s condition, clinical course (worsening or improvement), prognosis, nature and extent of functional limitation, other therapeutic interventions and results, past experience with related items, etc. If an item requires a CMN, it is recommended that a copy of the completed CMN be kept in the patient s record. However, neither a physician s order, nor a CMN, nor a supplier-prepared statement, nor a physician attestation by itself provides sufficient documentation of medical necessity, even though it is signed by the treating physician. There must be clinical information in the patient s medical record which supports the medical necessity for the item and substantiates the answers on the CMN (if applicable) or information on a supplier-prepared statement or physician attestation (if applicable). The patient s medical record is not limited to the physician s office records. It may include hospital, nursing home, or home health agency records, and records from other professionals including, but not limited to, nurses, physical or occupational therapists, prosthetists, and orthotists. The documentation in the patient s medical record does not have to be routinely sent to the supplier or to the DME MAC. However, the DME MAC may request this information in selected cases. If the DME MAC does not receive the information when requested, or if the information in the patient s medical record does not adequately support the medical necessity for the item, then (on assigned claims) the supplier is liable for the dollar amount involved unless a properly executed Advance Beneficiary Notice of Noncoverage (ABN) of possible denial has been obtained. 132_0909 4

70 Chapter 8: Documentation [SEPTEMBER 2009] Note: When requesting medical records and documentation, suppliers should consider the Privacy Act of 1974 and the Health Insurance Portability & Accountability Act of 1996 (HIPAA) Privacy Rule. Protected health information (PHI) is included in these records and all avenues should be taken to safeguard PHI. For additional documentation requirements, please refer to the CMS IOM Publication , Medicare Program Integrity Manual, Chapter 5, Section 5.7 and 5.8. PROOF OF DELIVERY REQUIREMENTS Documentation Requirements Suppliers are required to maintain proof of delivery documentation in their files. Documentation must be maintained in the supplier s files for seven years. Proof of delivery is required in order to verify that the beneficiary received the DMEPOS. Proof of delivery is one of the supplier standards as noted in 42 Code of Federal Regulations (CFR), (12). Proof of delivery documentation must be made available to the DME MAC upon request. For any services, which do not have proof of delivery from the supplier, such claimed items and services shall be denied and overpayments recovered. Suppliers who consistently do not provide documentation to support their services may be referred to the Office of the Inspector General for investigation and/or imposition of sanctions. Delivery Methods Note: For the purpose of the delivery methods noted below, the designee is defined as: Any person who can sign and accept the delivery of durable medical equipment on behalf of the beneficiary. Suppliers, their employees, or anyone else having a financial interest in the delivery of the item are prohibited from signing and accepting an item on behalf of a beneficiary (i.e., acting as a designee on behalf of the beneficiary). The relationship of the designee to the beneficiary should be noted on the delivery slip obtained by the supplier (i.e., spouse, neighbor, etc.). The signature of the designee should be legible. If the signature of the designee is not legible, the supplier/shipping service should note the name of the designee on the delivery slip. Method 1 Direct Delivery to the Beneficiary By the Supplier Suppliers may deliver directly to the beneficiary or the designee. An example of proof of delivery to a beneficiary would be having a signed delivery slip. It is recommended that the delivery slip include: 1) Patient s name 2) Quantity delivered 3) Detailed description of the item being delivered 4) Brand name, and 5) Serial number 132_0909 5

71 Chapter 8: Documentation [SEPTEMBER 2009] The date of signature on the delivery slip must be the date that the DMEPOS item was received by the beneficiary or designee. In instances where the supplies are delivered directly by the supplier, the date the beneficiary received the DMEPOS supply shall be the date of service on the claim. Method 2 Delivery via Shipping or Delivery Service If the supplier utilizes a shipping service or mail order, an example of proof of delivery would include the service s tracking slip and the supplier s own shipping invoice. If possible, the supplier s records should also include the delivery service s package identification number for that package sent to the beneficiary. The shipping service s tracking slip should reference the following: Each individual package Delivery address Corresponding package identification number given by the shipping service, and Date delivered (if possible) If a supplier utilizes a shipping service or mail order, suppliers shall use the shipping date as the date of service on the claim. Suppliers may also utilize a return postage-paid delivery invoice from the beneficiary or designee as a form of proof of delivery. The descriptive information concerning the DMEPOS item (i.e., the patient s name, the quantity, detailed description, brand name, and serial number), as well as the required signatures from either the beneficiary or the beneficiary s designee, should be included on this invoice as well. For DMEPOS products that are supplied as refills to the original order, suppliers must contact the beneficiary prior to dispensing the refill. This shall be done to ensure that the refilled item is necessary and to confirm any changes/modifications to the order. Contact with the beneficiary or designee regarding refills should take place no sooner than approximately seven days prior to the delivery/shipping date. For subsequent deliveries of refills, the supplier should deliver the DMEPOS product no sooner than approximately five days prior to the end of usage for the current product. This is regardless of which delivery method is utilized. The DME MACs shall allow for the processing of claims for refills delivered/shipped prior to the beneficiary exhausting his/her supply. Method 3 Delivery to Nursing Facility on Behalf of a Beneficiary When a supplier delivers items to a nursing facility, the documentation described for Method 1 is required. When a delivery service is used to deliver the item to a nursing facility, the documentation described for Method 2 is required. For those patients that are residents of a nursing facility, upon request from the DME MAC, suppliers should obtain copies of the necessary documentation from the nursing facility to document proof of delivery or usage by the beneficiary (e.g., nurse s notes). Items Provided in Anticipation of Discharge from a Hospital or Skilled Nursing Facility Exceptions to the preceding statements concerning the date(s) of service on the claim occur when the items are provided in anticipation of discharge from a hospital or nursing facility. A supplier may 132_0909 6

72 Chapter 8: Documentation [SEPTEMBER 2009] deliver a DMEPOS item to a patient in a hospital or nursing facility for the purpose of fitting or training the patient in the proper use of the item. This may be done up to two days prior to the patient s anticipated discharge to their home. The supplier shall bill the date of service on the claim as the date of discharge and shall use the place of service (POS) code 12 (patient s home). The item must be for subsequent use in the patient s home. No billing may be made for the item on those days the patient was receiving training or fitting in the hospital or nursing facility. A supplier may not bill for drugs or other DMEPOS items used by the patient prior to the patient s discharge from the hospital or a Medicare Part A nursing facility stay. Billing the DME MAC for surgical dressings, urological supplies, or ostomy supplies that are provided in the hospital or during a Medicare Part A nursing facility stay is not allowed. These items are payable to the facility under Part A of Medicare. This prohibition applies even if the item is worn home by the patient from the hospital or nursing facility. Any attempt by the supplier and/or facility to substitute an item that is payable to the supplier for an item that, under statute, should be provided by the facility, may be considered to be fraudulent. These statements apply to DME delivered to a patient in hospitals, skilled nursing facilities (POS = 31), or nursing facilities providing skilled services (POS = 32). A supplier may deliver a DMEPOS item to a patient s home in anticipation of a discharge from a hospital or nursing facility. The supplier may arrange for actual delivery of the item approximately two days prior to the patient s anticipated discharge to their home. The supplier shall bill the date of service on the claim as the date of discharge and should use the POS code 12 (patient s home). REQUESTS FOR ADDITIONAL INFORMATION If the original claim and CMN do not contain all the information required to determine the medical necessity of the supply or item, the DME MAC may request additional information from the supplier, the ordering physician, or the beneficiary through the additional documentation request (ADR) process. Suppliers may receive additional documentation requests from any of the following: DME MAC Claims Department DME MAC Medical Review Department Comprehensive Error Rate Testing (CERT) Recovery audit contractors (RACs) PSCs/zone program integrity contractors (ZPICs) Suppliers must submit the requested information within the timeframe indicated in the letter. A copy of the ADR letter and/or cover sheet should be included with the documentation submitted. The information should be mailed and/or faxed to the appropriate contractor based on the contact information indicated in the letter. If a supplier fails to respond timely or does not provide the requested documentation, this can result in a claim denial or an overpayment. 132_0909 7

73 Chapter 8: Documentation [SEPTEMBER 2009] DME MAC Medical Review/Claims Department If additional information is requested from the DME MAC, suppliers must submit the requested documentation to the appropriate address and/or fax number indicated on the letter within 30 days. Suppliers must return all requested documentation along with a copy of the ADR letter. If after 30 days the DME MAC has received no response, the DMEPOS item will be denied for lack of information. The Jurisdiction B DME MAC Medical Review ADR address is: National Government Services, Inc. Additional Documentation Requests P.O. Box 7027 Indianapolis, Indiana Suppliers are encouraged to keep a copy of the letter within their files as it contains important contact information that may be needed at a later date. CERT Program Overview The Centers for Medicare and Medicaid Services developed the CERT program to identify national, contractor-specific, and service-specific paid claim error rates. The program has independent reviewers that periodically review random samples of Medicare claims within the processing systems of Medicare contractors. The independent reviewers medically review claims that are paid and claims that are denied to ensure that the decision was appropriate. As such, suppliers should be aware that one or more of their claims may be selected in the CERT sampling process. When this occurs, the supplier will receive a letter from the CERT contractor requesting medical documentation for the selected claims. The supplier must respond to the request from the CERT contractor within 75 days of the date of the initial request letter. Note: Submitting documentation to the CERT contractor is not in violation of the HIPAA Privacy Rules. For more information, suppliers should also reference the CMS IOM Publication , Medicare Program Integrity Manual, to Chapter 12 at Recovery Audit Contractor Overview The Centers for Medicare & Medicaid Services is launching the national recovery audit contractor (RAC) program to help strengthen its oversight of medical equipment suppliers and home health agencies. The RACs will focus on companies and individuals whose billings for Medicare services are higher than the majority of providers and suppliers in the community. CMS is also shifting its traditional approach to fighting fraud by working directly with beneficiaries by ensuring they received the durable medical equipment or home health services for which Medicare was billed and that the items or services were medically necessary. For claims that were not reviewed before payment was made, CMS is implementing further medical review of submitted DMEPOS claims by one of the new RACs. The RACs review paid claims for all Medicare Part A and B providers to ensure their claims meet Medicare statutory, regulatory and policy 132_0909 8

74 Chapter 8: Documentation [SEPTEMBER 2009] requirements and regulations. If the RACs find that any Medicare claim was paid improperly it will then request repayment from the provider if an overpayment was found or request that the provider is repaid if the claim was underpaid. The new national RACs can be found at Program Safeguard Contractors/Zone Program Integrity Contractors TriCenturion is a PSC under contract with the CMS to perform all benefit integrity functions for DME MAC Jurisdictions A/B. These functions include: Fraud investigations Audit activities which may include prepay and postpay medical review of claims, and Data analysis While the focus of the medical review program is to reduce the error rate through medical review and provider notification and feedback; medical review for benefit integrity purposes focuses on addressing situations of potential fraud, waste, and abuse. In this contract, TriCenturion works closely with National Government Services, the Jurisdiction B DME MAC, and NHIC, Corp., the Jurisdiction A DME MAC. PSCs will continue to perform the benefit integrity functions; however, in the near future, benefit integrity functions will transition to the ZPICs. Information relating to the transition of PSC benefit integrity functions to ZPICs is noted in Medicare Learning Network (MLN) Matters article 5765 and the CMS IOM Publication , Medicare Program Integrity Manual, Chapter 5 (revision). TriCenturion will contact suppliers directly in the event that they require information in carrying out their activities, and any such request will contain explicit instructions on when, where, and how to respond. Updated information regarding fraud and abuse, alerts, and referral to benefit integrity forms are located on the TriCenturion Web site at Additionally, a brochure titled: Medicare Claim Review Programs: MR, NCCI Edits, MUEs, CERT, and RAC explains the different CMS claim review programs and assists providers in reducing payment errors; in particular, coverage and coding errors. This brochure is available online at 132_0909 9

75 Medicare Break-in-Service Form A break in service (BIS) is defined as a change in the patient s medical condition to the point that they no longer need the original equipment (i.e., the patient no longer met medical necessity requirements for the equipment) for a period of 60 days or more. The patient s condition changed again and the patient resumed using the same equipment (i.e., the patient again met medical necessity requirements for the equipment). Note: It could be for the same or different diagnosis. This form should be used by CMS 1500 paper claim submitters only and must be attached to the first paper claim submitted to the Jurisdiction B Durable Medical Equipment Medicare Administrative Contractor (DME MAC) after a BIS has occurred. Suppliers that meet one of the Administrative Simplification Compliance Act (ASCA) exceptions and have a valid waiver on file with the Jurisdiction B DME MAC should complete this form when a break in service has occurred. Suppliers that do not qualify for an ASCA exception or do not have a valid waiver on file with the Jurisdiction B DME MAC must submit their claims electronically. Electronic BIS claims do not require the use of the BIS form. 1. Patient s Name: 2. Patient s Health Insurance Claim Number (HICN): 3. Supplier s Name: 4. National Provider Identifier: 5. Pick up Date (of old equipment): 6. Delivery Date (of new equipment): 7. Old Diagnosis Code: 8. New Diagnosis Code: 9. Notes: Attach this form to the CMS 1500 paper claim form and mail to: DMEPOS Claims P.O. Box 7027 Indianapolis, Indiana National Government Services, Inc. Page: 1 of 1 263_0309

76 Chapter 9: Advance Determination of Medicare Coverage [ DECEMBER 2009 ] 9 Advance Determination of Medicare Coverage Advance determination of Medicare coverage (ADMC) is a process by which the durable medical equipment Medicare administrative contractor (DME MAC) will provide the requestor with a coverage decision prior to delivery of an item. ELIGIBLE ITEMS The ADMC process is only available for the following wheelchair base Healthcare Common Procedure Code System (HCPCS) codes and related options and accessories: E1161 E1231 E1232 E1233 E1234 K0005 K0009 Manual adult size wheelchair, includes tilt in space Wheelchair, pediatric size, tilt-in-space, rigid, adjustable, with seating system Wheelchair, pediatric size, tilt-in-space, folding, adjustable, with seating system Wheelchair, pediatric size, tilt-in-space, rigid, adjustable, without seating system Wheelchair, pediatric size, tilt-in-space, folding, adjustable, without seating system Ultralightweight manual wheelchair Not otherwise classified manual wheelchair base Power wheelchairs: Group 2 (K0835 K0843) Group 3 (K0856 K0864) Group 4 (K0877 K0886) Group 5 (K0890, K0891) Group 3 (K0848 K0855) provided with an alternative drive control interface (E2321 E2322, E2325, E2327 E2330) Group 4 (K0868 K0871) provided with an alternative drive control interface (E2321 E2322, E2325, E2327 E2330) Note: When a particular wheelchair base is eligible for ADMC, all wheelchair options and accessories ordered by the physician for that patient along with the base HCPCS code will be eligible for ADMC. SUBMITTING ADMC REQUESTS Effective February 18, 2008, all ADMC requests must be sent to National Government Services due to the medical review transition from the program safeguard contractors (PSC) (e.g., TriCenturion) to the DME MACs. Advance determination of Medicare coverage (ADMC) requests may either be mailed or sent by fax; ADMC requests cannot be submitted electronically. Note: There is a new address for mailed ADMC 132_1209 1

77 Chapter 9: Advance Determination of Medicare Coverage [DECEMBER 2009] requests. When submitting an ADMC request by mail or fax, please include the ADMC cover sheet (located at the end of this chapter) with each request. The new mailing address for ADMC requests is: National Government Services, Inc. Attn: Medical Review ADMC P.O. Box 7018 Indianapolis, Indiana Fax ADMC information to ADMC cover sheets are located on the National Government Services Web site: Go to Select Durable Medical Equipment (DME) as your Business Type Select Jurisdiction B as your Region Select the Resources navigation category from the dark blue menu bar Select the Forms subnavigation option Select the Jurisdiction B DME MAC Advance Determination of Medicare Coverage Request Form PDF link ADMC REQUIREMENTS Certificates of Medical Necessity (CMNs) for manual and power wheelchair bases were discontinued effective April 1, 2006, prompting questions about what information should be submitted to support an ADMC request. Because CMNs are no longer required and will not be used for the submission of wheelchair claims, the first page of the ADMC request must contain all of the following demographic information: Beneficiary information Name Health Insurance Claim number (HICN) Address Date of birth Place of service ICD-9-CM diagnosis code (narrative description is not sufficient) Supplier information Name Provider Transaction Access Number (PTAN) or National Provider Identifier (NPI) Address Phone number Physician s information Name PTAN or NPI Address Phone number 132_1209 2

78 Chapter 9: Advance Determination of Medicare Coverage [DECEMBER 2009] Note: If the information listed above is not present, ADMC requests received by the DME MACs will be rejected. Manual Wheelchairs For manual wheelchairs, the supplier must include the following (1 3): 1) A detailed written order that lists the specific wheelchair base that is to be provided and each option/accessory that will be separately billed. The order must also specify which HCPCS code is associated with each item on the order. This information may be entered by the supplier but the order must be signed and dated by the physician. 2) Information from the patient s medical record that documents that the coverage criteria defined in the medical policy on manual wheelchairs have been met. 3) A home assessment which establishes that the beneficiary or caregiver is able to use the wheelchair ordered to assist with activities of daily living (ADLs) in the home. For more information on coverage criteria, coding guidelines, and documentation requirements, refer to the local coverage determinations for manual wheelchairs, wheelchair options and accessories, and wheelchair seating on the National Government Services Web site: Go to Select Durable Medical Equipment (DME) as your Business Type Select Jurisdiction B as your Region Select the Coverage navigation category from the dark blue menu bar Select the Local Medical Policy subnavigation option Locate the desired wheelchair LCD in the Active Policies index table and select either the link to the LCD (left column) or the Policy Article (right column) Power Wheelchairs For power wheelchairs, the supplier must include all of the following items (1 5): 1) The order that the supplier received within 45 days following the completion of the face-to-face examination. This order must contain the following elements: Beneficiary name Description of the item; this may be general, (e.g., power wheelchair or power mobility device ) or may be more specific Date of the face-to-face examination. If the evaluation involved multiple visits, enter the date of the last visit. (Refer to the Power Wheelchairs LCD for additional information.) Pertinent diagnoses/conditions that relate to the need for the power wheelchair Length of need Physician s signature Date of physician signature There must be a date stamp or equivalent on the order to indicate when it was received by the supplier. 132_1209 3

79 Chapter 9: Advance Determination of Medicare Coverage [DECEMBER 2009] 2) A statement that the wheelchair is provided by a supplier that employs a Rehabilitation Engineering and Assistive Technology Society of North America (RESNA)-certified assistive technology professional (ATP) who specializes in wheelchairs and who has direct, in-person involvement in the wheelchair selection for the patient 3) A detailed product description (which includes information previously contained in the detailed written order) that lists the specific wheelchair base that is to be provided and each option/accessory that will be separately billed. This document must also specify which HCPCS code is associated with each item on the list. This information may be entered by the supplier but the document must be signed and dated by the physician. (The signature date on this document does not have to be within 45 days following the face-to-face exam.) For ADMC requests that are received on or after August 24, 2006, the document must also include the supplier s charge and the Medicare fee schedule allowance for each item. If there is no fee schedule allowance, enter Not Applicable. 4) A copy of the report of the face-to-face examination by the physician and other licensed/certified medical professionals (LCMPs), if applicable. There must be a date stamp or equivalent on the report(s) to indicate when they were received by the supplier. For ADMC requests received on or after August 10, 2006, LCMPs reports that are to be considered part of the face-to-face examination must include an attestation statement from the supplier indicating that the LCMP has no financial relationship with the supplier. Refer to the Power Wheelchairs policy for guidance on the type of documentation to be included. Note: If the power wheelchair is a replacement within five years of one billed with the same HCPCS code that was previously covered by Medicare, a face-to-face examination is not required. 5) A home assessment which establishes that the beneficiary is able to use the wheelchair ordered to assist with ADLs in the home. For more information on coverage criteria, coding guidelines, and documentation requirements, refer to the LCDs for motorized/power wheelchairs, wheelchair options and accessories, and wheelchair seating on the National Government Services Web site: Go to Select Durable Medical Equipment (DME) as your Business Type Select Jurisdiction B as your Region Select the Coverage navigation category from the dark blue menu bar Select the Local Medical Policy subnavigation option Locate the desired wheelchair LCD in the Active Policies index table and select either the link to the LCD (left column) or the Policy Article (right column) Additional Guidance Any information provided that explains the medical necessity for separately billed options and accessories must use the same short description for the item that is used in the detailed product description or detailed written order. 132_1209 4

80 Chapter 9: Advance Determination of Medicare Coverage [DECEMBER 2009] If the patient s weight and/or height are needed to support the medical necessity for items that are ordered, that information should be included on the first page of the ADMC request. Even if the majority of the face-to-examination is performed by an LCMP, the ADMC request must also include the report of the face-to-face examination with the physician. Include the manufacturer, the product name, the model number, and the width of wheelchair cushion(s) that are provided. Make certain that the product is listed on the Pricing, Data Analysis, and Coding Contractor (PDAC) Product Classification List and that the HCPCS code on the ADMC is the one specified by the PDAC. Suppliers are reminded that if an affirmative determination is made on the wheelchair base but individual options/accessories are denied, there may be no resubmission or other request for an ADMC determination on these. If these items are provided and denied at the time of claim submission, the supplier may present additional information to justify coverage through the appeals process. ADMC DETERMINATION Upon receipt of an ADMC request, the DME MAC Medical Review Department will make a determination within 30-calendar days. The DME MAC Medical Review Department will provide the supplier and beneficiary with its determination, either affirmative or negative, in writing. If it is a negative determination, the letter will indicate why the request was denied, e.g., not medically necessary, insufficient information submitted to determine coverage, and/or statutorily noncovered. If a wheelchair base receives a negative determination, all accessories will also receive a negative determination. If a wheelchair base receives an affirmative determination, each accessory will receive an individual determination. Affirmative Determination An affirmative determination only relates to whether the item is medically necessary based on the information submitted. An affirmative determination does not provide assurance that the beneficiary meets Medicare eligibility requirements nor does it provide assurance that any other Medicare requirements (e.g., place of service, Medicare Secondary Payer) have been met. Only upon submission of a complete claim can the DME MAC make a full and complete determination. An affirmative determination does not extend to the price that Medicare will pay for the item. Finally, the DME MAC may review selected claims on a prepayment or postpayment basis and may deny a claim or request an overpayment if it determined that an affirmative determination was made based on incorrect information. An affirmative ADMC is only valid for items delivered within six months following the date of the determination. If the wheelchair is not delivered within that time, the supplier has the option of either submitting a new ADMC request (prior to providing the item) or filing a claim (after providing the item). If the item is provided within six months following an affirmative determination, and if the claim is for all the same items that were listed on the ADMC request, the documentation that supports the medical 132_1209 5

81 Chapter 9: Advance Determination of Medicare Coverage [DECEMBER 2009] necessity of the item does not need to be submitted with the claim. If any of the items on the ADMC request were described by HCPCS code K0108 and if those items were provided, the supplier must ensure that the narrative description used on the claim matches the narrative description used on the ADMC determination letter. If a wheelchair base receives an affirmative determination, the supplier may not submit a separate ADMC request for additional accessories. If options or accessories are provided that were not listed on the ADMC request, the supplier should submit whatever information is appropriate to document the medical necessity for the new item(s). Negative Determination A negative ADMC determination may not be appealed because it does not meet the regulatory definition of an initial determination since no request for payment is being made. However, if the ADMC request for the wheelchair base is denied and the supplier obtains additional medical documentation, a new ADMC request may be resubmitted with all pertinent medical documentation and forms. ADMC requests may only be resubmitted once during the six-month period following a negative determination. If the wheelchair base is approved, but one or more accessories are denied, an ADMC request may not be resubmitted for those accessories. If a supplier provides a wheelchair and/or accessories following a negative determination, a claim for the item should be submitted. If new information is provided with the claim, coverage will be considered. If the claim is denied, it may be appealed through the usual process. 132_1209 6

82 Medicare Jurisdiction B DME MAC Advance Determination of Medicare Coverage Request Form Note: Please submit this completed Advance Determination of Medicare Coverage (ADMC) Request Form along with supporting medical necessity documentation. Company Name: Company Address: NPI or PTAN: Contact Name: Telephone Number: Note: If you would like the ADMC returned to you by fax rather than by mail, please provide your fax number: Beneficiary Name: Beneficiary Address: Health Insurance Claim Number (HICN): Date of Birth: Place of Service: ICD 9: Physician s Name: Physician s Address: Telephone Number: National Provider Identifier: Number of Pages (including coversheet): Mail Completed Form To: Fax Completed Form To: National Government Services, Inc Attn: Medical Review ADMC P.O. Box 7018 Indianapolis, Indiana National Government Services, Inc. Page: 1 of 1 261_1109

83 Chapter 10: Advance Beneficiary Notice of Noncoverage [DECEMBER 2009] 10 Advance Beneficiary Notice of Noncoverage GENERAL GUIDELINES The Advance Beneficiary Notice/Advance Beneficiary Notice of Noncoverage (ABN) is a written notice the supplier gives to a Medicare beneficiary before providing items and/or services that are expected to be denied by Medicare. ABN requirements apply to both assigned and nonassigned claims. The purpose of the ABN is to inform a Medicare beneficiary, before he or she receives specified items and/or services that otherwise might be paid for, that Medicare probably will not pay for them on that particular occasion. The ABN also allows the beneficiary to make an informed consumer decision as to whether or not to receive the items and/or services for which he or she may have to pay out of pocket through other insurance coverage (e.g., employer group health plan coverage), through Medicaid, or other federal/nonfederal payment source. The ABN is to be used for Medicare beneficiaries only (including those who are dually-eligible for both Medicare and Medicaid). The ABN is not used for patients who are not Medicare beneficiaries. For an ABN to be acceptable, it must: be the revised CMS-R-131 form (effective with dates of services March 1, 2009); be completed in its entirety; clearly identify the particular item and/or service that is expected to be denied; state the specific reason the supplier believes Medicare is likely (or certain) to deny payment for the particular item and/or service; and indicate the estimated cost of the item that is expected to be denied. When to Issue an ABN An ABN should be issued for both assigned and nonassigned claims for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) services disallowed for the following reasons: Services are not medically reasonable and necessary Prohibition on unsolicited telephone contacts Supplier number requirements not met Advance Determination of Medicare Coverage (ADMC) denial Noncontracted suppliers in a competitive bidding area (CBA) For assigned and nonassigned claims that the supplier expects to be denied for any of the reasons listed above, the supplier must issue an ABN. If the supplier fails to issue a properly executed ABN, the supplier will be held liable for the item and/or service and may not bill or collect (or must refund amounts collected) from the beneficiary. If the supplier issues a properly executed ABN, the beneficiary will be held liable for the item or service for the reason listed on the ABN. To be held liable 132_1209 1

84 Chapter 10: Advance Beneficiary Notice of Noncoverage [DECEMBER 2009] for payment means that the beneficiary will be liable for payment out of pocket, or through other insurance coverage (e.g., employer group health plan coverage), or through Medicaid or other federal or nonfederal payment source. A single ABN covering an extended course of treatment is acceptable provided the ABN identifies all items and services for which the physician or supplier believes Medicare will not pay. If an extended course of treatment progresses and additional items or service are to be furnished for which the supplier believes Medicare will not pay, the supplier must separately notify the beneficiary in writing (i.e., give the beneficiary another ABN) that Medicare is not likely to pay for the additional items or services and obtain the beneficiary s signature on the ABN. One year is the limit for use of a single ABN for an extended course of treatment; if the course of treatment extends beyond one year, a new ABN is required for the remainder of the course of treatment. An ABN, once signed by the beneficiary, may not be modified or revised. When a beneficiary must be notified of new information, a new ABN must be given. FINANCIAL LIABILITY PROTECTION PROVISIONS There are two financial liability protection (FLP) provisions under the Social Security Act (the Act): (1) the Limitation on Liability provision, and (2) the Refund Requirement provision. These FLP provisions are the basis for the requirement for use of the ABN. By understanding the FLP provisions, the supplier will be able to make an educated determination as to when it is appropriate to execute the ABN. For additional information pertaining to the FLP provisions, refer to the Centers for Medicare & Medicaid Services (CMS) Internet-Only Manual (IOM) Publication , Medicare Claims Processing Manual, Chapter 30 at Limitation on Liability Provision The Limitation on Liability (LOL) provision of the Act provides financial relief to beneficiaries, providers, practitioners, physicians, and suppliers by permitting Medicare payment to be made, or requiring refunds to be made, for certain services and items for which Medicare payment would otherwise be denied. Limitation on Liability applies to assigned claims for DMEPOS services that have been disallowed because the item or service is not medically reasonable and necessary (Section 1862[a] of the SSA). Medicare payment under the LOL provision depends upon two primary factors: 1. The item was denied based on lack of medical necessity. 2. Neither the supplier nor beneficiary knew, or could reasonably have known, that items or services were not covered. When a supplier expects an item to be denied because the beneficiary does not meet medical necessity criteria, an ABN must be issued to the beneficiary to protect the supplier from financial liability. 132_1209 2

85 Chapter 10: Advance Beneficiary Notice of Noncoverage [DECEMBER 2009] Under LOL, financial liability for the item or service that is expected to be denied can be shifted to the beneficiary if the supplier issues the ABN and maintains a copy of the properly executed ABN on file. Specific billing requirements apply in this situation. Refund Requirement Provision The Refund Requirement provision states that suppliers must refund any amounts collected if the beneficiary was not properly notified of possible disallowed Medicare claims. This provision requires that before the item was furnished, the beneficiary was informed that payment may not be made for that item and the beneficiary has agreed to pay for that item, in order for the refund requirement provision to be afforded. The Refund Requirement provision applies to both assigned and nonassigned claims for DMEPOS services disallowed for the following reasons: Prohibition on unsolicited telephone contacts Supplier number requirements not met ADMC denial Additionally, the Refund Requirement provision applies to nonassigned claims for which payment is denied because the item or service is not medically reasonable or necessary. It is the supplier s responsibility to notify the beneficiary in writing that a specific item is expected to be disallowed or denied before providing an item or service, so that the beneficiary understands they will be held responsible for payment. In order for the supplier to be protected under the Refund Requirement provision, the beneficiary s knowledge must be evidenced by a signed ABN. BILLING REQUIREMENTS SPECIFIC TO THE ABN A supplier is required to issue an ABN when the supplier expects a claim to be denied for one of the following reasons: Services are not medically reasonable and necessary Prohibition on unsolicited telephone contacts Supplier number requirements not met ADMC Denial When an ABN is issued for one of these reasons, modifier GA should be reported (Item 24D of the CMS-1500 claim form or the corresponding loop/segment on the electronic claim) along with the appropriate Healthcare Common Procedure Coding System (HCPCS) code when the claim is filed to Medicare. The use of modifier GA is not optional and must be used anytime an ABN has been obtained for one of the reasons indicated above. If an ABN is obtained, but modifier GA is inadvertently omitted from the claim, the claim will be denied and the supplier will be assigned liability. To shift liability to the beneficiary, the supplier will need to submit a redetermination request and provide a copy of the signed ABN with the request. 132_1209 3

86 Chapter 10: Advance Beneficiary Notice of Noncoverage [DECEMBER 2009] Modifier GZ should be reported on the claim (Item 24D of the CMS-1500 claim form or the corresponding loop/segment on the electronic claim) when the supplier needs to indicate that a denial is expected, but there is no ABN form on file. Please note that the revised ABN CMS-R-131 can also be used as a voluntary notice to inform beneficiaries of statutorily excluded items/services. Modifier GY would be appropriate when an ABN is issued as a voluntary notice. Modifier GA should not be included on the electronic or paper claim when an ABN is issued to the patient as a voluntary notice, i.e., for any reason other than those listed above. Note: Modifiers GA and GY should never be reported together on the same claim line. If Medicare denies a claim as not medically necessary, but the supplier believes the service/item is medically necessary, the supplier should request a review of the claim. If the supplier chooses to request a review, suppliers should include any additional information necessary to support the claim. If a supplier requests a review within 30 days, the supplier may delay refunding to the beneficiary until Medicare makes a determination on the review request. If the review request renders a favorable decision, the supplier is not required to refund the beneficiary for the item or service in question. If the review request renders an unfavorable decision, the supplier must refund any monies collected for the item and/or service in question to the beneficiary within 15 days of receiving the review decision. The Medicare beneficiary will be notified of all review activity. A supplier may submit a review request any time within 120 days of receiving the initial determination, however in order to delay refunding the patient suppliers must submit a review request within 30 days of the initial determination. Modifiers Associated with ABNs GA GZ GY GK GL KB Waiver of liability (expected to be denied, ABN on file) Item or service not reasonable and necessary (expected to be denied, no ABN on file) Item or service statutorily excluded or does not meet the definition of any Medicare benefit Actual item/service ordered by physician, item associated with modifier GA or GZ Medically unnecessary upgrade provided instead of nonupgraded item, no charge, no ABN Beneficiary requested upgrade, for ABN, more than four modifiers identified on claim UPGRADES When a beneficiary prefers an item with features or upgrades that are not medically necessary, suppliers may collect an amount greater than Medicare s allowed amount from the beneficiary if the beneficiary agrees to pay extra for the item and signs an ABN. This policy applies to both assigned and nonassigned claims. The following instructions apply to situations where the ABN is being used for upgrades and applies to both assigned and unassigned claims. An upgrade is an item with features that go beyond what is medically necessary. The Centers for Medicare & Medicaid Services defines an upgrade as an item that is more expensive, contains more 132_1209 4

87 Chapter 10: Advance Beneficiary Notice of Noncoverage [DECEMBER 2009] components or features, or is greater in quantity than what the physician ordered. When a DMEPOS supplier knows or believes that the DMEPOS item does or may not meet Medicare s reasonable and necessary rules under specific circumstances, it is the responsibility of the supplier to notify the beneficiary in writing via an ABN if the supplier wants to collect money from a beneficiary if an item is denied. When a supplier furnishes an upgraded item of DMEPOS and the supplier expects Medicare to reduce the level of payment based on a medical necessity partial denial of coverage for additional expenses attributable to the upgrade, the supplier must give an ABN to the beneficiary for signature for holding the beneficiary liable for the additional expense. The upgraded item must be within the range of services that are appropriate for the beneficiary s medical condition (e.g., beneficiary can upgrade from a standard manual wheelchair to a power wheelchair, when there is no medical objection from the physician, but not from a walker to a wheelchair). If the beneficiary agrees to be financially liable by signing an ABN, a supplier may collect the difference between the charges for the upgraded item and the charges for the nonupgraded item. Suppliers must bill two line items for upgraded DMEPOS items where the beneficiary requests an upgrade. Suppliers must bill both lines on the same claim in the following order. Line 1: Bill the appropriate HCPCS code for the upgraded item the supplier actually provided to the beneficiary with the dollar amount of the upgraded item. If the supplier has a properly obtained ABN on file signed by the beneficiary, report modifier GA; if the supplier did not properly obtain an ABN signed by the beneficiary, report modifier GZ. Line 2: Bill the appropriate HCPCS code for the reasonable and necessary item with the actual charge for the item; report modifier GK. Suppliers should bill their full submitted charge on the claim line for the upgraded item (Line 1) and the full amount for the reasonable and necessary item (Line 2). If the upgrade is within a code, suppliers still bill two line items, using the same code on both lines, but Line 1 would have the higher dollar amount. Suppliers must bill both lines on the same claim in sequential order. Line 1 and the associated Line 2 should follow each other. A supplier may decide to provide a free upgrade for a beneficiary. When providing a free upgrade, the supplier should not have the beneficiary sign an ABN, because the supplier should not be charging the beneficiary more than the normal deductible and co-payment for the nonupgraded item. When providing a free upgrade, suppliers should submit the claim with the appropriate HCPCS code for the nonupgraded item/service that the physician ordered. The upgraded item is not billed. Suppliers should report modifier GL with the correct, nonupgraded HCPCS code. The supplier should specify the make and model of the upgraded item/service that was provided in Item 19 of the CMS-1500 claim form or as an attachment to the claim. The supplier should also describe why the item/service was an upgrade. When billing electronically, suppliers should provide this same information in the Note segment of the electronic claim. 132_1209 5

88 Chapter 10: Advance Beneficiary Notice of Noncoverage [DECEMBER 2009] The following examples explain how to file claims with an ABN and without an ABN: Upgraded with an ABN K0004RRKHGA $100 Item ordered by the physician K0001RRKHGK $50 Upgrade without an ABN K0004RRKHGZ $100 Item ordered by the physician K0001RRKHGK $50 The KB modifier should be utilized by the supplier when the beneficiary has requested an upgrade, the supplier has obtained a properly executed ABN, and there will be more than four modifiers reported on the claim line. The supplier should report the KB modifier in the 4th position of Item 24d and any remaining modifiers should be placed in the Note (NTE) segment for electronic claim submission, or Item 19 on the CMS-1500 claim form. Example: The supplier is submitting a claim with modifiers RR, KH, BR, LT, KX, and GK. The supplier should place modifiers RR, KH, BR, and KB on the claim line, then report the additional modifiers LT, KX, and GK in the NTE segment for electronic claim submission, or Item 19 of the CMS-1500 claim form. For additional instructions, review the CMS IOM Publication , Medicare Claims Processing Manual, Chapter 20 at ADVANCE BENEFICIARY NOTICE OF NONCOVERAGE COMPLETION Instructions for Advance Beneficiary Notice of Noncoverage CMS-R-131 (Mandated for Use Effective March 1, 2009) OMB-approved ABNs are placed on the CMS Web site at The Advance Beneficiary Notice of Noncoverage, CMS-R-131, is located on the CMS Web site at Notices placed on this site can be downloaded and should be used as is, as the ABN is a standardized OMB-approved notice. However, some allowance for customization of format is allowed as mentioned for those choosing to integrate the ABN into other automated business processes. In addition to the generic ABN, CMS will also provide alternate versions with certain blanks completed for those not wishing to do additional customization as permitted, including a version illustrating laboratory-specific use of the notice. Advance Beneficiary Notices of Noncoverage must be reproduced on a single page. The page may be either letter or legal-size, with additional space allowed for each blank needing completion when a legal-size page is used. Sections and Blanks There are 10 blanks for completion in this notice, labeled from (A) through (J), with accompanying instructions for each blank below. The Centers for Medicare & Medicaid Services recommends that the labels for the blanks be removed before use. Blanks (A) (F) and blank (H) may be completed prior to delivering the notice, as appropriate. Entries in the blanks may be typed or 132_1209 6

89 Chapter 10: Advance Beneficiary Notice of Noncoverage [DECEMBER 2009] handwritten, but should be large enough (i.e., approximately 12-point font) to allow ease in reading. (Note that a 10-point font can be used in blanks when detailed information must be given and is otherwise difficult to fit in the allowed space.) The Option Box, Blank (G), must be completed by the beneficiary or his/her representative. Blank (I) should be a cursive signature, with printed annotation if needed in order to be understood. Header Blank (A) Notifier: Notifiers may elect to place their logo at the top of the notice by typing, handwriting, preprinting, use of a label or other means. At a minimum, the name, address, and telephone number (including TTY when appropriate) of the notifier must appear, whether incorporated into the logo or not, to ensure the beneficiary s ability to follow-up with additional questions. The title for Blank (A) that is, Notifier may be completely removed during reproduction to accommodate letterhead type logos that go across the entire page. If appropriate, the name of more than one entity may be given in the notifier area, such as when the ordering and rendering providers differ, as long as this is clearly conveyed to the beneficiary for purposes of responding to questions. Blank (B) Patient Name: Notifiers must enter the first and last name of the beneficiary receiving the notice, and middle initial should also be used if on the beneficiary s Medicare (HICN) card. Note: The ABN will not be invalidated by a misspelling or missing initial, as long as the beneficiary or representative recognizes the name listed as that of the beneficiary. Blank (C) Identification Number: Notifiers should enter an identification number for the beneficiary that helps to link the notice with a related claim when applicable. However, this field is optional, and choosing not to enter a number does not invalidate the ABN. The beneficiary s Medicare number or HICN will no longer be used. Body The body of the notice consists of the text below the header, the box to record the items and services, reasons coverage is not expected and estimated cost, and the remaining text above the options box. Consistent with past policy, ABNs can be used for a single item or service or multiple items or services. However, when there are multiple items or services at issue, the name of each item or service, the reason it is not covered by Medicare and the estimated cost must be presented in a parallel format that enables the beneficiary or representative to match particular items or services with the applicable reason and cost information. Gridlines may be used across the box for this purpose. A standard lettersize downloadable ABN allows for entry of at least six lines across the box containing items, reasons, and costs at a 12-point font. Note: It is permissible for multiple items or services to all be explained by one reason or bundled under one cost, in which case the same information would not have to be entered multiple times. Itemized costs may be totaled but this is not required. If more items or services need to be described than fit onto the one-page ABN, use of an attached sheet is permissible. In such cases, the presence of an attachment should be noted in the box on the first page, and the attachment should again allow for clear matching of the items or services in question with the reason and cost information. The attachment should be retained along with the first 132_1209 7

90 Chapter 10: Advance Beneficiary Notice of Noncoverage [DECEMBER 2009] page of the ABN. Note that common or high-volume items or services, reasons and costs may be preprinted in the notice, though blank ABNs should also be available to allow for less commonly performed procedures. A box must appear around the items and services, reasons, and costs, and each of these sections must be clearly labeled with the proper heading. However, the shading included in this box is not mandatory. As a general rule, shading and shadowing is not required anywhere on the notice, although it is recommended if possible, since consumer testing has shown such shading to be useful grabbing the beneficiary s attention. Similarly, other limited formatting modifications are permissible to accommodate automated business processes for example, vertical lines are recommended but do not have to appear between the columns, and the width and length of the entire box can be adjusted on the page. Blank (D) Title Unfilled: Though these instructions use the default term items and services consistent with the Medicare statute, the label Blank (D) which is used in various parts of the ABN may vary in its wording. The most appropriate of the following choices can be inserted by the individual notifier in preparing the ABN before it is delivered (i.e., in preprinting the notice): Item(s) Service(s) Item(s) or service(s) Laboratory test(s) Test(s) Procedure(s) Care Equipment Supply(ies) The variable s may or may not appear, or a space can be left so that an s can be entered when appropriate, or appear and be crossed out when not appropriate. The Centers for Medicare & Medicaid Services will also post at least one version of the notice with Blank (D) filled in for those wishing just to download a notice needing only the individual case-specific information to be entered. In filling in the column under Blank (D) in the body of the ABN, notifiers must enter the name/description of all items or services that are the subject of the notice. The description may include a date, if that is relevant. Whenever possible, language that is easy for beneficiaries to understand should be used. If technical language must be used, it must be explained verbally to the beneficiary or representative. It is never permissible to add items or services to Blank (D) after the beneficiary or representative has signed the notice. The ABN is only effective for items and services clearly described on the notice at the time it is signed by the beneficiary or representative. Blank (E) Reason Medicare May Not Pay: Under the heading for this blank, notifiers must explain, in beneficiary-friendly language, why they believe the care that is the subject of the notice is not covered by Medicare. There must be at least one reason applicable to each item or service listed, although, as mentioned above, the same reason can apply to multiple things. 132_1209 8

91 Chapter 10: Advance Beneficiary Notice of Noncoverage [DECEMBER 2009] In the previous version of the ABN-L, there were three possible reasons for noncoverage preprinted on the ABN: 1. Medicare does not pay for these tests for your condition 2. Medicare does not pay for these tests as often as this (denied as too frequent) 3. Medicare does not pay for experimental or research use tests These reasons are still appropriate for use in Blank (E) of this ABN. Note there are many other possible valid reasons in addition to the examples given above. Blank (F) Estimated Cost: Notifiers must enter a cost estimate under the heading for Blank (F) for any items or services described in Blank (D). As noted above, there is flexibility in listing individual or total cost. The revised ABN will not be considered valid absent a good faith attempt to estimate cost. CMS will be flexible in defining what a good faith estimate is, particularly in consideration of cases where the ordering and rendering providers may be different. Option Box and Additional Information Blank (G) Options: The option box now has a title that stretches across the page, which should prove easier for systems formatting purposes. Also, we have included additional guidance within the options to reinforce critical aspects of the choice that a patient has to make. (As noted above, shading of the header line and shadowing of the checkboxes in the option box are recommended but not mandatory.) These three checkboxes represent the beneficiary s possible choices regarding the potentially noncovered care described in the body of the ABN. The beneficiary or representative must select only one of the three checkboxes. Under no circumstances can the notifier decide for the beneficiary or representative which of the three checkboxes to select. If the beneficiary cannot or will not make a choice, the notice should be annotated. If a beneficiary chooses to receive some, but not all of the items or services that are subject of the notice, the items and services listed under Blank (D) that they do not wish to receive may be crossed out, if this can be done in a way that also clearly strikes the reason(s) and cost information in Blanks (E) and (F) that correspond solely to that care. If this cannot be done clearly, a new ABN must be prepared. If a beneficiary initially elects Option 2 on the ABN, and on a later date changes his/her mind and requests a claim be submitted to Medicare, the supplier s obligation to submit a claim to Medicare at the beneficiary s request depends on whether or not the item or service furnished could have potentially been covered. If the item or service is statutorily excluded from coverage (i.e., Medicare never covers the item/service), the supplier would not be obligated to submit the claim even if the beneficiary requested that the claim be submitted. If the item that is furnished could potentially be covered by Medicare, the supplier is required to submit the claim to Medicare at the beneficiary s request in accordance with the mandatory claim submission rules of Section The supplier should have the beneficiary annotate the original ABN with his/her revised option selection and resign the ABN. A single ABN is valid for up to one year; thus, the beneficiary would have up to one year to change his/her option selection on the ABN. 132_1209 9

92 Chapter 10: Advance Beneficiary Notice of Noncoverage [DECEMBER 2009] Blank (H) Additional Information: Space is provided below the Option Boxes for additional information to be inserted on the ABN. Notifiers are permitted to use this space for additional clarification that will be of use to beneficiaries. Possible uses of this space by notifiers include: The former ABN-L language, [You should] notify your doctor who orders these laboratory tests you did not receive them Providing context on Medicare payment policy applicable to a specific benefit Information on other insurance coverage for beneficiaries needing immediate reassurance of additional coverage The ABN no longer includes an Other Insurance blank. Instead, the body of the notice now indicates that the notifier may help the patient to access any other insurance, although not required by the Medicare Program. In addition, as noted above, notifiers may use the Additional Information space to record other payer information if they so choose. Under the Additional Information section, the ABN now alerts beneficiaries that the ABN conveys the notifier s opinion, not an official Medicare decision, and also that the MEDICARE number is available for additional help when needed. Signature Box Blank (I) Signature: The beneficiary or representative must sign the notice, with his or her own name, in this box simply labeled Signature, to allow maximum space for making the written entry. The signature indicates that he or she has received the notice and understands its contents. Blank (J) Date: The beneficiary or representative must enter the date he or she signed the ABN. Disclosure Statement The disclosure statement is not specific to the ABN but is required by OMB to appear on applicable information collections. It replaces the previous statement on confidentiality of ABN information. 132_

93 (A) Notifier(s): (B) Patient Name: (C) Identification Number: ADVANCE BENEFICIARY NOTICE OF NONCOVERAGE (ABN) NOTE: If Medicare doesn t pay for (D) below, you may have to pay. Medicare does not pay for everything, even some care that you or your health care provider have good reason to think you need. We expect Medicare may not pay for the (D) below. (D) (E) Reason Medicare May Not Pay: (F) Estimated Cost: WHAT YOU NEED TO DO NOW: Read this notice, so you can make an informed decision about your care. Ask us any questions that you may have after you finish reading. Choose an option below about whether to receive the (D) listed above. Note: If you choose Option 1 or 2, we may help you to use any other insurance that you might have, but Medicare cannot require us to do this. (G) OPTIONS: Check only one box. We cannot choose a box for you. OPTION 1. I want the (D) listed above. You may ask to be paid now, but I also want Medicare billed for an official decision on payment, which is sent to me on a Medicare Summary Notice (MSN). I understand that if Medicare doesn t pay, I am responsible for payment, but I can appeal to Medicare by following the directions on the MSN. If Medicare does pay, you will refund any payments I made to you, less co-pays or deductibles. OPTION 2. I want the (D) listed above, but do not bill Medicare. You may ask to be paid now as I am responsible for payment. I cannot appeal if Medicare is not billed. OPTION 3. I don t want the (D) listed above. I understand with this choice I am not responsible for payment, and I cannot appeal to see if Medicare would pay. (H) Additional Information: This notice gives our opinion, not an official Medicare decision. If you have other questions on this notice or Medicare billing, call MEDICARE ( /TTY: ). Signing below means that you have received and understand this notice. You also receive a copy. (I) Signature: (J) Date: According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it displays a valid OMB control number. The valid OMB control number for this information collection is The time required to complete this information collection is estimated to average 7 minutes per response, including the time to review instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have comments concerning the accuracy of the time estimate or suggestions for improving this form, please write to: CMS, 7500 Security Boulevard, Attn: PRA Reports Clearance Officer, Baltimore, Maryland Form CMS-R-131 (03/08) Form Approved OMB No

94 Chapter 11: Claim Filing Jurisdiction [SEPTEMBER 2008] 11 Claim Filing Jurisdiction CLAIM FILING BASED ON BENEFICIARY ADDRESS Four durable medical equipment Medicare administrative contractors (DME MACs) process durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) claims for designated states and territories. National Government Services is the Jurisdiction B DME MAC. National Government Services processes DMEPOS claims for the states of Illinois, Indiana, Kentucky, Michigan, Minnesota, Ohio, and Wisconsin. Unlike other Medicare claims, DMEPOS claim jurisdiction is based on the beneficiary s address on file with the Social Security Administration. A DMEPOS claim should be sent to the DME MAC jurisdiction for the state in which the beneficiary resides. A paper DMEPOS claim should be mailed to the DME MAC jurisdiction for the state in which the beneficiary resides. An electronic DMEPOS claim should be transmitted to the Common Electronic Data Interchange (CEDI). Once the electronic claims have been accepted by the CEDI, the claims are transferred to the appropriate DME MAC for processing based on the beneficiary s address listed on the electronic claim. DISPOSITION OF INCORRECTLY FILED CLAIMS Paper Claims Paper claims filed to the incorrect DME MAC for DMEPOS items will be returned to the supplier unprocessed. The supplier must file the claim to the appropriate DME MAC based on beneficiary residence. Suppliers should review the DME MAC jurisdictions list to determine which DME MAC maintains authority over the claim. Electronic Claims All electronic claims should be transmitted to the CEDI. Once the electronic claims have been accepted by the CEDI, the claims are transferred to the appropriate DME MAC for processing based on the beneficiary s address listed on the electronic claim. The supplier must have an electronic data interchange (EDI) enrollment form on file with the CEDI. If there is no EDI enrollment form on file with the CEDI, the claim will reject on the front end and claim(s) will not enter the Medicare processing system. If a supplier does not have an EDI enrollment form on file, they should obtain an EDI enrollment form from the CEDI Web site at Examples A beneficiary resides in Michigan and purchases DME in Ohio. The Ohio supplier sends the claim to the local Ohio carrier. The claim will be returned to the supplier as DME claims are not processed by the local Ohio carrier. The supplier must send the paper claim to the appropriate DME MAC (in this case, Jurisdiction B) or transmit the electronic claim to the CEDI. 1

95 Chapter 11: Claim Filing Jurisdiction [SEPTEMBER 2008] If a Minnesota supplier files a paper claim for a beneficiary with a permanent residence in Wyoming to the Jurisdiction B DME MAC, the Jurisdiction B DME MAC will send the claim back to the supplier. The supplier must then send the claim to the appropriate DME MAC (Jurisdiction D). If a Minnesota supplier files an electronic claim to the CEDI for a beneficiary whose permanent residence is in Wyoming, the CEDI will transfer the accepted claim to Jurisdiction D DME MAC for processing. If there is an EDI enrollment form on file, the Jurisdiction D DME MAC will accept the claim on the front end and adjudicate the claim. If an EDI enrollment form is not on file, the claim will reject on the front end. The supplier must complete and forward an EDI enrollment form to the CEDI and resubmit the electronic claim. EDI enrollment forms are available on the CEDI Web site at DURABLE MEDICAL EQUIPMENT MEDICARE ADMINISTRATIVE CONTRACTORS AND JURISDICTIONS The first of the full and open MAC competitions were held for the DME claims workloads. The Centers for Medicare & Medicaid Services (CMS) decided to start the Medicare Contracting Reform initiative with DME MACs because the workload of the four current durable medical equipment regional carriers (DMERCs) was stable and the risk of any significant program disruption to the provider and beneficiary communities would be minimal. Jurisdiction A The Jurisdiction A DME MAC contract was awarded to National Heritage Insurance Company (NHIC). The states included in DME MAC Jurisdiction A are: Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont. Jurisdiction B The Jurisdiction B DME MAC contract was awarded to National Government Services, Inc. The states included in DME MAC Jurisdiction B are: Illinois, Indiana, Kentucky, Michigan, Minnesota, Ohio, and Wisconsin. Jurisdiction C The Jurisdiction C DME MAC contract was awarded to CIGNA Government Services. The states included in Jurisdiction C are: Alabama, Arkansas, Colorado, Florida, Georgia, Louisiana, Mississippi, New Mexico, North Carolina, Oklahoma, Puerto Rico, South Carolina, Tennessee, Texas, U.S. Virgin Islands, Virginia, and West Virginia. 2

96 Chapter 11: Claim Filing Jurisdiction [SEPTEMBER 2008] Jurisdiction D The Jurisdiction D DME MAC contract was awarded to Noridian Administrative Services (NAS). The states included in DME MAC Jurisdiction D are: Alaska, American Samoa, Arizona, California, Guam, Hawaii, Idaho, Iowa, Kansas, Missouri, Montana, Nebraska, Nevada, North Dakota, Northern Mariana Islands, Oregon, South Dakota, Utah, Washington, and Wyoming. Resources Current information on Medicare Administrative Contracts can be found on the CMS Web site at ntractor.asp. Refer to the map on the following page to view the four DME MAC jurisdictions and the states each is contracted to serve. 3

97 Chapter 11: Claim Filing Jurisdiction [SEPTEMBER 2008] DME MAC Jurisdictions 4

98 Chapter 12: Claim Submission [SEPTEMBER 2009] 12 Claim Submission ACCEPTABLE CLAIM FORMATS Durable medical equipment Medicare administrative contractors (DME MACs) accept Medicare claims both on paper using the CMS-1500 claim form and electronically. The CMS-1500 is one of the basic forms prescribed by the Centers for Medicare & Medicaid Services (CMS) for the Medicare Program. It is only accepted from physicians and suppliers that are excluded from the mandatory electronic claims submission requirements set forth in the Administrative Simplification Compliance Act (ASCA), Public Law and the implementing regulation at 42 Code of Federal Regulations (CFR) To accommodate the reporting of the National Provider Identifier (NPI), the CMS-1500 claim form (version 12-90) was revised in July of The new CMS-1500 claim form (version 08-05) became effective January 1, The major difference between the revised CMS-1500 (version 12-90) and the version CMS-1500 claim form is the split provider identifier fields. Centers for Medicare & Medicaid Services Change Request 5616 announced that beginning July 2, 2007, suppliers who are eligible to submit paper claims must use the CMS-1500 claim form (version 08/05). Claims received on or after July 2, 2007 version of the CMS-1500 claim form will be rejected. Note: Acceptance of the CMS-1500 claim form (version 08-05) involves the paper claim form only. Suppliers submitting electronic claims are required to use the Health Insurance Portability and Accountability Act (HIPAA) compliant format. For information on electronic claim submission, please refer to the Electronic Data Interchange chapter in this manual. CLAIM FILING TIME LIMITS Medicare law prescribes specific time limits within which claims for benefits may be submitted. The terms of the law require that the claim be filed no later than the end of the calendar year following the year in which the service was furnished, except as follows. The time limit on filing claims for services furnished in the last three months of a year is the same as if the services had been furnished in the subsequent year. Therefore, the time limit on filing claims for services furnished in the last three months of the year is December 31 of the second year following the year in which the services were rendered. For example: For Dates of Service: The Claim Must Be Filed By: October 1, 2006 September 30, 2007 Time limit has expired October 1, 2007 September 30, 2008 December 31, 2009 October 1, 2008 September 30, 2009 December 31, 2010 October 1, 2009 September 30, 2010 December 31, _0909 1

99 Chapter 12: Claim Submission [SEPTEMBER 2009] Note: For services rendered on or before September 30, 2007, the claim filing time limit has expired. Whenever the last day for timely filing of a claim falls on a Saturday, Sunday, federal nonworkday, or legal holiday, the claim will be considered timely if it is filed on the next workday. Claims for services filed outside the time limit will be denied. According to the Omnibus Budget Reconciliation Act (OBRA) of 1989, assigned Medicare claims must be filed within one year from the date of service or the payment will be reduced by ten percent. Interest Paid on Clean Claims Not Paid Timely Interest must be paid on clean claims if payment is not made within the applicable number of calendar days (i.e., 30 days) after the date of receipt. The applicable number of days is also known as the payment ceiling. For example, a clean claim received on March 1, 2009, must have been paid before the end of business on March 31, Interest is not paid on: Claims requiring external investigation or development by the Medicare contractor Claims on which no payment is due Full denials The interest rate is determined by the applicable rate on the day of payment. This rate is determined by the Treasury Department on a 6-month basis, effective every January and July 1. For the correct rate, go to the Treasury Department Web page at Interest is calculated using the following formula: Payment amount the rate the number of days 365 (366 in a leap year) = interest payment The interest period begins on the day after payment is due and ends on the day of payment. Note: The example below is for one 6-month period in which the interest rate was percent. Clean Paper Claim (calendar days) Clean Electronic Claim (calendar days) Milestones Date received March 1, 2009 March 1, 2009 Payment due March 31, 2009 March 31, 2009 Payment made April 3, 2009 April 3, 2009 Interest begins April 1, 2009 April 1, 2009 Days for which interest is due 3 3 Amount of payment $100 $100 Interest rate 5.625% 5.625% The following formula is used: For the clean paper claim: $ = $.0462 or $.05 when rounded to the nearest penny. For the clean electronic claim - $100 X X 3 divided by 365 = $.0462 or $.05 when rounded to the nearest penny. 132_0909 2

100 Chapter 12: Claim Submission [SEPTEMBER 2009] When interest payments are applicable, the Medicare contractor reports the amount of interest on each claim on the remittance advice to the provider. Supplier Responsibility for Filing Claims To Medicare The Omnibus Budget Reconciliation Act of 1989 requires a Medicare provider to submit a completed claim within one year when furnishing covered items to a Medicare beneficiary. The provider is relieved of this obligation when furnishing noncovered items, unless the beneficiary requests Medicare payment/determination. If the beneficiary chooses to waive Medicare determination/payment, the supplier is relieved of the responsibility to file claims for covered Medicare items. Should the beneficiary change his/her mind in the future, the supplier would again be responsible for submitting claims for covered items to Medicare. The participating supplier must always accept assignment on a claim and must accept the resulting Medicare allowed amount as full reimbursement for the item(s). A ten percent reduction in the allowed amount occurs for claims not filed within one year of the service date. The beneficiary is not responsible for this reduction. Participating suppliers are responsible for obtaining all necessary supporting documentation to prove the medical necessity (where applicable), order prior to delivery, as well as any additional information as specified in the medical policies. The nonparticipating supplier has the option to choose on a claim-by-claim basis whether to accept assignment on a Medicare claim. If the supplier chooses to accept assignment, the supplier must file a complete claim to Medicare on the beneficiary s behalf. The ten percent reduction for claims filed beyond the one-year limitation applies. The supplier must also accept the Medicare-allowed amount as the full payment for the item(s) furnished. In this instance, the supplier is responsible for obtaining all documentation to support the medical need of the item, e.g., the physician s order, a Certificate of Medical Necessity (if applicable) order prior to delivery, and any additional information as specified in the medical policies. When a nonparticipating supplier chooses not to accept assignment, the supplier must file a claim to Medicare on the patient s behalf. Either the supplier or the beneficiary can obtain the medical necessity information to support the need of the item(s). Suppliers must ensure the beneficiary understands Medicare may not reimburse if the required information is missing. The supplier may choose to hold the Medicare claim until the beneficiary presents the medical documentation. If the beneficiary refuses to obtain the necessary documentation, the supplier should file the claim, including as much information as possible. SIGNATURE ON FILE REQUIREMENTS Medicare requires that suppliers obtain beneficiary authorization before filing claims for any service to the DME MAC. This authorization is called the Assignment of Benefits (AOB) and must be signed by the beneficiary or their authorized representative. The AOB applies only to those particular items listed on the form. The supplier should maintain this one-time payment authorization in the patient s records. The supplier must indicate SOF or signature on file in Item 12 on the CMS-1500 claim form when billing Medicare. 132_0909 3

101 Chapter 12: Claim Submission [SEPTEMBER 2009] When a beneficiary is unable to sign because of mental or physical limitations, forms may be signed on their behalf by one of the following representatives: Legal guardian Representative payee a person designated by the Social Security Administration or other governmental agency to receive an incapable beneficiary s monthly cash benefits Authorized representative acts on behalf and in best interest of the beneficiary and is usually a parent, legal guardian of minor, or legal guardian of an adult who has been declared incompetent Designee any person who can sign and accept the delivery of durable medical equipment (DME) on behalf of the beneficiary Relative Friend Representative of an institution providing care or support Governmental agency providing assistance If the patient is unable to sign, the statement s signature line must indicate the patient s name followed by the word by, and then the representative s name, address, relationship to the patient, and the reason the patient cannot sign. When an illiterate or physically handicapped beneficiary signs by mark (X), the signature and address of the witness should be entered next to the beneficiary s mark. This procedure must be implemented by suppliers utilizing paperless (electronic) claim submission. Suppliers must incorporate the following language in a document to be signed by the patient and retained in the supplier s files. Statement to Permit Payment of Medicare Benefits to Provider, Physicians and Patient Name of Beneficiary HICN I request that payment of authorized Medicare benefits be made either to me or on my behalf for any services furnished me by or in (name of provider), including physician services. I authorize any holder of medical or other information about me to release to the Centers for Medicare & Medicaid Services and its agents any information needed to determine these benefits or benefits for related services. These records should be easily accessible and available for DME MAC inspection upon request. If the required information is not on the AOB form, then the form will be considered invalid and an overpayment will be requested if payment has been made. Once the above statement is executed, suppliers may enter signature on file in the patient s signature line of the CMS-1500 claim form. 132_0909 4

102 Chapter 12: Claim Submission [ SEPTEMBER 2009] Suppliers must complete and promptly submit a claim whenever durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) items are rendered to a Medicare beneficiary even if assignment is not accepted. On any bills or receipts sent to Medicare patients, the following statement should be included. Do not use this bill for claiming Medicare benefits. A claim has been, or will be, submitted to Medicare on your behalf. If the patient has a Medigap policy, the following statement below must be signed by the patient or their authorized representative to authorize payment of mandated Medigap benefits to the participating physician or supplier if required Medigap information is included in Item 9 of the CMS-1500 claim form and its subdivisions. Date Patient Name Health Insurance Claim Number I request that payment of authorized Medicare benefits be made on my behalf to (supplier name) for any services furnished to me by (supplier name). I authorize any holder of medical information about me to release to the Centers for Medicare & Medicaid Services and its agents any information needed to determine these benefits. Once the above statement is executed, suppliers must indicate on the claim form that a separate Medigap authorization has been obtained by entering SOF in Item 13 of the CMS-1500 form. The Medigap assignment on file in the participating provider and/or supplier s office must be insurerspecific. It may state that the authorization applies to all occasions of service until it is revoked. ORDERING CLAIM FORMS Copies of the current CMS-1500 claim form (version 08/05) may be ordered from the Superintendent of Documents; negatives for the CMS-1500 claim form may be ordered from the U.S. Government Printing Office (GPO). To purchase them from the GPO, call With these negatives, a printer may produce copies of the CMS-1500 claim form. They may be altered to overprint a provider s name address and NPI. Note: Orders must be placed using the SupDocs stock number. CMS-1500 Paper Claim Form Single Sheet 100 $ Part Snap-out 100 $ Part Continuous 2500 $ Part Continuous 1400 $ All of the forms listed above are sensor coded. On any order for 100 packages or more that is shipped to one address, a 25 percent discount can be applied to the prices shown above. For orders of 100, _0909 5

103 Chapter 12: Claim Submission [SEPTEMBER 2009] copies or more, the Superintendent of Documents can furnish CMS-1500 claim forms preprinted with the practitioner s name, address, and ID number, or customize the form in certain other ways. For information on this service, contact the GPO Superintendent of Documents at CMS-1500 Negatives Negatives for the CMS-1500 claim form and a specification package may be purchased. To purchase a negative, make a check payable to The Public Printer and mail it along with the order to the following address: Asst. Supt. of Dept. Acct. Rep. Div. U.S. Government Printing Office, Room C-830 Washington, District of Columbia Do not submit a purchase order, voucher, or similar form for purchase, as this office can only process payment by check or money order. Shipment will be made approximately five business days after receipt of the order. For additional information, call CLAIM COMPLETION HINTS AND TIPS Four-Digit Year All dates should be written as a four-digit year, for example: 06/01/2001. Date-Spanning When billing for items in which date spanning is recommended or required, the delivery date may be listed in the From field and the To field should indicate the date for which the supplies are expected to last. Multiple Claim Forms When a claim contains more than six items, a separate CMS-1500 claim form(s) should be completed for the remaining items. Documentation should accompany each claim when the initial claim requires more than one CMS-1500 claim form. The only additional forms that can accompany a CMS-1500 claim form are the Break-in-Service form, a Certificate of Medically Necessity (CMN), or a DME Information Form (DIF) and the explanation of benefits (EOB) statement from the primary payer. Example: Supplier ABC has a claim to bill that includes nine items and a DIF is required. The supplier will complete two CMS-1500 claim forms (one with six items, and one with three items), and the DIF will be included with both CMS-1500 claim forms. Each claim form should be totaled for each form. 132_0909 6

104 Chapter 12: Claim Submission [SEPTEMBER 2009] Note: Item 28 of the CMS-1500 claim form should only contain numbers. Suppliers should not use dollar signs, decimals, dashes, commas, or lines. Negative dollar amounts are not allowed. Do not mark Item 28 as continued or the claim will be rejected as unprocessable; each CMS-1500 claim form should have its own total. Diagnosis Coding For Item 21, it is the supplier s responsibility to code the diagnosis to the highest specified International Classification of Diseases, Clinical Modification, 9th Revision (ICD-9-CM) code. If suppliers are unable to determine the highest level of specificity, contacting the ordering physician is encouraged. If claims received are not coded to the highest level of specificity, the claim will be returned to the supplier as unprocessable. Example: Physician writes a prescription for diabetes mellitus. The ICD-9-CM codes describing diabetes mellitus require five digits. The supplier should code the ICD-9-CM to the highest level of specificity ( ). National Provider Identifier For Item 17b, 32a, and 33a, it is the supplier s responsibility to report a valid National Provider Identifier (NPI) for the ordering physician. Only NPIs that begin with the number 1 are valid. If the NPI presented to the supplier for the ordering physician does not begin with the number one, the NPI is not valid. If an invalid NPI is reported on a claim, the claim may be returned as unprocessable. Check the Completed Form Carefully Watch for the following items; these are the most frequent reasons for claim rejection. Patient s Name (Item 2) enter beneficiary s name exactly as it appears on his/her Medicare card Item 11 must not be left blank; if there is no payer primary to Medicare, document None in this section Missing or incorrect signatures (Items 12 and 31) Diagnosis in Item 24e instead of Item 21 Missing modifiers on capped rental, inexpensive, or other routinely purchased DME items (IRP) NPI (Item 33a) Note: Suppliers are required to complete each claim line that is billed. If any coding is missing from the claim lines (e.g., diagnosis indicator, dollar amount, HCPCS code, modifier, etc.) the claim will be returned as unprocessable. CMS-1500 CLAIM FORM (VERSION 08-05) The CMS-1500 claim form, version 08-05, became effective January 1, 2007, but was not mandated for supplier use until July 1, Effective January 1, 2007, suppliers were mandated to use only the CMS-1500 claim form version _0909 7

105 Chapter 12: Claim Submission [SEPTEMBER 2009] A sample CMS-1500 claim form (version 08-05) and form completion instructions are included on the following pages. The CMS-1500 claim form can also be located on the CMS Web site at 132_0909 8

106 1500 HEALTH INSURANCE CLAIM FORM APPROVED BY NATIONAL UNIFORM CLAIM COMMITTEE 08/05 PICA 1. MEDICARE MEDICAID TRICARE CHAMPVA GROUP FECA OT HER CHAMPUS HEALTH PLAN BLK LUNG (Medicare #) (Medicaid #) (Sponsor s SSN) (Member ID#) (SSN or ID) (SSN) (ID) PICA 1a. INSURED S I.D. NUMBER (For Program in Item 1) CARRIER 2. PATIENT S NAME (Last Name, First Name, Middle Initial) 3. PATIENT S BIRTH DATE MM DD YY M SEX F 4. INSURED S NAME (Last Name, First Name, Middle Initial) 5. PATIENT S ADDRESS (No., Street) 6. PATIENT RELATIONSHIP TO INSURED 7. INSURED S ADDRESS (No., Street) Self Spouse Child Other CITY STATE ZIP CODE TELEPHONE (Include Area Code) ( ) 9. OTHER INSURED S NAME (Last Name, First Name, Middle Initial) a. OTHER INSURED S POLICY OR GROUP NUMBER b. OTHER INSURED S DATE OF BIRTH SEX MM DD YY M F c. EMPLOYER S NAME OR SCHOOL NAME d. INSURANCE PLAN NAME OR PROGRAM NAME 8. PATIENT STATUS Single Married Other Employed Full-Time Part-Time Student Student 10. IS PATIENT S CONDITION RELATED TO: a. EMPLOYMENT? (Current or Previous) YES b. AUTO ACCIDENT? NO PLACE (State) YES NO c. OTHER ACCIDENT? YES NO 10d. RESERVED FOR LOCAL USE CITY STATE ZIP CODE TELEPHONE (Include Area Code) ( ) 11. INSURED S POLICY GROUP OR FECA NUMBER a. INSURED S DATE OF BIRTH SEX MM DD YY M F b. EMPLOYER S NAME OR SCHOOL NAME c. INSURANCE PLAN NAME OR PROGRAM NAME d. IS THERE ANOTHER HEALTH BENEFIT PLAN? PATIENT AND INSURED INFORMATION READ BACK OF FORM BEFORE COMPLETING & SIGNING THIS FORM. 12. PATIENT S OR AUTHORIZED PERSON S SIGNATURE I authorize the release of any medical or other information necessary to process this claim. I also request payment of government benefits either to myself or to the party who accepts assignment below. YES NO If yes, return to and complete item 9 a-d. 13. INSURED S OR AUTHORIZED PERSON S SIGNATURE I authorize payment of medical benefits to the undersigned physician or supplier for services described below. SIGNED DATE 14. DATE OF CURRENT: MM DD YY 19. RESERVED FOR LOCAL USE ILLNESS (First symptom) OR INJURY (Accident) OR PREGNANCY(LMP) 17. NAME OF REFERRING PROVIDER OR OTHER SOURCE 17a. 21. DIAGNOSIS OR NATURE OF ILLNESS OR INJURY (Relate Items 1, 2, 3 or 4 to Item 24E by Line) IF PATIENT HAS HAD SAME OR SIMILAR ILLNESS. GIVE FIRST DATE MM DD YY 17b. NPI SIGNED 16. DATES PATIENT UNABLE TO WORK IN CURRENT OCCUPATION MM DD YY MM DD YY FROM TO 18. HOSPITALIZATION DATES RELATED TO CURRENT SERVICES MM DD YY MM DD YY FROM TO 20. OUTSIDE LAB? $ CHARGES YES NO 22. MEDICAID RESUBMISSION CODE ORIGINAL REF. NO. 23. PRIOR AUTHORIZATION NUMBER A. DATE(S) OF SERVICE B. C. D. PROCEDURES, SERVICES, OR SUPPLIES E. From To PLACE OF (Explain Unusual Circumstances) DIAGNOSIS MM DD YY MM DD YY SERVICE EMG CPT/HCPCS MODIFIER POINTER 25. FEDERAL TAX I.D. NUMBER SSN EIN 26. PATIENT S ACCOUNT NO. 27. ACCEPT ASSIGNMENT? (For govt. claims, see back) 31. SIGNATURE OF PHYSICIAN OR SUPPLIER INCLUDING DEGREES OR CREDENTIALS (I certify that the statements on the reverse apply to this bill and are made a part thereof.) YES NO F. G. H. I. J. DAYS EPSDT OR Family ID. RENDERING $ CHARGES UNITS Plan QUAL. PROVIDER ID. # NPI 28. TOTAL CHARGE 29. AMOUNT PAID 30. BALANCE DUE $ $ $ 32. SERVICE FACILITY LOCATION INFORMATION 33. BILLING PROVIDER INFO & PH # NPI NPI NPI NPI NPI ( ) PHYSICIAN OR SUPPLIER INFORMATION NPI a. b. a. b. SIGNED DATE NUCC Instruction Manual available at: APPROVED OMB FORM CMS-1500 (08/05) NPI

107 BECAUSE THIS FORM IS USED BY VARIOUS GOVERNMENT AND PRIVATE HEALTH PROGRAMS, SEE SEPARATE INSTRUCTIONS ISSUED BY APPLICABLE PROGRAMS. NOTICE: Any person who knowingly files a statement of claim containing any misrepresentation or any false, incomplete or misleading information may be guilty of a criminal act punishable under law and may be subject to civil penalties. REFERS TO GOVERNMENT PROGRAMS ONLY MEDICARE AND CHAMPUS PAYMENTS: A patient s signature requests that payment be made and authorizes release of any information necessary to process the claim and certifies that the information provided in Blocks 1 through 12 is true, accurate and complete. In the case of a Medicare claim, the patient s signature authorizes any entity to release to Medicare medical and nonmedical information, including employment status, and whether the person has employer group health insurance, liability, no-fault, worker s compensation or other insurance which is responsible to pay for the services for which the Medicare claim is made. See 42 CFR (a). If item 9 is completed, the patient s signature authorizes release of the information to the health plan or agency shown. In Medicare assigned or CHAMPUS participation cases, the physician agrees to accept the charge determination of the Medicare carrier or CHAMPUS fiscal intermediary as the full charge, and the patient is responsible only for the deductible, coinsurance and noncovered services. Coinsurance and the deductible are based upon the charge determination of the Medicare carrier or CHAMPUS fiscal intermediary if this is less than the charge submitted. CHAMPUS is not a health insurance program but makes payment for health benefits provided through certain affiliations with the Uniformed Services. Information on the patient s sponsor should be provided in those items captioned in Insured ; i.e., items 1a, 4, 6, 7, 9, and 11. BLACK LUNG AND FECA CLAIMS The provider agrees to accept the amount paid by the Government as payment in full. See Black Lung and FECA instructions regarding required procedure and diagnosis coding systems. SIGNATURE OF PHYSICIAN OR SUPPLIER (MEDICARE, CHAMPUS, FECA AND BLACK LUNG) I certify that the services shown on this form were medically indicated and necessary for the health of the patient and were personally furnished by me or were furnished incident to my professional service by my employee under my immediate personal supervision, except as otherwise expressly permitted by Medicare or CHAMPUS regulations. For services to be considered as incident to a physician s professional service, 1) they must be rendered under the physician s immediate personal supervision by his/her employee, 2) they must be an integral, although incidental part of a covered physician s service, 3) they must be of kinds commonly furnished in physician s offices, and 4) the services of nonphysicians must be included on the physician s bills. For CHAMPUS claims, I further certify that I (or any employee) who rendered services am not an active duty member of the Uniformed Services or a civilian employee of the United States Government or a contract employee of the United States Government, either civilian or military (refer to 5 USC 5536). For Black-Lung claims, I further certify that the services performed were for a Black Lung-related disorder. No Part B Medicare benefits may be paid unless this form is received as required by existing law and regulations (42 CFR ). NOTICE: Any one who misrepresents or falsifies essential information to receive payment from Federal funds requested by this form may upon conviction be subject to fine and imprisonment under applicable Federal laws. NOTICE TO PATIENT ABOUT THE COLLECTION AND USE OF MEDICARE, CHAMPUS, FECA, AND BLACK LUNG INFORMATION (PRIVACY ACT STATEMENT) We are authorized by CMS, CHAMPUS and OWCP to ask you for information needed in the administration of the Medicare, CHAMPUS, FECA, and Black Lung programs. Authority to collect information is in section 205(a), 1862, 1872 and 1874 of the Social Security Act as amended, 42 CFR (a) and 424.5(a) (6), and 44 USC 3101;41 CFR 101 et seq and 10 USC 1079 and 1086; 5 USC 8101 et seq; and 30 USC 901 et seq; 38 USC 613; E.O The information we obtain to complete claims under these programs is used to identify you and to determine your eligibility. It is also used to decide if the services and supplies you received are covered by these programs and to insure that proper payment is made. The information may also be given to other providers of services, carriers, intermediaries, medical review boards, health plans, and other organizations or Federal agencies, for the effective administration of Federal provisions that require other third parties payers to pay primary to Federal program, and as otherwise necessary to administer these programs. For example, it may be necessary to disclose information about the benefits you have used to a hospital or doctor. Additional disclosures are made through routine uses for information contained in systems of records. FOR MEDICARE CLAIMS: See the notice modifying system No , titled, Carrier Medicare Claims Record, published in the Federal Register, Vol. 55 No. 177, page 37549, Wed. Sept. 12, 1990, or as updated and republished. FOR OWCP CLAIMS: Department of Labor, Privacy Act of 1974, Republication of Notice of Systems of Records, Federal Register Vol. 55 No. 40, Wed Feb. 28, 1990, See ESA-5, ESA-6, ESA-12, ESA-13, ESA-30, or as updated and republished. FOR CHAMPUS CLAIMS: PRINCIPLE PURPOSE(S): To evaluate eligibility for medical care provided by civilian sources and to issue payment upon establishment of eligibility and determination that the services/supplies received are authorized by law. ROUTINE USE(S): Information from claims and related documents may be given to the Dept. of Veterans Affairs, the Dept. of Health and Human Services and/or the Dept. of Transportation consistent with their statutory administrative responsibilities under CHAMPUS/CHAMPVA; to the Dept. of Justice for representation of the Secretary of Defense in civil actions; to the Internal Revenue Service, private collection agencies, and consumer reporting agencies in connection with recoupment claims; and to Congressional Offices in response to inquiries made at the request of the person to whom a record pertains. Appropriate disclosures may be made to other federal, state, local, foreign government agencies, private business entities, and individual providers of care, on matters relating to entitlement, claims adjudication, fraud, program abuse, utilization review, quality assurance, peer review, program integrity, third-party liability, coordination of benefits, and civil and criminal litigation related to the operation of CHAMPUS. DISCLOSURES: Voluntary; however, failure to provide information will result in delay in payment or may result in denial of claim. With the one exception discussed below, there are no penalties under these programs for refusing to supply information. However, failure to furnish information regarding the medical services rendered or the amount charged would prevent payment of claims under these programs. Failure to furnish any other information, such as name or claim number, would delay payment of the claim. Failure to provide medical information under FECA could be deemed an obstruction. It is mandatory that you tell us if you know that another party is responsible for paying for your treatment. Section 1128B of the Social Security Act and 31 USC provide penalties for withholding this information. You should be aware that P.L , the Computer Matching and Privacy Protection Act of 1988, permits the government to verify information by way of computer matches. MEDICAID PAYMENTS (PROVIDER CERTIFICATION) I hereby agree to keep such records as are necessary to disclose fully the extent of services provided to individuals under the State s Title XIX plan and to furnish information regarding any payments claimed for providing such services as the State Agency or Dept. of Health and Human Services may request. I further agree to accept, as payment in full, the amount paid by the Medicaid program for those claims submitted for payment under that program, with the exception of authorized deductible, coinsurance, co-payment or similar cost-sharing charge. SIGNATURE OF PHYSICIAN (OR SUPPLIER): I certify that the services listed above were medically indicated and necessary to the health of this patient and were personally furnished by me or my employee under my personal direction. NOTICE: This is to certify that the foregoing information is true, accurate and complete. I understand that payment and satisfaction of this claim will be from Federal and State funds, and that any false claims, statements, or documents, or concealment of a material fact, may be prosecuted under applicable Federal or State laws. According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it displays a valid OMB control number. The valid OMB control number for this information collection is The time required to complete this information collection is estimated to average 10 minutes per response, including the time to review instructions, search existing data resources, gather the data needed, and complete and review the information co llection. If you have any comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, Attn: PRA Reports Clearance Officer, 7500 Security Boulevard, Baltimore, Maryland This address is for comments and/or suggestions only. DO NOT MAIL COMPLETED CLAIM FORMS TO THIS ADDRESS.

108 Chapter 12: Claim Submission [SEPTEMBER 2009] CMS-1500 Claim Form Field Descriptions and Instructions Item # Description Cause Reject Special Instructions 1 Type of claim Yes Show the type of health insurance coverage applicable to this claim by checking the appropriate box, e.g., if a Medicare claim is being filed, check the Medicare box. 1a Insured s ID Yes Enter the patient s Medicare Health Insurance Claim number (HICN) whether Medicare is the primary or secondary payer. This is a required field. 2 Patient s name Yes Enter the patient s last name, first name and middle initial, if any, as shown on the patient s Medicare card. This is a required field. 3 Patient s birthdate/sex Yes Enter patient s eight-digit birth date (MM/DD/CCYY) and sex. 4 Insured s name If there is insurance primary to Medicare, either through the patient s or spouse s employment or any other source, list the name of the insured here. When the insured and the patient are the same enter Same. If Medicare is primary, leave blank. 5 Patient s address Enter the patient s mailing address and telephone number. On the first line, enter the street address; the second line, the city and state; the third line, the ZIP Code and phone number. 6 Patient relationship to insured If the beneficiary has a representative payee, then the representative payee s address is listed in Item 4. The beneficiary s actual residence is then entered in Item 32. This information is required in case the representative payee is located in a different state from the beneficiary. Check appropriate box for patient s relationship to insured when Item 4 is completed. 7 Insured s address Enter the insured s address and telephone number. When the address is the same as the patient s, enter the word Same. Complete this item only when Items 4 and 11 are completed. 8 Patient status Check the appropriate box for the patient s marital status and whether employed or a student. 9 Other insured s name Enter the last name, first name, and middle initial of the enrollee in a Medigap policy, if it is different from that shown in Item 2; otherwise, enter the word Same. If no Medigap benefits are assigned, leave blank. This field may be used in the future for supplemental insurance plans. Only participating physicians and suppliers are to complete Item 9 and its subdivisions and only when the beneficiary wishes to assign his/her benefits under a Medigap policy to the participating physician or supplier. Participating physicians and suppliers must enter information required in Item 9 and its subdivisions if requested by the beneficiary. Participating physician s/suppliers sign an agreement with Medicare to accept assignment of Medicare benefits for all Medicare patients. A claim for which a beneficiary elects to assign his/her benefits under a Medigap policy to a participating physician/supplier is called a mandated Medigap transfer. Medigap: A Medigap policy meets the statutory definition of a Medicare supplemental policy contained in both Sections 1882(g)(1) of Title XVIIII of the Social Security Act and the definition contained in the NAIC Model Regulation which is incorporated by reference to the statute. It is a health insurance policy or other health benefit plan offered by a private entity to those persons entitled to Medicare benefits and is specifically designed to supplement Medicare benefits. It fills in some of the gaps in Medicare coverage by providing payment for some of the charges for which Medicare does not have responsibility due to the applicability of deductibles, coinsurance amounts, or other limitations imposed by Medicare. It does not include limited benefit coverage available to Medicare beneficiaries such as specified disease or hospital indemnity coverage. Also, it explicitly excludes a policy or plan offered by an employer to employees, or former employees, as well as that offered by a labor organization to members or former members. 132_

109 Chapter 12: Claim Submission [SEPTEMBER 2009] Cause Item # Description Reject Special Instructions Do not list other supplemental coverage in Item 9 and its subdivisions at the time a Medicare claim is filed. Other supplemental claims are forwarded automatically to the private insurer if the private insurer contracts with the carrier to send Medicare claim information electronically. If there is no such contract, the beneficiary must file his/her own supplemental claim. 9a Other insured s policy or group number Enter the policy and/or group number of the Medigap insured preceded by Medigap. 9b 9c 9d Other insured s date of birth Employer s name or school name Insurance plan name or program name Yes Note: Item 9d must be completed if you enter a policy and/or group number in Item 9a. Enter the Medigap insured s eight-digit birth date (MM/DD/CCYY) and sex. Leave blank if a Medigap PayerID is entered in Item 9d. Otherwise, enter the claims processing address of the Medigap insurer. Use an abbreviated street address, two-letter postal code, and ZIP Code copied from the Medigap insured s Medigap identification card. For example: 1257 Anywhere Street Baltimore, Maryland is shown as 1257 Anywhere St Maryland Enter the five-digit coordination of benefits agreement (COBA) Medigap claim base identifier. If no identifier exists, then enter the Medigap insurance program or plan name. Note: The identifiers will range from If you are a participating provider of service or supplier and the beneficiary wants Medicare payment data forwarded to a Medigap insurer under a mandated Medigap transfer, all of the information in Items 9, 9a, 9b, and 9d must be complete and accurate. Otherwise, the Medicare carrier cannot forward the claim information to Medigap insurer. Providers/suppliers may reference a list of assigned COBA Medigap claim-based identifiers for Medicare billing at 10 Is patient s condition related to Note: This list is updated weekly. Check yes or no to indicate whether employment, auto liability, or other accident involvement applies to one or more of the services described in Item 24. Enter the state postal code. Any item checked yes indicates there may be other insurance primary to Medicare. Identify primary insurance information in Item d Reserved for local use Use this item exclusively for Medicaid (MCD) information. If the patient is entitled to Medicaid, enter the patient s Medicaid number preceded by MCD. Not a required field. 11 Insured s policy, group, or Federal Employees Compensation Act (FECA) number Yes This item must be completed. By completing this item, the physician/supplier acknowledges having made a good faith effort to determine whether Medicare is the primary or secondary payer. If there is insurance primary to Medicare, enter the insured s policy or group number and proceed to Items 11a through 11c. Note: Enter the appropriate information in Item 11c if insurance primary to Medicare is indicated in Item 11. If there is no insurance primary to Medicare, enter the word None and proceed to Item 12. If there has been a change in the insured s insurance status due to their employment status, e.g., retired, enter the word None and proceed to Item 11b. Insurance primary to Medicare circumstances under which Medicare payment may be secondary to other insurance include: group health plan coverage, Working Aged, Disability (large group health plan 132_

110 Chapter 12: Claim Submission [SEPTEMBER 2009] Cause Item # Description Reject Special Instructions [LGHP]), end-stage renal disease (ESRD), no-fault, work-related illness/injury Workers Compensation, Black Lung and Veterans Benefits. Items 4, 6, and 7 must also be completed. Note: For a paper claim to be considered for Medicare Secondary Payer benefits, a copy of the primary payer s explanation of benefits (EOB) notice must be forwarded along with the claim form. 11a Insured s date of birth Yes Enter the insured s birth date and sex if different from Item 3. 11b 11c Employer s name or school name Insurance plan name or program name 11d Is there another health benefit plan 12 Patient s or authorized person s signature Enter the employer s name if applicable. If there is a change in the insured s insurance status, e.g. retired, enter the retirement date preceded by the word Retired. Enter the nine-digit PayerID number of the primary insurer. If no PayerID number exists, then enter the complete primary payer s program or plan name. If the primary payer s explanation of benefits (EOB) does not contain the claims processing address, record the primary payer s claims processing address directly on the EOB. This is required if there is insurance primary to Medicare that is indicated in Item 11. Leave blank. Not required by Medicare. The patient or authorized representative must sign and date this item unless the signature is on file. In lieu of signing the claim, the patient may sign a statement to be retained in the provider, physician, or supplier file in accordance with Sections If the patient is physically or mentally unable to sign, a representative specified in Section 3008 may sign on the patient s behalf. In this event, the statement s signature line must indicate the patient s name followed by by the representative s name, address, relationship to the patient, and the reason the patient cannot sign. The authorization is effective indefinitely unless patient or the patient s representative revokes this arrangement. Note: This can be a signature on file and/or a computer-generated signature. The patient s signature authorizes release of medical information necessary to process the claim. It also authorizes payment of benefits to the provider of service or supplier when the provider of service or supplier accepts assignment on the claim. 13 Insured s or authorized person s signature Signature by Mark: When an illiterate or physically handicapped enrollee signs by mark, a witness must enter his/her name and address next to the mark. The signature in this item authorizes payment of mandated Medigap benefits to the participating physician or supplier if required Medigap information is included in Item 9 and its subdivisions. The patient or his/her authorized representative signs this item, or the signature must be on file as a separate Medigap authorization. The Medigap assignment on file in the participating provider of service/supplier s office must be insurer specific. It may state that the authorization applies to all occasions of service until it is revoked. Note: This can be a signature on file and/or a computer-generated signature. 14 Date of current illness Enter the date of current illness, injury, or pregnancy. For chiropractic services, enter the date of the initiation of the course of treatment and enter the x-ray date (MM/DD/YY) in Item _

111 Chapter 12: Claim Submission [SEPTEMBER 2009] Cause Item # Description Reject Special Instructions 15 If patient has had same or similar illness, give first date Leave blank. Not required by Medicare. 16 Date patient unable to work in current occupation 17 Name of referring physician or other source Yes Enter dates patient is employed and unable to work in current occupation. (An entry in this field may indicate employment-related insurance coverage.) Enter the name of the referring or ordering physician if the service or item was ordered or referred by a physician. The term physician when used within the meaning of Section 1861(r) of the Social Security Act (the Act) and used in connection with performing any function or action refers to: 1) a doctor of medicine or osteopathy legally authorized to practice medicine and surgery by the state in which he/she performs such function or action; 2) a doctor of dental surgery or dental medicine who is legally authorized to practice dentistry by the state in which he/she performs such functions and who is acting within the scope of his/her license when performing such functions; 3) a doctor of podiatric medicine for purposes of Sections (k), (m), (p)(1) and (s) and Sections 1814(a), 1832(a)(2)(F)(ii) and 1835 of the Act, but only with respect to functions which he/she is legally authorized to perform as such by the state in which he/she performs them; 4) a doctor of optometry, but only with respect to the provision of items or services described in Section 1861(s) of the Act which he/she is legally authorized to perform as a doctor of optometry by the state in which he/she performs them; or 5) a chiropractor who is licensed as such by a state (or in a state which does not license chiropractors as such), and is legally authorized to perform the services of a chiropractor in the jurisdiction in which he/she performs such services, and who meets uniform minimum standards specified by the Secretary, but only for purposes of Sections 1861(s)(1) and 1861(s)(2)(A) of the Act, and only with respect to treatment by means of manual manipulation of the spine (to correct a subluxation). For the purposes of Section 1862(a)(4) of the Act and subject to the limitations and conditions provided above, chiropractor includes a doctor of one of the arts specified in the statute and legally authorized to practice such art in the country in which the inpatient hospital services (referred to in Section 1862[a][4] of the Act) are furnished. Referring physician is a physician who requests an item or service for the beneficiary for which payment may be made under the Medicare program. Ordering physician is a physician or, when appropriate, a nonphysician practitioner who orders nonphysician services for the patient. Reference the CMS Internet-Only Manual (IOM) Publication , Medicare Benefit Policy Manual, Chapter 15 for nonphysician practitioner rules. Examples of services that might be ordered include diagnostic laboratory tests, clinical laboratory tests, pharmaceutical services, DME, and services incident to that physician s or nonphysician practitioner s service. The ordering/referring requirement became effective January 1, 1992, and is required by Section 1833(q) of the Act. All claims for Medicare-covered services and items that are the result of a physician's order or referral shall include the ordering/referring physician's name. See Items 17a and 17b below for further guidance on reporting the 132_

112 Chapter 12: Claim Submission [SEPTEMBER 2009] Item # Description Cause Reject Special Instructions referring/ordering provider s Unique Physician Identification Number (UPIN) and/or NPI. The following services/situations require the submission of the referring/ordering provider information: Medicare-covered services and items that are the result of a physician s order or referral Parenteral and enteral nutrition Immunosuppressive drug claims Hepatitis B claims Diagnostic laboratory services Diagnostic radiology services Portable x-ray services Consultative services DME When the ordering physician is also the performing physician (as often is the case with in-office clinical laboratory tests) When a service is incident to the service of a physician or nonphysician practitioner, the name of the physician or nonphysician practitioner who performs the initial service and orders the nonphysician service must appear in Item 17 When a physician extender or other limited licensed practitioner refers a patient for consultative service, submit the name of the physician who is supervising the limited licensed practitioner 17a Non NPI Effective May 23, 2008 and later, Item 17a should not to be reported, but Item 17b must be reported when a service was ordered or referred by a physician. 17b NPI of referring physician Enter the NPI of the referring/ordering physician listed in Item 17. When a claim involves multiple referring and/or ordering physicians, a separate CMS-1500 claim form shall be used for each ordering/referring physician. All physicians who order or refer Medicare beneficiaries or services must report an NPI even though they may never bill Medicare directly. A physician who has not been assigned an NPI should contact the Medicare carrier. 18 Hospitalization dates related to current services Note: If after several attempts the supplier is unsuccessful in obtaining the NPI from the ordering/referring and attending physician, the supplier who furnished the items or services may report their own NPI. The supplier must report their own name in Item 17. Complete this item when a medical service is furnished as a result of, or subsequent to, a related hospitalization. 19 Reserved for local use Enter the date the patient was last seen and the NPI of his/her attending physician when an independent physical or occupational therapist, or physician providing routine foot care submits claims. For physical and occupational therapists, entering this information certifies that the required physician certification (or recertification) is being kept on file. Enter the x-ray for chiropractor services. By entering an x-ray date and the initiation date for course of chiropractic treatment in Item 14, you are certifying that all the relevant information requirements (including level of subluxation) of the CMS IOM Publication , Medicare Benefit Policy Manual, Chapter 15 are on file along with the appropriate x-ray and are all available for carrier review. Enter the drug s name and dosage when submitting a claim for not otherwise classified (NOC) drugs. Enter a concise description of an unlisted procedure code if one can be given within the confines of this box. Otherwise an attachment must be submitted with the claim. 132_

113 Chapter 12: Claim Submission [SEPTEMBER 2009] Cause Item # Description Reject Special Instructions Enter all applicable modifiers when modifier 99 (multiple modifiers) is entered in Item 24d. If modifier 99 is entered on multiple line items of a single claim form, all applicable modifiers for each line item containing modifier 99 should be listed as follows: 1=(mod), where the number 1 represents the line item and mod represents all modifiers applicable to the referenced line item. Enter the statement Homebound when an independent lab renders an electrocardiogram tracing or obtains a specimen from a homebound or institutionalized patient. (See CMS IOM Publication , Medicare Benefit Policy Manual, Chapter 15, Covered Medical and Other Health Services, and CMS IOM Publication , Medicare Claims Processing Manual, Chapter 16, Laboratory Services from Independent labs, Physicians and Providers and CMS IOM Publication , Medicare General Information, Eligibility, and Entitlement Manual, Chapter 5, Definitions, respectively for the definition of homebound and a more complete definition of a medically necessary laboratory service to a homebound or an institutional patient.) Enter the statement, Patient refuses to assign benefits when the beneficiary absolutely refuses to assign benefits to a participating provider. In this case, no payment may be made on the claim. Enter the statement, Testing for hearing aid when submitting claims to obtain intentional denials when other payers are involved. (When dental exams are billed, enter the specific surgery for which the exam is being performed.) Enter the specific name and dosage amount when low osmolar contrast material is billed but only if HCPCS codes do not cover them. Enter the assumed and/or relinquished date for a global surgery claim when providers share postoperative care. Enter the statement, Attending physician, not hospice employee when a physician renders services to a hospice patient but the hospice providing the patient s care (in which the patient resides) does not employ the attending physician. 20 Outside lab Complete this item when billing for diagnostic tests subject to purchase price limitations. Enter the purchase price under charges if the yes is checked. A yes check indicates that an entity other than the entity billing for the service performed the diagnostic test. A no check indicates that no purchased tests are included on the claim. When yes is annotated, Item 32 must be completed. When billing for multiple purchased diagnostic tests, each test must be submitted on a separate claim form. Multiple purchased tests may be submitted on the ASC X electronic format as long as appropriate line level information is submitted when services are rendered at different service facility locations. Note: This is a required field when billing for diagnostic tests subject to purchase price limitations. 21 Diagnosis or nature of illness or injury Enter the patient s diagnostic/condition. All physician specialties must use an ICD-9-CM code number and code to the highest level of specificity for the date of service. Enter up to four codes in priority order (primary, secondary condition). An independent laboratory must enter a diagnosis only for limited coverage procedures. All narrative diagnosis for nonphysician specialties must be submitted on an attachment. 22 Medicaid resubmission Leave blank. Not required by Medicare. 132_

114 Chapter 12: Claim Submission [SEPTEMBER 2009] Cause Item # Description Reject Special Instructions 23 Prior authorization number Enter the quality improvement organization (QIO) prior authorization number for those procedures requiring QIO prior approval. Enter the investigational device exemption (IDE) number when an investigational device is used in a FDA-approved clinical trial. Post market approval number should also be placed here when applicable. For physicians performing care plan oversight services, enter the six-digit Medicare provider number of the home health agency (HHA), or hospice when CPT code G0181 (home health), or G0182 (hospice) is billed. Enter the ten-digit Clinical Laboratory Improvement Act (CLIA) certification number for laboratory services billed by an entity performing CLIA covered procedures. Note: Item 23 can contain only one condition. Any additional conditions should be reported on a separate CMS-1500 claim form. 24a Dates of service Yes Enter the month, day, and year for each procedure, service, or supply. When from and to dates are shown for a series of identical services, enter the number of days or units in column G. This is a required field. Return as unprocessable if a date of service extends more than one day and a valid to date is not present. 24b Place of service Yes Enter the appropriate place of service code(s) from the list provided. Identify the location, using a place of service code for each item used or service performed. Note: When a service is rendered to a hospital inpatient, use the inpatient hospital code. (Refer below to Place of Service Codes table.) Place of Service Codes Code Title Definition Unassigned 03 School A facility whose primary purpose is education. 04 Homeless Shelter A facility or location whose primary purpose is to provide temporary housing to homeless individuals (e.g., emergency shelters, individual, or family shelters). Please note that for the purposes of receiving DME, a homeless shelter is considered the beneficiary s home. 05 Indian Health Service Freestanding Facility 06 Indian Health Service Provider-Based Facility 07 Tribal 638 Freestanding Facility A facility or location, owned and operated by the Indian Health Service, which provides diagnostic, therapeutic (surgical and nonsurgical), and rehabilitation services to American Indians and Alaska natives who do not require hospitalization. Medicare does not currently use the POS code designated for this setting. Claims submitted with this code will be returned as unprocessable. A facility or location, owned and operated by the Indian Health Service, which provides diagnostic, therapeutic (surgical and nonsurgical), and rehabilitation services rendered by, or under the supervision of, physicians to American Indians and Alaska Natives admitted as inpatients or outpatients. Medicare does not currently use the POS code designated for this setting. Claims submitted with this code will be returned as unprocessable. A facility or location owned and operated by a federally recognized American Indian or Alaska Native tribe or tribal organization under a 638 agreement, which provides diagnostic, therapeutic (surgical and nonsurgical), and rehabilitation services to tribal members who do not require hospitalization. Medicare does not currently use the POS code designated for this setting. Claims submitted with this code will be returned as unprocessable. 08 Tribal 638 Provider- A facility or location owned and operated by a federally recognized 132_

115 Chapter 12: Claim Submission [SEPTEMBER 2009] Code Title Definition Based Facility American Indian or Alaska Native tribe or tribal organization under a 638 agreement, which provides diagnostic, therapeutic (surgical and nonsurgical), and rehabilitation services to tribal members admitted as inpatients or outpatients. Medicare does not currently use the POS code designated for this setting. Claims submitted with this code will be returned as unprocessable. 09 Prison Correction Facility A prison, jail, reformatory, work farm, detention center, or any other similar facility maintained by either federal, state, or local authorities for the purpose of confinement or rehabilitation of adult or juvenile criminal offenders. (Effective 07/01/06) 10 Unassigned 11 Office Location, other than a hospital, skilled nursing facility (SNF), military treatment facility, community health center, state or local public health clinic, or intermediate care facility (ICF), where the health professional routinely provides health examinations, diagnosis, and treatment of illness or injury on an ambulatory basis. 12 Patient s Home Location, other than a hospital or other facility, where the patient receives care in a private residence. 13 Assisted Living Facility Congregate residential facility with self-contained living units providing assessment of each resident s needs and on-site support 24 hours a day, seven days a week, with the capacity to deliver or arrange for services including some health care and other services. 14 Group Home Congregate residential foster care setting for children and adolescents in state custody that provides some social, health care, and educational support services and that promotes rehabilitation and reintegration of residents into the community. 15 Mobile Unit A facility/unit that moves from place to place equipped to provide preventive, screening, diagnostic, and/or treatment services. 16 Temporary Lodging A short-term accommodation such as a hotel, camp ground, hostel, cruise ship, or resort where the patient receives care, and which is not identified by any other POS code. (Effective 04/01/08) Unassigned 20 Urgent Care Facility Location, distinct from a hospital emergency room, an office, or a clinic, whose purpose is to diagnose and treat illness or injury for unscheduled, ambulatory patients seeking immediate medical attention. 21 Inpatient Hospital A facility, other than psychiatric, which primarily provides diagnostic, therapeutic (both surgical and nonsurgical), and rehabilitation services by, or under, the supervision of physicians to patients admitted for a variety of medical conditions. 22 Outpatient Hospital A portion of a hospital that provides diagnostic, therapeutic (both surgical and nonsurgical), and rehabilitation services to sick or injured persons who do not require hospitalization or institutionalization. 23 Emergency Room Hospital A portion of a hospital where emergency diagnosis and treatment of illness or injury is provided. 24 Ambulatory Surgical Center A freestanding facility, other than a physician s office, where surgical and diagnostic services are provided on an ambulatory basis. 25 Birthing Center A facility, other than a hospital s maternity facilities or a physician s office, which provides a setting for labor, delivery, and immediate postpartum care, as well as immediate care of newborn infants. 26 Military Treatment Facility A medical facility operated by one or more of the Uniformed Services. Military Treatment Facility (MTF) also refers to certain former U.S. Public Health Service (USPHS) facilities now designated as Uniformed Service Treatment Facilities (USTF) Unassigned 31 Skilled Nursing Facility A facility which primarily provides inpatient skilled nursing care and related services to patients who require medical, nursing, or rehabilitative services, but does not provide the level of care or treatment available in a hospital. 32 Nursing Facility A facility which primarily provides to residents skilled nursing care and 132_

116 Chapter 12: Claim Submission [SEPTEMBER 2009] Code Title Definition related services for the rehabilitation of injured, disabled, or sick persons, or, on a regular basis, health-related care services above the level of custodial care to other than mentally retarded individuals. 33 Custodial Care Facility A facility which provides room, board, and other personal assistance services, generally on a long-term basis, and which does not include a medical component. 34 Hospice A facility other than a patient's home in which palliative and supportive care for terminally ill patients and their families are provided Unassigned 41 Ambulance Land A land vehicle specifically designed, equipped, and staffed for lifesaving and transporting the sick or injured. 42 Ambulance Air or Water An air or water vehicle specifically designed, equipped, and staffed for lifesaving and transporting the sick or injured Unassigned 49 Independent Clinic A location, not part of a hospital and not described by any other POS code, that is organized and operated to provide preventive, diagnostic, therapeutic, rehabilitative, or palliative services to outpatients only. 50 Federally Qualified Health Center 51 Inpatient Psychiatric Facility 52 Psychiatric Facility Partial Hospitalization 53 Community Mental Health Center (CMHC) 54 Intermediate Care Facility/Mentally Retarded 55 Residential Substance Abuse Treatment Facility 56 Psychiatric Residential Treatment Center 57 Nonresidential Substance Abuse Treatment Facility Unassigned A facility located in a medically under-served area that provides Medicare beneficiaries preventive, primary medical care under the general direction of a physician. A facility that provides inpatient psychiatric services for the diagnosis and treatment of mental illness on a 24-hour basis, by or under the supervision of a physician. A facility for the diagnosis and treatment of mental illness that provides a planned therapeutic program for patients who do not require full time hospitalization, but who need broader programs than are possible from outpatient visits to a hospital-based or hospital-affiliated facility. A facility that provides the following services: Outpatient services, including specialized outpatient services for children, the elderly, individuals who are chronically ill, and residents of the CMHC s mental health services area who have been discharged from inpatient treatment at a mental health facility 24-hour-a-day emergency care services Day treatment, other partial hospitalization services, or psychosocial rehabilitation services Screening for patients being considered for admission to state mental health facilities to determine the appropriateness of such admission, and Consultation and education services A facility which primarily provides health-related care and services above the level of custodial care to mentally retarded individuals, but does not provide the level of care or treatment available in a hospital or SNF. A facility that provides treatment for substance (alcohol and drug) abuse to live-in residents who do not require acute medical care. Services include individual and group therapy and counseling, family counseling, laboratory tests, drugs and supplies, psychological testing, and room and board. A facility or distinct part of a facility for psychiatric care that provides a total 24-hour therapeutically planned and professionally staffed group living and learning environment. A location that provides treatment for substance (alcohol and drug) abuse on an ambulatory basis. Services include individual and group therapy and counseling, family counseling, laboratory tests, drugs and supplies, and psychological testing. 132_

117 Chapter 12: Claim Submission [SEPTEMBER 2009] Code Title Definition 60 Mass Immunization Center A location where providers administer pneumococcal pneumonia and influenza virus vaccinations and submit these services as electronic media claims, paper claims, or using the roster billing method. This generally takes place in a mass immunization setting, such as, a public health center, pharmacy, or mall but may include a physician office setting. 61 Comprehensive Inpatient Rehabilitation Facility 62 Comprehensive Outpatient Rehabilitation Facility Unassigned 65 End-Stage Renal Disease Treatment Facility Unassigned 71 State or Local Public Health Clinic A facility that provides comprehensive rehabilitation services under the supervision of a physician to inpatients with physical disabilities. Services include physical therapy, occupational therapy, speech pathology, social or psychological services, and orthotics and prosthetics services. A facility that provides comprehensive rehabilitation services under the supervision of a physician to outpatients with physical disabilities. Services include physical therapy, occupational therapy, and speech pathology services. A facility other than a hospital, which provides dialysis treatment, maintenance, and/or training to patients or caregivers on an ambulatory or home-care basis. A facility maintained by either state or local health departments that provides ambulatory primary medical care under the general direction of a physician. 72 Rural Health Clinic A certified facility which is located in a rural medically under-served area that provides ambulatory primary medical care under the general direction of a physician Unassigned 81 Independent Laboratory A laboratory certified to perform diagnostic and/or clinical tests independent of an institution or a physician s office Unassigned 99 Other Place of Service Other place of service not identified above. Item # Description Cause Reject Special Instructions 24c Emergency Leave blank. Medicare providers are not required to complete this box. 24d Procedures, services, or supplies Yes Enter the procedures, services, or supplies using the Healthcare Common Procedure Coding System (HCPCS). When applicable, show HCPCS modifiers with the HCPCS code. Enter the specific procedure code without a narrative description. However, when reporting an unlisted procedure code or a not otherwise classified (NOC) code, include a narrative description in Item 19 if a coherent description can be given within the confines of that box. Otherwise, an attachment must be submitted with the claim. This is a required field. Return as unprocessable if an unlisted procedure code or a NOC code is indicated in Item 24d, but an accompanying narrative is not present in Item 19 or on an attachment. 24e Diagnosis pointer Enter the reference number as shown in Item 21 to relate the date of service and the procedures performed to the primary diagnosis. Enter only one reference number per line item. When multiple services are performed, enter the primary reference number for each service: either 1, 2, 3, or 4. If a situation arises where two or more diagnoses are required for a procedure code (e.g., pap smears), you must reference only one of the diagnosis in Item f Charges Yes Enter the charge for each listed service. 132_

118 Chapter 12: Claim Submission [SEPTEMBER 2009] Cause Item # Description Reject Special Instructions 24g Days or units Yes Enter the number of days or units. This field is most commonly used for multiple visits, units of supplies, anesthesia minutes, or oxygen volume. If only one service is performed, the numeral 1 must be entered. Some services require that the actual number or quantity billed be clearly indicated on the claim form (e.g., multiple ostomy or urinary supplies, medication dosages, or allergy testing procedure). When multiple services are provided, enter the actual number provided. For anesthesia, show the elapsed time (minutes) in Item 24g. Convert hours into minutes and enter the total minutes required for this procedure. Suppliers must furnish the units of oxygen contents except for concentrators and initial rental claims for gas and liquid oxygen systems. Rounding of oxygen is as follows: For stationary gas system rentals, suppliers must indicate oxygen contents in unit multiples of 50 cubic feet in Item 24g, rounded to the nearest increment of 50. For example, if 73 cubic feet of oxygen were delivered during the rental month, the unit entry 01 indicating the nearest 50 cubic foot increment is entered in Item 24g. For stationary liquid systems, units of contents must be specified in multiples of ten pounds of liquid contents delivered, rounded to the nearest ten pound increment. For example, if 63 pounds of liquid oxygen were delivered during the applicable rental month billed, the unit entry 06 is entered in Item 24g. For units of portable contents only (i.e., no stationary gas or liquid system used) round to the nearest cubic feet or one liquid pound, respectively. 24h EPSDT Leave blank. Not required by Medicare. 24i ID Qualifier (08/05) Enter the ID qualifier 1C in the shaded portion. 24j Rendering provider s NPI (08/05) 25 Federal Tax I.D. number 26 Patient s account number Effective May 23, 2008, do not use the shaded portion; enter the rendering provider s NPI number in the lower portion. In the case of a service provided incident to the service of a physician or nonphysician practitioner, when the person who ordered the service is not supervising, enter the NPI of the supervisor in the lower portion. Enter the provider of service or supplier Federal Tax ID (Employer Identification Number or Social Security Number) and check the appropriate check box. Medicare providers are not required to complete this item for crossover purposes since the Medicare contractor will retrieve the tax identification information from their internal provider file for inclusion on the COB outbound claim. However, tax identification information is used in the determination of accurate NPI reimbursement. Reimbursement of claims submitted without tax identification information will/may be delayed Enter the patient s account number assigned by the provider of service s or supplier s accounting system. This field is optional to assist you in patient identification. As a service, any account numbers entered here will be returned to you. 27 Accept assignment Yes Check the appropriate box to indicate whether the provider of service or supplier accepts assignment of Medicare benefits. If Medigap is indicated in Item 9 and Medigap payment authorization is given in Item 13, the provider of service or supplier must also be a Medicare-participating provider of service or supplier and must accept assignment of Medicare benefits for all covered charges for all patients. Note: The following providers of service/suppliers and claims can only be paid on an assignment basis: 132_

119 Chapter 12: Claim Submission [SEPTEMBER 2009] Cause Item # Description Reject Special Instructions Physician services to individuals dually entitled to Medicaid and Medicare Clinical diagnostic laboratory services Participating physician/supplier services Services of physician assistants, nurse practitioners, clinical nurse specialist, nurse midwives, certified registered nurse anesthetists, clinical psychologists, clinical social workers Ambulatory surgical center (ASC) services for covered ASC procedures and home dialysis supplies and equipment paid under Method II Ambulance services Drugs and biologicals, and Simplified billing roster for influenza virus vaccine and pneumococcal vaccine 28 Total charge Yes Enter total charges for all services (i.e., total of all charges in Item 24f). 29 Amount paid Enter the total amount the patient paid on the covered services only. 30 Balance due NR Leave blank. Not required by Medicare. 31 Signature of supplier Yes Enter the signature of the provider of service or supplier, or his/her representative, and the date the form was signed. 32 Name and address of facility where services were rendered Note: This is a required field. However, the claim can be processed if the following is true. If a physician, supplier, or authorized person s signature is missing, but the signature is on file; or if any authorization is attached to the claim or if the signature field has signature on file and/or a computer-generated signature. The name of the business is not an acceptable signature. Enter the name and address, and ZIP Code of the facility if the services were furnished in a hospital, clinic, laboratory, or facility other than the patient s home or physician s office. Effective for claims received on or after April 1, 2004, the name, address, and ZIP Code of the service location for all services other than those furnished in place of service home (code 12). Effective for claims received on or after April 1, 2004, on the CMS-1500 claim form, only one name, address and ZIP Code may be entered in the block. If additional entries are needed, separate claim forms shall be submitted. Effective for claims with dates of service on or after October 1, 2007, the name, address, and nine-digit ZIP Code of the service location for services paid under the Medicare physician fee schedule and anesthesia services, other than those furnished in place of service home (12), and any other places of service contractors treat as home, must be entered according the CMS IOM Publication , Medicare Claims Processing Manual, Chapter 1, Sections and Effective for claims with dates of service on or after October 1, 2007, for claims received that require a nine-digit ZIP Code with a four-digit extension, a four-digit extension that matches one of the zip 9 file or a four-digit extension that can be verified must be entered on the claim according the CMS IOM Publication , Medicare Claims Processing Manual, Chapter 1, Sections and Providers of service (namely physicians) shall identify the supplier s name, address, ZIP Code, and NPI when billing for purchased diagnostic tests. When more than one supplier is used, a separate CMS-1500 claim form should be used to bill for each supplier. For foreign claims, only the enrollee can file for Part B benefits rendered outside of the United States. These claims will not include a valid ZIP Code. When a claim is received for these services on a beneficiary submitted CMS-1490S form, before the claim is entered in 132_

120 Chapter 12: Claim Submission [SEPTEMBER 2009] Cause Item # Description Reject Special Instructions the system, it should be determined if it is a foreign claim. If it is a foreign claim, follow the instructions for disposition of the claim in the CMS IOM Publication , Medicare Claims Processing Manual, Chapter 1. The carrier processing the foreign claim will have to make necessary accommodations to verify that the claim is not returned as unprocessable due to the lack of a ZIP Code. For DMEPOS claims, the name, address, or NPI of the location where the order was accepted must be entered (DME MAC only). This field is required. When more than one supplier is used, a separate CMS-1500 claim form should be sued to bill each supplier. This item is completed whether the supplier s personnel performs the work at the physician s office or at another location. If modifiers QB or QU are billed, indicating the service was rendered in a Health Professional Shortage Area (HPSA), the physical location where the service was rendered shall be entered if other than home. If the supplier is a certified mammography screening center, enter the six-digit Food and Drug Administration (FDA)-approved certification number. Complete this item for all laboratory work performed outside a physician s office. If an independent laboratory is billing, enter the place where the test was performed. 32a NPI Enter the NPI of the service facility. If required by Medicare claims processing policy, enter the NPI of the service facility. Note: If after several attempts the supplier is unsuccessful in obtaining the NPI from the service facility, the supplier who furnished the items or services may report their own NPI. The supplier must report their own name in Item b Non NPI Identifier Note: Effective May 23, 2008 and later, Item 32b should not be reported. 33 Physician s, supplier s billing name, address, ZIP Code, and phone Yes Enter the provider of service/supplier's billing name, address, ZIP Code, and telephone number. This is a required field. 33a NPI Effective May 23, 2008 and later, the provider/supplier must enter the NPI of the billing provider or group. 33b Non NPI Note: Effective May 23, 2008 and later, Item 33b should not to be reported. MAILING ADDRESS All completed DMEPOS paper claims should be mailed to: National Government Services, Inc. DMEPOS Claims P.O. Box 7027 Indianapolis, Indiana _

121 Chapter 12: Claim Submission [SEPTEMBER 2009] RESOURCES A CMS Web-based training course can be located at The CMS IOM Publication , Medicare Claims Processing Manual, Chapter 26 The National Uniform Claim Committee: 132_

122 Chapter 13 : Electronic Data Interchange [ MARCH 2010] 13 Electronic Data Interchange ELECTRONIC MEDIA CLAIMS All Health Insurance Portability and Accountability Act (HIPAA)-compliant electronic claims are subject to a 14-day payment floor. Claims submitted on paper are subject to a 29-day payment floor. By submitting claims electronically, both Medicare and health care suppliers can process transactions faster due to the difference in these payment floors. Other electronic data interchange (EDI) advantages include: increased cash flow; ease of billing electronically; lower administrative, postage and handling costs; added efficiency and accurate claims filing data is received precisely as input by the supplier s office, eliminating the chance of processing errors; receipt of the Front-End Edit Reports confirmations that can be downloaded from the Common Electronic Data Interchange (CEDI)* within 48-hours of transmission. (These reports verify the acceptance of claims and Certificates of Medical Necessity [CMNs] and/or DME Information Forms [DIFs]); availability of: Claim Status Inquiry (CSI), including beneficiary eligibility information and CMN/DIF status; electronic remittance advice (ERA); and electronic funds transfer (EFT); and the ability to submit claims, CMNs, and DIFs seven days a week, including holidays. * Note: More information on CEDI can be found in the Common Electronic Data Interchange section of this chapter. The Centers for Medicare & Medicaid Services (CMS) strictly prohibits any trading partner from outsourcing system functions overseas, unless explicitly authorized, in writing, by the CMS CIO. System functions include: Transmission of electronic claims, Receipt of electronic remittance advice, or Access to any system for beneficiary and/or eligibility information Any request for access by an overseas party will be immediately denied by National Government Services pending authorization from CMS. 132_0310 1

123 Chapter 13 : Electronic Data Interchange [ MARCH 2010] ADMINISTRATIVE SIMPLIFICATION COMPLIANCE ACT Section 3 of the Administrative Simplification Compliance Act (ASCA), Public Law (PL) , and the implementing regulation at 42 Code of Federal Regulations (CFR) require that all initial claims for reimbursement under Medicare (except from small providers) be submitted electronically as of October 16, 2003, with limited exceptions. Initial claims are those claims submitted to a Medicare fee-for-service carrier, durable medical equipment Medicare administrative contractor (DME MAC), or fiscal intermediary for the first time, including: resubmitted previously rejected claims; claims with paper attachments; demand claims; claims where Medicare is secondary and there is only one primary payer; and nonpayment claims. Medicare is prohibited from payment of claims submitted in a nonelectronic manner that do not meet the limited exceptions criteria. Claims required to be submitted electronically effective October 16, 2003, and later must comply with the appropriate claim standards adopted for national use under HIPAA (refer to the Electronic Format section of this chapter). Further details on the ASCA provision, exception criteria, and how to apply for a waiver can be found on the National Government Services Web site: Go to Select Durable Medical Equipment (DME) as your Business Type Select the Claims navigation category from the dark blue menu bar Select the Administrative Simplification Compliance Act subnavigation option Reference the Centers for Medicare & Medicaid Services (CMS) Internet-Only Manual (IOM) Publication , Medicare Claims Processing Manual, Chapter 24, Section 90 for further details on ASCA at COMMON ELECTRONIC DATA INTERCHANGE The CEDI contract was developed by the CMS to provide a standard front-end system for all DME MAC electronic trading partners/submitters. The CEDI provides a single front-end solution for the submission and retrieval of DME MAC electronic transactions. The CEDI contract was awarded to National Government Services. The following electronic transactions are handled by the CEDI: Electronic claims (American National Standards Institute Health Data Committee X12 file format 837 [ANSI X12 837] and National Council of Prescription Drug Programs [NCPDP]) Delivery of all electronic front-end reports Enrollment and delivery of the electronic remittance advice (ERA) 276/277 claim status request/response transactions 132_0310 2

124 Chapter 13 : Electronic Data Interchange [ MARCH 2010] Note: The CEDI does not process enrollment forms or provide support for CSI or EFT. Please refer to the Claim Status Inquiry/Beneficiary Eligibility and Electronic Funds Transfer sections of this chapter for more information on these products and services. CEDI Contact Resources Web Site Listserv Available on the CEDI Web site ( under Listserv Registration CEDI Help Desk The CEDI Help Desk is available 9:00 a.m. 7:00 p.m. eastern time (ET), Monday Friday. CEDI Help Desk support is also available at The CEDI Help Desk will answer questions and provide support for the following: Support for the HIPAA-compliant electronic formats X claims NCPDP claims X claim status request and X claim status response X ERA CEDI password reset requests CEDI enrollment status X claims NCPDP claims X claim status request and X claim status response X ERA Software support for: Medicare Remit Easy Print (MREP) PC-ACE Pro32 Note: Effective April 1, 2010, CEDI will no longer support the Express Plus software. Express Plus users will transition to the HIPAA compliant free software program, PC-ACE Pro32. PC-ACE Pro32 can be accessed from the CEDI Web site: o Go to o Select the Software Downloads and Documentation (MREP, NGSComm and PC-ACE) link Verification of the receipt of electronic files Support of all electronic front-end reports Testing support for vendors and new electronic trading partners/submitters 132_0310 3

125 Chapter 13 : Electronic Data Interchange [ MARCH 2010] ELECTRONIC FORMAT Medicare DME claims are submitted via direct transmission to the CEDI. The acceptable Medicare HIPAA claims format is the ANSI X12 Version 4010A1 837 transaction and the National Council for Prescription Drug Programs (NCPDP). The Secretary of Health and Human Services has established, under part 162 of Title 45 of the Code of Federal Regulations, the NCPDP Telecommunications Standard Version 5.1 and Batch Standard 1.1 as the standard for electronic retail pharmacy drug claims. This standard will be used by all health plans, including DME MACs that process retail pharmacy drug transactions. All other claims submitted to Medicare by pharmacies, other than retail pharmacy drug claims, must be submitted electronically in the ANSI X12 Version 4010A1 837 Health Care Claim format, and must be submitted in a separate transmission from the NCPDP retail drug claims. Health Insurance Portability and Accountability Act (HIPAA) version implementation guides may be downloaded at The NCPDP implementation guide is available at Suppliers should visit the CEDI Web site at prior to programming their system with the HIPAA-compliant claim transaction. The following information is available on the CEDI Web site: Companion document Telecommunications information HOW TO BECOME AN ELECTRONIC SUBMITTER Step 1 Acquire software for electronic submission. Several options are available: Use a software vendor s product. For a list of software vendors that have passed testing with CEDI, view the Approved Entities List at Write a software program using the ANSI X12 Version 4010A1 837 transaction and/or NCPDP format for retail pharmacy drug claims. For more details see the Electronic Format section of this chapter. Employ a billing service or clearinghouse. For a list of billing services that have passed testing with CEDI, view the Approved Entities List at Note: If this option is selected, steps 2 (applying for a sender ID) and 3 (testing) are not required. Obtain the free PC-ACE Pro32 software program. Suppliers may download the PC-ACE Pro32 software from the CEDI Web site at Note: PC-ACE Pro32 does not have the capability to bill claims using the NCPDP format for retail pharmacy drug claims. 132_0310 4

126 Chapter 13 : Electronic Data Interchange [ MARCH 2010] Note: If this option is selected, steps 2 (applying for a sender ID) and 3 (testing) are not required. Step 2 Obtain an electronic sender ID with the CEDI. Once a software package has been selected, the supplier must apply for an electronic sender ID with the CEDI. To obtain an electronic sender ID with the CEDI, complete the appropriate EDI enrollment forms for new electronic submitters/trading partners found at Step 3 Test with the CEDI. All new software vendors and in-house program developers must complete testing with CEDI. Once a vendor or in-house programmer has successfully passed CEDI testing, they can begin to setup their customers to exchange production transactions. Customers using an approved CEDI vendor do not need to test. Some vendors may require testing and customers should verify this process with their selected vendor. For a list of software vendors that have passed testing with CEDI, view the Approved Entities List at Note: Testing is not required for suppliers that choose a billing service, clearinghouse, or the PC-ACE Pro32 software program. FRONT-END EDIT REPORT An electronic submitter will receive the front-end reports listed below. CEDI Reports These reports are created and delivered by the CEDI and include: TA1 Note: Some systems may generate a TA1 report for accepted and rejected files, others will only generate a TA1 if the file rejects. Check with your software vendor to determine if your system generates both accepted and rejected TA1 reports. TRN 997 GenResponse Report (GENRPT) DME MAC Reports This report is created by the DME MACs and delivered by the CEDI. 132_0310 5

127 Chapter 13 : Electronic Data Interchange [ MARCH 2010] DME MAC (RPT) Report: This report will only show accepted claims. All front-end claim rejections will be reported on the CEDI GENRPT. Attached to the DME MAC (RPT) report is the CMN Reject Report. The CMN Reject Report will only be created by the DME MACs if CMNs are rejected on accepted claims. If a CMN is rejected, it will be removed from the accepted claim and will not be considered in processing. Note: Manuals for all electronic front-end reports are available on the CEDI Web site at ELECTRONIC REMITTANCE ADVICE The ERA allows receipt of payment information in an electronic file. Suppliers should check with their software vendor to determine if their system has the capability to print and/or post an ERA received by National Government Services and delivered by the CEDI. If software capability is in place, an ERA file created by Medicare allows automatic posting to an accounts receivable system. Once ERA is in place, the payment posting process is more efficient and accurate. Note: The supplier can download the ERA to their computer daily if an electronic payment file is available. The MREP software is available for suppliers to view and print HIPAA-compliant ERAs from their own computer. If your current system does not have ERA capability, the MREP software is available at no cost. This software is easy to use and will save suppliers currently receiving standard paper remittances (SPR) time and money. Note: The SPR will no longer be mailed 45 days after the submitter ID has been setup for ERA. Suppliers whose Provider Transaction Access Number (PTAN) is setup for ERAs under a submitter ID that has been receiving ERAs for longer than 45 days will no longer receive their SPRs effective with the completion of their ERA setup date. Here are a few comments from suppliers currently receiving the benefits of ERAs: We just started using the electronic remittance advice one day and have enjoyed all the benefits since. The conversion for us was simple and easy. I did not think the ERA would have been as easy as it is. I am sorry I waited so long to get started. The ERA is relatively simple once the programming is in place. Cuts down on staff manually having to post these transactions. Suppliers should confirm with their software vendor that their system has ERA capability. To sign up for the ERA go to To download the MREP software, go to 132_0310 6

128 Chapter 13 : Electronic Data Interchange [ MARCH 2010] ELECTRONIC FUNDS TRANSFER Electronically deposited funds are available in the supplier s account the day after Medicare transmits an EFT to the bank. Paper checks must be mailed, manually processed in the supplier s office, deposited, and cleared by the bank. This means the EFT will usually be available to the supplier one week sooner than paper funds. On May 1, 2006, CMS issued the revised CMS-855 Medicare enrollment applications. As part of that revision, DMEPOS suppliers are now required to submit the EFT agreement with the application form when initially enrolling, submitting an application for a new location, or reenrolling with Medicare. Note: Reenrollment with Medicare is done every three years. Note: For additional information on EFT requirements, please refer to Section 4 on page 14 of the CMS-855S. This form can be accessed at The EFT enrollment form is available on the National Government Service Web site: Go to Select Durable Medical Equipment (DME) as your Business Type Select the Claims navigation category from the dark blue menu bar Select the Electronic Data Interchange subnavigation option Select Overview of EDI Products and Services Select Electronic Funds Transfer Existing suppliers do not have to wait for their reenrollment package to enroll for EFTs. Suppliers may complete the EFT enrollment form and send the form along with a voided check to: National Government Services, Inc. Attention: EFT Enrollment (ME0105-E020) P.O. Box 7165 Indianapolis, Indiana Suppliers who have questions regarding enrollment or status of their EFT should contact the Jurisdiction B DME MAC Provider Contact Center at CLAIM STATUS INQUIRY/BENEFICIARY ELIGIBILITY All participating or nonparticipating suppliers who submit electronic or paper claims are eligible for online Claim Status Inquiry (CSI). With access to CSI, suppliers can view the status of all claims as they appear in the Jurisdiction B DME MAC claims processing system. This includes paid, denied, and pending claims. The information can be searched by viewing all claims for a specific Provider Transaction Access Number (PTAN), National Provider Identifier (NPI), a beneficiary Health Insurance Claim number (HICN), or date(s) of service. 132_0310 7

129 Chapter 13 : Electronic Data Interchange [ MARCH 2010] Online eligibility is available through CSI and provides information about a Medicare beneficiary concerning prior year and current year deductible, Medicare Secondary Payer information, health maintenance organization (HMO) activity, and much more! Suppliers also have the option of researching Certificates of Medical Necessity (CMN) and/or DME Information Forms (DIF) that are on file with the Jurisdiction B DME MAC. Note: CSI will search the local system for CMNs/DIFs. At this time, suppliers will not be able to search the Common Working File (CWF) for CMN/DIF status through CSI. The CSI Manual can be accessed from the National Government Services Web site: Go to Select Durable Medical Equipment (DME) as your Business Type Select the News and Publications navigation category from the dark blue menu bar Select the Manuals subnavigation option The following steps must be completed to obtain online access to CSI. 1. Select a network service vendor to provide the communications required to access CSI. Each vendor has different connectivity options and price points. Contact the vendors directly and select the option that is best for your company. More information on the network service vendors is listed below. 2. Complete the National Government Services electronic data interchange (EDI) Claim Status Inquiry Form to obtain a Jurisdiction B DME MAC CSI logon ID and password for each user. Note: If a CSI logon ID is not accessed within a 60-day period, the DME MAC CSI system access will be deactivated. Suppliers are required to complete a new EDI Claim Status Inquiry Form to regain their access. If a CSI login ID is not accessed within a 30-day period, the DME MAC CSI system will be revoked. CSI users will have to contact the Jurisdiction B DME MAC EDI Help Desk to have their password reset. The Claims Status Inquiry Form can be accessed on the National Government Services Web site at or by following these navigation steps: Go to Select Durable Medical Equipment (DME) as your Business Type Select the Resources navigation category from the dark blue menu bar Select the Forms subnavigation option Select the EDI Claims Status Inquiry Form link Note: All online EDI enrollment forms, including the Claim Status Inquiry Form, are required to be signed and faxed within 10 business days. Any forms that are not signed and faxed to National Government Services within those 10 business days will be rejected. 132_0310 8

130 Chapter 13 : Electronic Data Interchange [ MARCH 2010] Network Services Vendors National Government Services offers three network service vendors (IVANS, Nebo Systems, Inc., or VisionShare) to provide the communications needed for CSI access. IVANS: Offers quick-to-start, simple to use, flexible solutions to connect to Medicare for CSI, electronic claims transactions, real-time 270/271 transactions, and other payers. IVANS solutions are fully supported and require no major technology investment or management. Choose the one that is right for you. IVANS secure high-speed Internet: LIME uses your existing Internet connection, has flat monthly fee with unlimited use. Good for low to high volume users (1 100 users). Secure Dial-Up is a low hourly rate plan for very low-volume submitters that prefer to be charged only when sending transactions. MDNS Frame Relay Leased Line offers a fixed rate for high-volume claim submitters with multiple locations. IVANS membership provides connections to other trading partners at no additional cost. Ask about IVANS FTP Solution for batch access to CMS. For assistance in selecting the plan that is right for you or for more information, call , or visit Nebo Systems, Inc.: Provides secure, high-speed access to Medicare through a virtual private network (VPN). Our VPN provides unrestricted access to an unlimited number of users for a flat monthly fee. Secure 3270 emulation software is required to establish connectivity which many providers already have in-house. For additional information, call , extension 261, or visit Nebo Systems, Inc. at VisionShare: Provides secure, high-speed connectivity to Medicare and other payers using a health care organization s existing Internet connection. All VisionShare services are offered at a flat monthly rate for unlimited use. For DME suppliers, access to DME CSI is available at $29.95 per month with VisionShare s secure exchange site, and is accessible using a standard Web browser. Other options include a desktop application or an enterprise server version for large multi-user environments. VisionShare services are also available for electronic claims transactions (835/837, 276/277, 997, etc.), real-time eligibility transactions (270/271), and online access to other Medicare applications, e.g., Direct Data Entry (DDE) and PPTN. Visit for a listing of connections available on a state-by-state basis. For assistance in selecting the best fit for your organization call VisionShare at or contact via at Questions to Ask when Researching Claim Status Inquiry Connectivity Options Installation: Is any special software or hardware required? How long will the installation take? Will I need help from my information technology staff? 132_0310 9

131 Chapter 13 : Electronic Data Interchange [ MARCH 2010] Ease of Use: Will the connection give users high-speed access to CSI? What is the login process? Are there separate connectivity IDs and passwords to manage? Does the vendor allow users to work remotely from a laptop? Pricing: How many CSI users require access? How often and how long do users need access to CSI? Is the pricing based on a flat rate or is it metered? Are there overage charges if you exceed a certain volume of usage? Support: What kind of support does the vendor offer? When you call, are they responsive and knowledgeable? The EDI Claim Status Inquiry Form and user manual are available on the National Government Services Web site: Go to Select Durable Medical Equipment (DME) as your Business Type Select the Claims navigation category from the dark blue menu bar Select the Electronic Data Interchange subnavigation option Note: Enrollment and support for the online CSI product is handled by National Government Services, the Jurisdiction B DME MAC. Password Reset Requests for Claim Status Inquiry National Government Services, the Jurisdiction B DME MAC, only accepts electronic password reset requests for the online CSI product. All other electronic password reset requests must go through the CEDI. Please refer to the section in this chapter titled, Common Electronic Data Interchange (CEDI) for more information. Jurisdiction B DME MAC CSI users can reset their own password when lost or forgotten. To set up the automated password reset feature and learn how to reset a CSI password, complete the easy to follow instructions in the Jurisdiction B DME MAC Claim Status Inquiry User Manual located on the National Government Services Web site: Go to Select Durable Medical Equipment (DME) as your Business Type Select the News and Publications navigation category from the dark blue menu bar Select the Manuals subnavigation option Note: If a CSI password is revoked because of too many unsuccessful attempts to log in or if it is not used within a 30-day period, contact the Jurisdiction B DME MAC EDI Help Desk at If a CSI logon ID is not accessed with a 60-day period the DME MAC CSI system access will be deactivated. Suppliers are required to complete a new EDI Claim Status Inquiry Form to regain their access. 132_

132 Chapter 13 : Electronic Data Interchange [ MARCH 2010] JURISDICTION B DME MAC EDI HELP DESK The Jurisdiction B DME MAC EDI Help Desk is available 8:00 a.m. 4:00 p.m. ET, Monday Friday. Jurisdiction B DME MAC EDI Help Desk support is also available via at Issues that can be addressed by the Jurisdiction B DME MAC EDI Help Desk include: CSI Enrollment or setup status Logon or user ID Password resets E-COMMERCE CONSULTANTS Suppliers should contact the e-commerce consultants to: discuss EDI advantages; and analyze claims submission needs. Lisa Hare Tamara Hall NATIONAL GOVERNMENT SERVICES WEB SITE More details on the information provided in this chapter can be found in the EDI section of our Web site. For additional EDI information: Go to Select Durable Medical Equipment (DME) as your Business Type Select the Claims navigation category from the dark blue menu bar Select the Electronic Data Interchange subnavigation option LISTSERV Listserv is available through the National Government Services Web site. By subscribing to the Listserv and selecting the Electronic Data Interchange option, providers/suppliers will stay informed of EDI news, changes, and updates. Select the Electronic data interchange option under the question: In addition to general Medicare updates, which specific area(s) would you like to receive updates on? 132_

133 Chapter 13 : Electronic Data Interchange [ MARCH 2010] To subscribe, go to the National Government Services Web site: Go to Select Durable Medical Equipment (DME) as your Business Type Select the News and Publications navigation category from the dark blue menu bar Select the Listserv subnavigation option Once subscribed, suppliers will receive s containing the latest, up-to-date information. 132_

134 Chapter 14: Level II HCPCS Codes and HCPCS Modifiers [DECEMBER 2009] 14 Level II HCPCS Codes and HCPCS Modifiers LEVEL II HCPCS CODES Level II of the Healthcare Common Procedure Coding System (HCPCS) is a standardized coding system that is used primarily to identify products, supplies, and services not included in the Current Procedural Terminology (CPT) codes, such as ambulance services and durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) when used outside a physician s office. Because Medicare and other insurers cover a variety of services, supplies, and equipment that are not identified by CPT codes, the HCPCS Level II codes were established for submitting claims for these items. The development and use of HCPCS Level II codes began in the 1980s. HCPCS Level II codes are also referred to as alphanumeric codes because they consist of a single alphabetical letter followed by four numeric digits, while CPT codes are identified using five numeric digits. Suppliers must use HCPCS Level II codes to identify items/services rendered to its Medicare beneficiaries when submitting claims to the durable medical equipment Medicare administrative contractor (DME MAC) for payment. National Government Services is the Jurisdiction B Durable Medical Equipment Medicare Administrative Contractor (DME MAC). One role of the DME MAC is to create and maintain local coverage determinations (LCDs), also referred to as medical policies, for certain DMEPOS items/services. Each LCD contains information vital to the supplier community in determining whether the item/service meets medical necessity guidelines. In addition, the LCDs offer HCPCS coding information as well as coding guidelines in the LCD-related article. Suppliers should visit the National Government Services Web site to view the LCDs and specific HCPCS requirements outlined therein. Suppliers may also view a HCPCS code file (non-lcd specific) on the National Government Services Web site. To view the LCDs and related HCPCS and/or HCPCS code file, go to Structure of HCPCS File Prior to utilizing the HCPCS file, suppliers should become familiar with the structure of HCPCS file, which provides an explanation of the HCPCS file table. This file is available at HCPCS Jurisdiction List The HCPCS jurisdiction list indicates whether a code should be billed to the DME MAC or the local Medicare carrier. This file is also available at Noncovered Items The following HCPCS codes will be denied as noncovered when they are submitted to the DME MAC. These items either do not meet the requirements for a benefit category processed by the DME MAC (technical denial) or are statutorily excluded for reasons other than lack of medical necessity. These 132_1209 1

135 Chapter 14: Level II HCPCS Codes and HCPCS Modifiers [ DECEMBER 2009] items may be covered under other provisions of the law (e.g., as part of institutional care in a hospital or nursing facility, as an item incident to a physician s service, etc.). However, in these circumstances, the claim would not be submitted to the DME MAC and/or would be submitted using a different code. A4210 A4261 A4335 A4554 A4490 A4495 A4500 A4510 A4554 A4565 A4575 A4627 A4670 A6000 A9190 A9270 A9300 E0191 E0220 E0230 E0231 E0232 E0238 E0241 E0242 E0243 E0244 E0245 E0246 E0270 E0273 E0274 E0315 E0625 E0700 E0746 E1300 E1355 J1055 J3520 J3535 Needle-free injection device, each Cervical cap for contraceptive use Disposable sheets and bags Disposable underpads Surgical stockings above knee length, each Surgical stockings thigh length, each Surgical stockings below knee length, each Surgical stockings full length, each Disposable underpads, all sizes, (e.g., chux s) Slings Topical hyperbaric oxygen chamber, disposable Spacer, bag or reservoir, with or without mask, for use with metered dose inhaler Automatic blood pressure monitor Noncontact wound warming wound cover for use with the noncontact wound warming device and warming card Personal comfort item Noncovered item or service Exercise equipment Heel or elbow protector, each Hot water bottle Cap or collar Noncontact wound warming device Warming card for use with the noncontact wound warming device and noncontact wound warming wound cover Nonelectric heat pad, moist Bath tub wall rail, each Bath tub rail, floor base Toilet rail, each Raised toilet seat Tub stool or bench Transfer tub rail attachment Hospital bed, institutional type includes: oscillating, circulating, and stryker frame with mattress Bed board Over-bed table Bed accessories and boards or tables, any type Patient lift, kartop, bathroom, or toilet Safety equipment (e.g., belt, harness or vest) Biofeedback therapy for the treatment of urinary incontinence Whirlpool, nonportable (overtub type) Stand rack Injection, medroxyprogesterone acetate for contraceptive use, 150 mg Edetate disodium, per 150 mg Drug administered through a metered dose inhaler 132_1209 2

136 Chapter 14: Level II HCPCS Codes and HCPCS Modifiers [ DECEMBER 2009] J3570 J7300 J8499 L3215 L3216 L3217 L3219 L3221 L3222 Q0144 V2025 V2600 V2610 V2615 V2760 V5008 V5010 V5011 V5014 V5020 V5030 V5299 V5336 Laetrile, amygdalin, vitamin b17 Intrauterine copper contraceptive Prescription drug, oral, nonchemotherapeutic, NOS Orthopedic footwear, ladies shoes, oxford Orthopedic footwear, ladies shoes, depth inlay Orthopedic footwear, ladies shoes, hightop, depth inlay Orthopedic footwear, mens shoes, oxford Orthopedic footwear, mens shoes, depth inlay Orthopedic footwear, mens shoes, hightop, depth inlay Azithromycin dihydrate, oral, capsules/powder, 1 gram Deluxe frame Hand held low vision aids and other nonspectacle mounted aids Single lens spectacle mounted low vision aids Telescopic and other compound lens system, including distance vision telescopic, near vision telescopes, and compound microscopic lens system Scratch resistant coating, per lens Hearing screening Assessment for hearing aid Fitting/orientation/checking of hearing aid Repair/modification of a hearing aid Conformity evaluation Hearing aids Hearing devices Repair/modification of augmentative communicative system or device (excludes adaptive hearing aid) HCPCS MODIFIERS In some instances, insurers instruct providers that a HCPCS code must be accompanied by a code modifier to provide additional information regarding the service or item identified by the HCPCS code. Modifiers are used when the information provided by a HCPCS code descriptor needs to be supplemented to identify specific circumstances that may apply to an item or service. Following is a list of HCPCS modifiers. The fourth column (01) of the HCPCS modifier chart indicates the Medicare coverage status for the modifier. The codes and descriptions for these alpha characters include: D I G M S C Special coverage instructions apply Not payable by Medicare (no grace period) Not payable by Medicare (90-day grace period) Noncovered by Medicare Noncovered by Medicare statute Carrier judgment Note: Modifiers marked with an asterisk ( * ) have additional information located in the section that follows the chart below. 132_1209 3

137 Chapter 14: Level II HCPCS Codes and HCPCS Modifiers [DECEMBER 2009] HCPCS Modifier Action Code Long Description 01 Code Add Date Action Effective Date 99* Multiple modifiers A1 Dressing for one wound C A2 Dressing for two wounds C A3 Dressing for three wounds C A4 Dressing for four wounds C A5 Dressing for five wounds C A6 Dressing for six wounds C A7 Dressing for seven wounds C A8 Dressing for eight wounds C A9 Dressing for nine or more wounds C AU Item furnished in conjunction with a C urological, ostomy, or tracheostomy supply AV Item furnished in conjunction with a C prosthetic device, prosthetic, or orthotic AW Item furnished in conjunction with a C surgical dressing AX Item furnished in conjunction with C dialysis services BA Item furnished in conjunction with C parenteral enteral nutrition (PEN) services BO Orally administered nutrition, not by C feeding tube BP* The beneficiary has been informed of C the purchase and rental options and has elected to purchase the item BR* The beneficiary has been informed of C the purchase and rental options and has elected to rent the item BU* The beneficiary has been informed of C the purchase and rental options and after 30 days has not informed the supplier of his/her decision CC Procedure code change (use CC when C the procedure code submitted was changed either for administrative reasons or because an incorrect code was filed) CR Catastrophe/disaster related C EA ESA, anemia, chemo-induced EB ESA, anemia, radio-induced EC ESA, anemia, non-chemo/radio EJ Subsequent claims for a defined D course of therapy, e.g., Epotein Alfa (EPO), sodium hyaluronate, infliximab EM Emergency reserve supply (for D end-stage renal disease [ESRD] benefit only) EY No physician or other licensed health care provider order for this item or service C Term Date 132_1209 4

138 Chapter 14: Level II HCPCS Codes and HCPCS Modifiers [DECEMBER 2009] HCPCS Modifier Action Code Long Description 01 Code Add Date Action Effective Date FB C Item provided without cost to I provider, supplier, or practitioner, or credit received for replaced device (examples, but not limited to covered under warranty, replaced due to defect, free samples) GA Waiver of liability statement on file C GB Claim being resubmitted for payment C because it is no longer covered under a global payment demonstration GK Actual item/service ordered by C physician, item associated with GA or GZ modifier GL Medically unnecessary upgrade provided C instead of standard item, no charge, no advance beneficiary notice (ABN) GS C Dosage of EPO or Darbepoietin Alfa D has been reduced and maintained in response to hematocrit or hemoglobulin level GW* Service not related to the hospice patient s terminal condition GY Item or service statutorily excluded or S does not meet the definition of any Medicare benefit GZ Item or service expected to be denied M as not reasonable and necessary JA A Administered intravenously C JB A Administered subcutaneously C K0 Lower extremity prosthesis functional C level 0 does not have the ability or potential to ambulate or transfer safely with or without assistance and a prosthesis does not enhance their quality of life or mobility K1 Lower extremity prosthesis functional C level 1 has the ability or potential to use a prosthesis for transfers or ambulation on level surfaces at fixed cadence. Typical of the limited and unlimited household ambulator. K2 Lower extremity prosthesis functional C level 2 has the ability or potential for ambulation with the ability to traverse low level environmental barriers such as curbs, stairs, or uneven surfaces. Typical of the limited community ambulatory. K3 Lower extremity prosthesis functional level 3 has the ability or potential for ambulation with variable cadence. Typical of the community ambulator who has the ability to transverse most environmental barriers and may have vocational, therapeutic, or exercise activity that demands prosthetic utilization beyond simple locomotion. C Term Date 132_1209 5

139 Chapter 14: Level II HCPCS Codes and HCPCS Modifiers [DECEMBER 2009] HCPCS Modifier Action Code Long Description 01 Code Add Date Action Effective Date K4 Lower extremity prosthesis functional C level 4 has the ability or potential for prosthetic ambulation that exceeds the basic ambulation skills, exhibiting high impact, stress, or energy levels, typical of the prosthetic demands of the child, active adult. KA Add on option/accessory for wheelchair C KB* Beneficiary requested upgrade for C ABN, more than four modifiers identified on claim KC Replacement of special power C wheelchair interface KD Drug or biological infused through DME C KE Bid under round one of the DMEPOS competitive bidding program for use with noncompetitive bid base equipment KF* Item designated by FDA as Class III C device KG DMEPOS item subject to DMEPOS competitive bidding program number 1 KH DMEPOS item, initial claim, purchase, C or first month rental KI DMEPOS item, second or third month C rental KJ DMEPOS item, parenteral enteral C nutrition (PEN) pump or capped rental, months four to fifteen KK DMEPOS item subject to DMEPOS competitive bidding program number 2 KL DMEPOS item, delivered via mail C KM Replacement of facial prosthesis C including new impression/moulage KN Replacement of facial prosthesis C using previous master model KO Single drug unit dose formulation C KP First drug of a multiple drug unit dose C formulation KQ Second or subsequent drug of a C multiple drug unit dose formulation KR Rental item, billing for partial month C KS Glucose monitor supply for diabetic D beneficiary not treated with insulin KT Beneficiary resides in a competitive bidding area and travels outside that competitive bidding area and receives a competitive bid item KU DMEPOS item subject to DMEPOS competitive bidding program number 3 KV DMEPOS item subject to competitive bidding program that is furnished as part of a professional service KW DMEPOS item subject to DMEPOS competitive bidding program number 4 KX Specific required documentation on file C Term Date 132_1209 6

140 Chapter 14: Level II HCPCS Codes and HCPCS Modifiers [DECEMBER 2009] HCPCS Modifier Action Code Long Description 01 Code Add Date Action Effective Date Term Date KY DMEPOS item subject to DMEPOS competitive bidding program number 5 LL Lease/rental (use the LL modifier C when DME equipment rental is to be applied against the purchase price) LR Laboratory round trip C LS FDA-monitored intraocular lens implant D LT Left side (used to identify procedures C performed on the left side of the body) M2 A Medicare secondary payer (MSP) C MS Six-month maintenance and servicing C fee for reasonable and necessary parts and labor which are not covered under any manufacturer or supplier warranty NR New when rented (use the NR modifier C when DME which was new at the time of rental is subsequently purchased) NU New equipment C PL Progressive addition lenses C QA FDA investigational device exemption C QE Prescribed amount of oxygen is less C than 1 liter per minute (lpm) QF Prescribed amount of oxygen exceeds C liters per minute (lpm) and portable oxygen is prescribed QG Prescribed amount of oxygen is C greater than 4 liters per minute(lpm) QH Oxygen conserving device is being C used with an oxygen delivery system Services/items provided to a prisoner D or patient in state or local custody, however the state or local government, as applicable, meets the requirements in 42 cfr (b) QR Item or service provided in a D Medicare specified study QV Item or service provided as routine care D in a Medicare qualifying clinical trial RA Replacement of a DME item C RB Replacement of a part of DME furnished as part of a repair C RP* Replacement and repair RP may be C used to indicate replacement of DME, orthotic and prosthetic devices which have been in use for sometime. The claim shows the code for the part, followed by the RP modifier and the charge for the part. RR Rental (use the RR modifier when C DME is to be rented) RT Right side (used to identify C procedures performed on the right side of the body) UE Used durable medical equipment C VP Aphakic patient C _1209 7

141 Chapter 14: Level II HCPCS Codes and HCPCS Modifiers [DECEMBER 2009] Additional Modifier Information Modifiers BR, BP, BU Parenteral and enteral nutrition (PEN) pumps require the usage of modifiers BR, BP, and BU to identify the option the beneficiary has requested. Suppliers must give Medicare beneficiaries the option to either purchase (BP) or rent (BR) their PEN pump at the time the item is first furnished. The beneficiary also has the option of purchasing a PEN pump any time during the rental period. If a beneficiary opts to purchase the PEN pump at the time the pump was furnished, the supplier would bill the DME MAC with the pricing modifier (modifier NU or UE), modifier BP, and any additional modifiers that are required per the LCD. If the beneficiary opts to rent the PEN pump at the time the pump was furnished, the supplier would bill the DME MAC with the pricing modifier (i.e., modifier RR), modifier BR, and any additional modifiers required per the LCD. BR BP BU If the beneficiary decides to continue rental, Medicare will pay 15 months of rental payments. If the beneficiary decides to purchase the pump, Medicare will pay 13 months of rental payments. If the beneficiary is undecided (the supplier has not received notification from the beneficiary of their decision). If the beneficiary decides to purchase the pump after rental payments have been paid, the supplier would bill modifier BP in the month the beneficiary has requested to purchase the item. Note: For additional details regarding payment for PEN, please reference the CMS Internet-Only Manual (IOM) Publication , Medicare Claims Processing Manual, Chapter 20, Section (Payment for Parenteral and Enteral Pumps). Power wheelchairs require the usage of modifiers BR and BP. Suppliers must give beneficiaries that are entitled to power wheelchairs the option of purchasing (BP) or renting (BR) the item when first furnished. This notification must be submitted to the DME MAC on the first claim. Modifier GW Any covered Medicare services not related to the treatment of the patient s terminal condition for which hospice care was elected, and which are furnished during a hospice election period, may be billed by the supplier for nonhospice Medicare payment. These services are coded with modifier GW (Service not related to the hospice patient s terminal condition) when submitted to the DME MAC. Claims will be processed in the normal manner for coverage and payment determinations. If warranted, the DME MAC may conduct prepayment development or postpayment review to validate that services billed with the GW modifier are not related to the patient's terminal condition. Modifier KE Modifier KE is effective for claims with dates of service on or after January 1, Modifier KE is used to identify an accessory code that can be dually billed with either a competitive or noncompetitive bid base item. Modifier KE must be appended to the accessory code if it is billed with a noncompetitively bid base item. Modifier KE should be reported on the claim line immediately following the primary pricing modifier (NU, RR, or UE) followed by any additional modifiers. 132_1209 8

142 Chapter 14: Level II HCPCS Codes and HCPCS Modifiers [DECEMBER 2009] Suppliers must use modifier KE to identify when the same accessory HCPCS code can be furnished in multiple competitive and noncompetitive bidding product categories. For example, HCPCS code E0981 (Wheelchair accessory, seat upholstery, replacement only, each) can be used with both competitively bid standard and complex rehabilitative power wheelchairs (K0813 K0829 and K0835 K0864), as well as with noncompetitively bid manual wheelchairs (K0001 K0009) or a miscellaneous power wheelchair (K0898). Modifier KE would be appended to the E0981 if it is an accessory for a HCPCS code K0001 (Manual wheelchair) the noncompetitively bid base item. Proper usage of modifier KE will ensure appropriate payment amounts for those items and situations listed. Failure to use modifier KE as appropriate will result in a 9.5 percent reduction in payment for these items. Note: Suppliers should not use the KE modifier on any claims for items that were included under Round 1 of competitive bidding such as an accessory for a standard or complex rehabilitative power wheelchair. Standard or Complex Rehabilitative Power Mobility Device Accessories When billing a Column I accessory code for use with a base code in Column II, do not use modifier KE. When billing a Column I accessory code for use with a base code in Column III, use modifier KE. Column I: Accessory E0950, E0951, E0952, E0955, E0956, E0957, E0960, E0973, E0978, E0981, E0982, E0990, E0995, E1016, E1020, E1028, E2208, E2209, E2210, E2361, E2363, E2365, E2366, E2367, E2368, E2369, E2370, E2371, E2381, E2382, E2383, E2384, E2385, E2386, E2387, E2388, E2389, E2390, E2391, E2392, E2394, E2395, E2396, E2601, E2602, E2603, E2604, E2605, E2606, E2607, E2608, E2611, E2612, E2613, E2614, E2615, E2616, E2619, E2620, E2621, K0015, K0017, K0018, K0019, K0020, K0037, K0038, K0039, K0040, K0041, K0042, K0043, K0044, K0045, K0046, K0047, K0050, K0051, K0052, K0053, K0098, K0195, K0733, K0734, K0735, K0736, K0737 Column II: Power Mobility Device Base (no Modifier KE) K0813, K0814, K0815, K0816, K0820, K0821, K0822, K0823, K0824, K0825, K0826, K0827, K0828, K0829, K0835, K0836, K0837, K0838, K0839, K0840, K0841, K0842, K0843, K0848, K0849, K0850, K0851, K0852, K0853, K0854, K0855, K0856, K0857, K0857, K0858, K0859, K0860, K0861, K0862, K0863, K0864 Column III: Wheelchair Base (Modifier KE) K0001, K0002, K0003, K0004, K0005, K0006, K0009, K0830, K0831, K0898, E1050, E1060, E1070, E1083, E1084, E1085, E1086, E1087, E1088, E1089, E1090, E1092, E1093, E1100, E1110, E1130, E1140, E1150, E1160, E1161, E1170, E1171, E1172, E1180, E1190, E1195, E1200, E1220, E1221, E1222, E1223, E1224, E1225, E1226, E1227, E1228, E1229, E1231, E1232, E1233, E1234, E1235, E1236, E1237, E1238, E1239, E1240, E1250, E1260, E1270, E1280, E1285, E1290, E _1209 9

143 Chapter 14: Level II HCPCS Codes and HCPCS Modifiers [DECEMBER 2009] Complex Rehabilitative Power Mobility Device Only Accessories When billing a Column I accessory code used with a base code in Column II, do not use modifier KE. When billing a Column I accessory code used with a base code in Column III, use modifier KE. Column I: Accessory E1002, E1003, E1004, E1005, E1006, E1007, E1008, E1010, E1029, E1030, E2310, E2311, E2321, E2322, E2323, E2324, E2325, E2326, E2327, E2328, E2329, E2330, E2351, E2373 KC*, E2374, E2375, E2376, E2377 Column II: Complex Rehab Base (no Modifier KE) K0835, K0836, K0837, K0838, K0839, K0840, K0841, K0842, K0843, K0848, K0849, K0850, K0851, K0852, K0853, K0854, K0855, K0856, K0857, K0857, K0858, K0859, K0860, K0861, K0862, K0863, K0864 Column III: Wheelchair Base (Modifier KE) K0001, K0002, K0003, K0004, K0005, K0006, K0009, K0830, K0831, K0898, E1050, E1060, E1070, E1083, E1084, E1085, E1086, E1087, E1088, E1089, E1090, E1092, E1093, E1100, E1110, E1130, E1140, E1150, E1160, E1161, E1170, E1171, E1172, E1180, E1190, E1195, E1200, E1220, E1221, E1222, E1223, E1224, E1225, E1226, E1227, E1228, E1229, E1231, E1232, E1233, E1234, E1235, E1236, E1237, E1238, E1239, E1240, E1250, E1260, E1270, E1280, E1285, E1290, E1295 * When billing E2373 KC for use with a Column III wheelchair, use modifier KE in place of the KC pricing modifier. IV Pole When billing an intravenous (IV) pole for use with an enteral code in Column II, do not use the KE modifier; continue to use modifier BA. When billing the IV pole for use with a parenteral code in Column III, use modifier KE in place of modifier BA. Column II: Billed with Enteral Column I: IV Pole Nutrition (no KE only Modifier BA) E0776 BA B4149, B4150, B4152, B4153, B4154, B4155 Column III: Billed with Parenteral Nutrition (Modifier KE) B4164, B4168, B4176, B4178, B4180, B4185, B4189, B4193, B4197, B4199, B4216, B4220, B4222, B4224, B5000, B5100, B5200 Canister used with Negative Pressure Wound Therapy Pumps When billing A7000 for use with a negative pressure wound therapy pump in Column II, do not use the KE modifier. When billing A7000 for use with a respiratory or gastric suction pump code in Column III, use modifier KE. Column I: Canister Column II: Billed with NPWT (No KE Modifier) A7000 E2402 E0600, E2000 Column III: Billed with Suction Pumps (KE Modifier) 132_

144 Chapter 14: Level II HCPCS Codes and HCPCS Modifiers [DECEMBER 2009] Walker Replacement Handgrips and Tips When billing replacement handgrips and tips for use with a walker code in Column II, do not use modifier KE. When billing replacement handgrips and tips for use with a cane or crutch code in Column III, use modifier KE. Column I: Handgrips and Tips Column II: Billed with Walkers (no KE only Modifier BA) A4636, A4637 E0130, E0135, E0140, E0141, E0143, E0144, E0147, E0148, E0149 Column III: Billed with Canes or Crutches (Modifier KE) E0100, E0105, E0110, E1111, E1112, E0114, E0116, E0117, E0118 Modifier KF According to the Centers for Medicare & Medicaid Services (CMS) Internet-Only Manual (IOM) Publication , Medicare Benefit Integrity Manual, Chapter 14, Section 20, FDA Approval Investigational Device Exemptions (IDE), the Food and Drug Administration (FDA) assigns a special identifier number that corresponds to each device granted an investigational device exemption. Under the Food, Drug, and Cosmetic Act, devices are categorized into three classes: Class I devices are the least regulated. These are devices that the FDA has determined need to be subject only to general controls, such as good manufacturing practice regulations. Class II devices are those which, in addition to general controls, require special controls such as performance standards or postmarket surveillance, to assure safety and effectiveness. Class III devices are those which cannot be classified into class I or class II because insufficient information exists to determine that either special or general controls, would provide reasonable assurance of safety and effectiveness. Class III devices require premarket approval. The HCPCS codes for DME designated as class III devices by the FDA are identified on the DMEPOS fee schedule by the presence of modifier KF. To determine if a device that is being billed is considered a class III, go to the FDA Web site at Modifier KB Modifier KB should be utilized by the supplier when the beneficiary has requested an upgrade, a properly executed Advance Beneficiary Notice of Noncoverage (ABN) is on file, and there will be more than four modifiers reported with the appropriate HCPCS code. The supplier should report modifier KB in the 4th position of Item 24d and any remaining modifiers should be placed in the Note (NTE) segment for electronic claim submission or Item 19 on the CMS-1500 claim form. Example: The supplier is submitting a claim with modifiers RR, KH, BR, LT, KX, and GK. The supplier should place modifiers RR, KH, BR, and KB on the claim line, then report the additional modifiers LT, KX, and GK in the NTE segment for electronic claim submission, or Item 19 of the CMS-1500 claim form. 132_

145 Chapter 14: Level II HCPCS Codes and HCPCS Modifiers [DECEMBER 2009] Modifier 99 When submitting a claim which requires more than four modifiers, modifier 99 must be reported. Suppliers should place modifier 99 in the fourth position of Item 24d. Suppliers are required to place all modifiers in the NTE segment for electronic claim submission, or Item 19 on the CMS-1500 claim form. Example: The supplier is submitting a claim with modifiers RR, KH, BR, LT, and KX. The supplier should place modifiers RR, KH, BR, and 99 on the claim line, then report modifiers RR, KH, BR, LT, and KX in the NTE segment for electronic claim submission, or Item 19 of the CMS-1500 claim form. Modifier RA Modifier RA is effective for claims with dates of service January 1, 2009 and after. Modifier RA is reported on DMEPOS claims to denote instances where an item is furnished as a replacement for the same item which has been lost, stolen or irreparably damaged, or when the equipment is replaced because it has been in continuous use by the patient for the equipment s reasonable useful lifetime. Modifier RB Modifier RB is effective for claims with dates of service January 1, 2009 and after. Modifier RB should be used on a DMEPOS claim to indicate replacement parts of a DMEPOS item (base equipment/device) furnished as part of the service of repairing the DMEPOS item (base equipment/device). Modifier RP Modifier RP is used on claims with dates of service prior to January 1, 2009, to identify items that are replaced or repaired. Modifier RP was discontinued effective December 31, 2008, and replaced by two new modifiers (RA and RB) to clearly distinguish between the repair and replacement of an item. Additional billing information is located in the DMEPOS Payment Categories chapter of this manual. THE PRICING, DATA ANALYSIS, AND CODING CONTRACTOR The Pricing, Data Analysis, and Coding (PDAC) Contractor is a national entity that provides services under contract for CMS. Noridian Administrative Services, LLC has been contracted by the CMS to serve as the PDAC. The PDAC provides data analysis support to the four DME MACs, and guidance to manufacturers and suppliers on the proper use of the HCPCS, the means by which DMEPOS services are identified for Medicare billing. Additionally, the PDAC performs a variety of national pricing functions for DMEPOS services, assists CMS with the DMEPOS fee schedules, and analyzes DMEPOS fees to identify unreasonable or excessive reimbursement amounts. Manufacturers and suppliers should contact the PDAC HCPCS Unit to obtain proper billing codes for DMEPOS items. In addition to coding assistance, manufacturers and suppliers may also obtain fee schedule prices. 132_

146 Chapter 14: Level II HCPCS Codes and HCPCS Modifiers [DECEMBER 2009] A function of the PDAC is to help determine the appropriate HCPCS code to use when submitting claims to Medicare. A HCPCS code identifies the DMEPOS being billed. Contact Information PDAC P.O. Box 6757 Fargo, North Dakota Telephone: Hours Available: 8:30 a.m. 4:00 p.m. central time (CT) Additional information is available on the PDAC Web site at Durable Medical Equipment Coding System The Durable Medical Equipment Coding System (DMECS) provides HCPCS coding assistance and national pricing information via searches for: HCPCS Level II codes and modifiers DMEPOS products, and CMS national fee schedules The DMECS is available through the PDAC (Noridian Administrative Services) and provides coding assistance to the public that is reflective of DME MAC policies and guidelines. DMECS is designed to assist the public with the coding of DMEPOS products for submission to the DME MAC. DMECS currently has four interactive components that work together to provide HCPCS coding information. 1) Search by HCPCS Information 2) Search for Modifier 3) Search for Fee Schedule 4) Search DMEPOS Product Classification List DMECS is available on the PDAC Web site at 132_

147 Chapter 15 : DMEPOS Payment Categories [ MARCH 2010] 15 DMEPOS Payment Categories The durable medical equipment (DME) fee schedules include items of DME as well as supplies needed to use the DME and are divided into the following categories: Inexpensive or other routinely purchased DME Items requiring frequent and substantial servicing Customized items Other prosthetic and orthotic devices Parenteral and enteral nutrition (PEN) (effective January 1, 2002) Therapeutic shoes and inserts (effective January 1, 2005) Surgical dressings Home dialysis supplies Capped rental items Oxygen and oxygen equipment INEXPENSIVE OR OTHER ROUTINELY PURCHASED DME This is defined as equipment whose purchase price does not exceed $150, or equipment that is acquired at least 75 percent of the time by purchase. Equipment in this category may be purchased or rented. Purchases are reimbursed in a lump sum, minus any previous rental payments. All claims for purchase must specify whether the equipment is new (NU) or used (UE), using the appropriate modifier. If the equipment is rented, monthly rental payments will be made as long as the item is supplied, or until the purchase price is reached. Modifiers RR NU UE Rental Purchase of new equipment. Only use if new equipment was delivered Purchase of used equipment All claims for purchase must specify whether the equipment is new (NU), used (UE) or rented (RR) with the appropriate modifiers. For Medicare payment purposes, used (UE) equipment is defined as any equipment that has been purchased previously, rented to another patient, or has been used for trial periods or demonstrative purposes, prior to the current purchase transaction. Some examples of equipment which may be purchased as a used piece of equipment are power wheelchairs, canes, and walkers. If a beneficiary elects to rent new (NU) equipment and subsequently purchases the equipment, the payment amount for the purchase will be a combined total of previous rental payments and the purchased amount of the equipment to equal the fee schedule of comparable new equipment. 132_0310 1

148 Chapter 15 : DMEPOS Payment Categories [ MARCH 2010] TRANSCUTANEOUS ELECTRICAL NERVE STIMULATORS Transcutaneous electrical nerve stimulators (TENS) fall under the category of Inexpensive or Routinely Purchased Items. For TENS, modifier RR must be entered on the claim when rented for a patient with acute postoperative pain or as a trial for patients with chronic pain. For claims submitted with dates of service on or after January 1, 2007, a Certificate of Medical Necessity (CMN) for a TENS rental will not be required. A CMN is only required for a TENS purchase for claims with dates of service on or after January 1, If, after the trial period, the physician determines it would be of benefit for the patient to purchase the TENS unit, a claim for purchase may be submitted. Payment for purchase is made in a lump sum. Rental payments are not deducted from the purchase allowance. ITEMS REQUIRING FREQUENT AND SUBSTANTIAL SERVICING Equipment in this category is paid on a rental basis only. Payment is based on the monthly fee schedule amounts until the medical necessity ends. No payment is made for the purchase of equipment, maintenance and servicing, or for replacement of items in this category. Supplies and accessories are not allowed separately. Modifiers RR Rental When billing for FS items, the rental (RR) modifier must be used in addition to any policy specific modifiers. CUSTOMIZED ITEMS Coverage and allowable amounts for custom equipment will be decided by an individual evaluation based on medical indication. The beneficiary s physician must prescribe the customized equipment and provide information regarding the patient s physical and medical status to warrant the need for the equipment. Payment with respect to a covered item that is uniquely constructed or substantially modified to meet the specific needs of an individual patient should be made in a lump-sum amount. The payment amount for the purchase of a customized item is based upon the DME MACs individual consideration for that item. Suppliers must submit the following documentation for these items for coverage to be considered: Detailed description of the item Description of feature(s) that make this item unique 132_0310 2

149 Chapter 15 : DMEPOS Payment Categories [ MARCH 2010] Acquisition or production cost of the item (i.e., line item cost of materials and/or labor) Manufacturer name, product name, and product number The date of service for custom-made equipment is the actual date the beneficiary receives the item. Do not use the date the item was ordered when billing Medicare. Modifiers NU RT LT New equipment Right side (used to identify procedures performed on the right side of the body) Left side (used to identify procedures performed on the right side of the body) OTHER PROSTHETIC AND ORTHOTIC DEVICES These items consist of all prosthetic and orthotic devices excluding: Items requiring frequent and substantial servicing Certain customized items Transcutaneous electrical nerve stimulators (TENS) Parenteral/enteral nutritional supplies and equipment, and Intraocular lenses Other than these exceptions, prosthetic and orthotic devices will be paid on a lump-sum purchase basis. Informational Modifiers LT RT Left side Right side When billing for other prosthetic and orthotic devices, the supplier is required to code the claim indicating which side of the body the prosthetic or orthotic device is being applied. In most cases, the medical policies for prosthetic and orthotic devices require the submission of the left (LT) and/or right (RT) modifier(s). When bilateral items are provided on the same date of service, the supplier must append both the LT and RT modifier on the same claim line and indicate two units of service. Failure to append the required modifier will result in a CO-16 denial due to the lack of information required to adjudicate the claim. Medical policies requiring the use of the modifiers LT and/or RT include, but are not limited to the following: Eye Prosthesis Facial Prosthesis External Breast Prosthesis Lower Limb Prosthesis Refractive Lens Ankle-Foot/Knee-Ankle-Foot Orthoses 132_0310 3

150 Chapter 15 : DMEPOS Payment Categories [ MARCH 2010] Knee Orthosis Orthopedic Footwear Policy Specific Modifiers AU AV Item furnished in conjunction with an ostomy, tracheostomy, or urological supply Item furnished in conjunction with a prosthetic device, prosthetic, or orthotic Ostomy, tracheostomy and urological supplies are also covered under the prosthetic benefit. When tape codes (A4450, A4452) and adhesive (A5120) are used in conjunction with ostomy, tracheostomy, or urological supplies, they must be coded with modifier AU. In addition to the tape and adhesive codes (A4450, A4452, and A5120, HCPCS A4217 for sterile saline used in conjunction with urological supplies must also be coded with modifier AU. The LCDs for ostomy, tracheostomy or urological supplies provides specific instructions for the proper use of modifier AU. Failure to submit modifier AU with codes A4217, A4450, and A4452 will result in a noncovered denial (PR-96) of your claim(s). Payment of codes A4217, A4450, and A4452 is based on the presence of modifier AU. Modifier AV is required when tape (A4450, A4452) and skin barriers (A5120) are used with a facial prosthesis. Claims for tape and adhesive (A4450, A4452, A5120) that are billed without an AV modifier or another modifier indicating coverage under a different policy will be denied as noncovered. (PR-96) PARENTERAL AND ENTERAL NUTRITION PUMPS Parenteral and enteral nutrition (PEN) pumps are covered under the provisions of the prosthetic benefit. However, payment policies for these pumps generally follow the rules for capped rental items. The beneficiary has the option of either purchasing or renting the pump from the supplier. The DME MAC will make no more than 15 rental payments. The beneficiary has the option of purchasing a PEN pump with the initial claim or at any time during the rental period. However, PEN pump suppliers must notify the beneficiary of the option to purchase the pump with the initial claim. If the beneficiary decides to purchase the pump after rental payments have been paid, the purchase allowance will be equal to the used purchase allowance, minus the amount previously allowed for the rentals. Suppliers will also need to include the appropriate pricing modifier when submitting the claims to Medicare. If the beneficiary chooses to rent the item, suppliers should append modifier RR to the initial claim and subsequent claims. If the beneficiary chooses to purchase the item, modifier NU should be appended to the initial claim. The 25 percent rental allowance reduction for months 4 15 does not apply to PEN pumps. If the beneficiary chooses to rent the pump to the 15-month rental limit, the supplier is entitled to periodic maintenance and servicing payments. Necessary maintenance and servicing of pumps may include repairs and extensive maintenance that involves the breaking down of sealed components, or performing tests that require specialized testing equipment not available to the beneficiary or nursing home. The DME MAC will pay only for actual incidents of maintenance, servicing, or replacements. For 132_0310 4

151 Chapter 15 : DMEPOS Payment Categories [ MARCH 2010] enteral pumps, the DME MAC pays no more than half the rental payment every six months, beginning six months after the last rental period. For parenteral pumps, the DME MAC pays no more than half the rental payment every three months, beginning three months after the last rental period for the pump. The supplier should keep written proof of maintenance and servicing of the pump on file. Claims for replacement of parenteral/enteral pumps purchased more than eight years ago will be considered for payment. Modifier MS (Maintenance and servicing) is used in this category. Modifiers NU RR UE BR BP BU KH KI KJ BA BO EY New DME Rented DME Used DME If the beneficiary decides to continue rental, Medicare will pay 15 months of rental payments If the beneficiary decides to purchase the pump, Medicare will pay 13 months of rental payments If the beneficiary is undecided (the supplier has not received notification from the beneficiary of their decision 30 days past notification of option) DMEPOS item, initial claim, purchase or first month rental DMEPOS item, second or third month rental DMEPOS item, parenteral enteral nutrition (PEN) pump or capped rental, months four to thirteen (for capped rental periods beginning or after 01/01/2006) or fifteen (for capped rental periods beginning prior to 01/01/2006) Items furnished in conjunction with parenteral enteral nutrition (PEN) services Orally administered nutrition, not by feeding tube No physician or other licensed health care provider order for this item or service Pricing Modifiers RR, NU, UE Suppliers must include the appropriate pricing modifier when submitting the claims for PEN pumps. Pricing modifiers are used to define the appropriate fee schedule allowance for the pump. In cases where more than one modifier is required on the claim, the pricing modifier must be placed first, immediately following the HCPCS code and then all subsequent modifiers may follow. If the beneficiary chooses to rent the item, suppliers should append modifier RR to the initial claim and subsequent claims. If the beneficiary chooses to purchase the item, modifier NU should be appended to the initial claim. If a used pump is purchased, the supplier uses the modifier UE. Rental Modifiers BR, BU, BP Suppliers must give Medicare beneficiaries the option to either purchase (BP) or rent (BR) their PEN pump at the time the item is first furnished. The beneficiary also has the option of purchasing a PEN pump any time during the rental period. Use of modifiers BR, BP, and BU is required to identify the option the beneficiary has requested. Because suppliers are required to give Medicare beneficiaries the option to purchase or rent their PEN pump at the time the pump is initially provided, one of these modifiers should be included on the initial claim for the PEN pump to notify Medicare of the beneficiary s choice. If modifier BP, BR, or BU is not provided on the initial claim, the supplier may include it on a subsequent claim; however, it must be received no later than the 10th month. If one of these modifiers is not received on or before the 10th month, the claim for the 10th month rental will be denied. This type of denial is can be 132_0310 5

152 Chapter 15 : DMEPOS Payment Categories [ MARCH 2010] appealed. Once the claim with a BP, BR, or BU modifier has been processed, use of those modifiers on subsequent claims is not necessary except where the beneficiary was initially undecided or chose to rent the pump, then later decided to purchase the pump. Note: When billing for PEN pumps, the supplier must append all other applicable modifiers in addition to BP, BR, or BU (i.e., pricing modifiers RR, NU, and UE; capped rental modifiers KH, KI, KJ; and any other applicable modifiers). If a beneficiary opts to purchase the PEN pump at the time the pump was furnished, the supplier may submit the claim with the pricing modifier NU or UE, modifier BP, and any additional modifiers that are required. If billed in this manner, Medicare will issue a lump-sum reimbursement for the pump. If the beneficiary opts to rent the PEN pump or is undecided at the time the pump was furnished, the supplier should submit monthly claims with the pricing modifier RR, modifier BR or BU, and any additional modifiers required. Medicare will make up to 15 monthly rental payments. If the beneficiary decides to purchase the pump after rental payments have been made, the supplier may submit the claim with pricing modifier UE, and modifier BP in the month the beneficiary has requested to purchase the item. In this situation, Medicare will calculate a lump-sum payment. Refer to the Sample Medicare Capped Rental and Inexpensive or Routinely Purchased Items Notification letter for services on or after January 1, 2006 at the end of this chapter. Rental Modifiers KH, KI, KJ Suppliers will need to include the appropriate rental modifier (KH, KI, or KJ) with each claim for the PEN pump. KH KI KJ DMEPOS item, initial claim, purchase, or first month rental DMEPOS item, second or third month rental DMEPOS item, parenteral enteral nutrition (PEN) pump or capped rental, months four to thirteen (for capped rental periods beginning or after 01/01/2006), or fifteen (for capped rental periods beginning prior to 01/01/2006) Policy Specific Modifiers BA, BO Per the LCD for Enteral and Parenteral Nutrition, when an IV pole (E0776) is used for enteral nutrition administered by gravity or a pump, or in conjunction with parenteral nutrition, the BA modifier should be added to the code. Code E0776 is the only code with which modifier BA may be used. When enteral nutrients (B4149 B4162) are administered by mouth, modifier BO must be added to the code. The claim line will be denied as statutorily noncovered, no benefit category. An ABN is not required since this is not a medical necessity denial. PEN Modifier Examples (1) If the beneficiary opts to purchase the pump at the time the supplier initially provided the item, the following modifiers must be appended to the claim line: B9002NUBPKH. 132_0310 6

153 Chapter 15 : DMEPOS Payment Categories [ MARCH 2010] (2) If the beneficiary opts to rent the pump at the time the supplier initially provided the item, the following modifiers must be appended to the claim line: B9002RRBRKH. Note: Subsequent claims for a rental item would include modifier RR and either the modifier KI for months two and three, or modifier KJ for the remaining rental months. The 25 percent rental allowance reduction for months 4 15 does not apply to PEN pumps. Note: For additional details regarding payment for PEN, please reference the Centers for Medicare & Medicaid Services (CMS) Internet-Only Manual (IOM) Publication , Medicare Claims Processing Manual, Chapter 20, Section , Payment for Parenteral and Enteral Pumps. THERAPEUTIC SHOES AND INSERTS Therapeutic shoes for diabetics are not DME and are not considered DME nor orthotics, but a separate category of coverage under Medicare Part B. Coverage of therapeutic shoes (depth or custom-molded) along with inserts for individuals with diabetes is available as of May 1, These diabetic shoes are covered if the specific requirements as specified in the Local Coverage Determination for Therapeutic Shoes for Diabetics, including certification and prescription, are fulfilled. In addition, this benefit provides for a pair of diabetic shoes even if only one foot suffers from diabetic foot disease. Each shoe is equally equipped so that the affected limb, as well as the remaining limb, is protected. Claims for therapeutic shoes for diabetics are processed by the DME MACs. The statutory benefit is limited to one pair of shoes and up to three pairs of inserts or shoe modifications per calendar year (January December). Therapeutic shoes and inserts are purchased outright and single payment is made. Medicare payment is equal to 80 percent of the lower of either the actual charge for the item or the fee schedule amount calculated for the item, less any unmet deductible. The beneficiary is responsible for 20 percent of the lower of either the actual charge for the item or the fee schedule amount calculated for the item, plus any unmet deductible. Modifiers EY KX LT RT No physician or other licensed health care provider order for this item or service. Specific required documentation on file Left side Right side Modifier Usage Modifier KX must be appended to therapeutic shoes, inserts and therapeutic shoe modifications if all of the criteria outlined in the Indications and Limitations of Coverage and/or Medical Necessity section of the local coverage determination have been met. 132_0310 7

154 Chapter 15 : DMEPOS Payment Categories [ MARCH 2010] When a single shoe insert or modification is provided, the appropriate HCPCS modifier LT (left) or RT (right), must be appended. If a pair is provided, report as 2 units of service on the claim the RT and LT modifier should not be used. SURGICAL DRESSINGS Surgical dressings are limited to primary and secondary dressings required for the treatment of a wound caused by, or treated by, a surgical procedure that has been performed by a physician or other health care professional to the extent permissible under State law. In addition, surgical dressings required after debridement of a wound are also covered, irrespective of the type of debridement, as long as the debridement was reasonable and necessary and was performed by a health care professional acting within the scope of his/her legal authority when performing this function. Surgical dressings are covered for as long as they are medically necessary. Primary dressings are therapeutic or protective coverings applied directly to wounds or lesions either on the skin or caused by an opening to the skin. Secondary dressing materials that serve a therapeutic or protective function and that are needed to secure a primary dressing are also covered. Items such as adhesive tape, roll gauze, bandages, and disposable compression material are examples of secondary dressings. Elastic stockings, support hose, foot coverings, leotards, knee supports, surgical leggings, gauntlets, and pressure garments for the arms and hands are examples of items that are not ordinarily covered as surgical dressings. Some items, such as transparent film, may be used as a primary or secondary dressing. If a physician, certified nurse midwife, physician assistant, nurse practitioner, or clinical nurse specialist applies surgical dressings as part of a professional service that is billed to Medicare, the surgical dressings are considered incident to the professional services of the health care practitioner. When surgical dressings are not covered incident to the services of a health care practitioner and are obtained by the patient from a supplier (e.g., a drugstore, physician, or other health care practitioner that qualifies as a supplier) on an order from a physician or other health care professional authorized under State law or regulation to make such an order, the surgical dressings are covered separately under Part B and billed to the DME MAC. Surgical dressings are purchased outright, and a single payment is made. Medicare payment for surgical dressings is equal to 80 percent of the lower of either the actual charge for the item or the fee schedule amount calculated for the item, less any unmet deductible. The beneficiary is responsible for 20 percent of the lower of either the actual charge for the item or the fee schedule amount calculated for the item, plus any unmet deductible. Modifiers A1 A2 A3 A4 A5 A6 A7 Dressing for one wound Dressing for two wounds Dressing for three wounds Dressing for four wounds Dressing for five wounds Dressing for six wounds Dressing for seven wounds 132_0310 8

155 Chapter 15 : DMEPOS Payment Categories [ MARCH 2010] A8 A9 Dressing for eight wounds Dressing for nine wounds Modifier Usage Modifiers A1 A9 are used with surgical dressings to indicate the number of wounds. If modifier A9 (Dressing for nine or more wounds) is used, information must be submitted in Item 19 on a paper claim, or the NTE segment for electronic claims, indicating the number of wounds. If the dressing is not being used as a primary or secondary dressing on a surgical or debrided wound, do not use modifiers A1 A9. Surgical dressing codes billed without modifiers A1 A9 are noncovered under the Surgical Dressings benefit. Policy Specific Modifiers AU AV AW EY GA GY LT RT Item furnished in conjunction with an ostomy, tracheostomy, or urological supply Item furnished in conjunction with a prosthetic device, prosthetic, or orthotic Item furnished in conjunction with a surgical dressing No physician or other licensed health care provider order for this item or service Waiver of liability on file Item or service statutorily noncovered or does not meet the definition of any Medicare benefit Left side Right side Modifiers AU (Item furnished in conjunction with a urological, ostomy, or tracheostomy supply), AV (Item furnished in conjunction with a prosthetic or orthotic device), and AW (Item furnished in conjunction with a surgical dressing) are used with HCPCS codes for tape (A4450 and A4452). Claims for tape (A4450 and A4452) which are billed without an AW, AU, or AV modifier will be denied as noncovered. If tape is used in conjunction with a surgical dressing, suppliers must also append the applicable A1 A9 modifier indicating how many wounds are being treated with that particular dressing. When dressings are provided in noncovered situations (e.g., use of gauze in the cleansing of a wound or intact skin), modifier GY must be added to the code and a brief description of the reason for noncoverage included, e.g., "A6216GY used for wound cleansing." Modifiers LT (left) and RT (right) must be used with HCPCS codes A6531 and A6532 for gradient compression stockings. When the same code for bilateral items (left and right) is billed on the same date of service, bill both items on the same claim line using LTRT modifiers and 2 units of service. HOME DIALYSIS SUPPLIES Before Medicare can approve home dialysis supplies for a beneficiary, a CMS-382 ESRD Beneficiary Selection Form must be filed. The CMS-382 ESRD Beneficiary Selection Form is located at the end of this chapter. If the beneficiary chooses to receive home dialysis supplies and equipment from a renal dialysis facility (i.e., Method I), the claims submitted for payment will be processed by the Medicare Part A fiscal intermediary. The DME MAC processes claims for beneficiaries who have chosen to 132_0310 9

156 Chapter 15 : DMEPOS Payment Categories [ MARCH 2010] receive their supplies and equipment from an independent supplier (i.e., Method II). Suppliers should obtain the original CMS-382 ESRD Beneficiary Selection Form and submit a copy to the Medicare fiscal intermediary to update the selection records. Note: The DME MAC does not record or update method selection changes. Please refer to sample CMS-382 ESRD Beneficiary Selection Form located at the end of this chapter. Modifiers AX Item furnished in conjunction with dialysis services When used with home dialysis equipment and supplies, the following HCPCS codes must be submitted with modifier AX: A4215 A4216 A4217 A4244 A4245 A4246 A4247 A4248 A4450 A4452 A4651 A4652 A4657 A4660 A4663 A4670 A4927 A4928 A4930 A4931 A6216 A6250 A6260 A6402 E0210 E1632 E1637 E1639 J1644 KX Specific required documentation on file Method II suppliers must add a modifier KX to all dialysis codes only if a written agreement exists between the supplier and a Medicare certified support service facility within a reasonable distance from the beneficiary s home. Failure to append the modifier KX when a written agreement is in place will result in a noncovered denial (PR-96) for the dialysis codes. EM Emergency reserve supply Modifier EM must only be added to a dialysis supply code when appropriate. Modifier EM is not used with equipment codes. Emergency reserve supplies are allowed for patients on dialysis to anticipate short-term increased use of supplies or delays in supply delivery. Up to a one month s supply is covered, but this is a once in a lifetime allowance for each dialysis modality (hemodialysis, continuous ambulatory peritoneal dialysis and continuous cycling peritoneal dialysis) that the patient receives. For a single modality, only emergency reserve supplies provided in the same calendar month will be covered. If supplies from the reserve are used, replacement of them must be billed along with the other supplies used during the month, without modifier EM. CAPPED RENTAL ITEMS Items in this category are paid on a monthly rental basis not to exceed a period of continuous use of 13 months. Rental Fee Schedule For the first three rental months, Medicare pays 80 percent of the Medicare allowed amount from the Medicare fee schedule. For each of the remaining months of rental, the fee schedule amount allowance will be reduced by 25 percent. For example: If the normal fee schedule allowance for an 132_

157 Chapter 15 : DMEPOS Payment Categories [ MARCH 2010] item is $100, Medicare would allow $100 for the first three months of rental and then $75 for each month after. After paying the rental fee schedule amount for 13 months, no further payment may be made except for payments for maintenance and servicing. Payments During a Period of Continuous Use Payment for items in this category may not exceed a period of continuous use longer than 13 months. After 13 months of rental have been paid, the beneficiary owns the DME item, and after that time Medicare pays for reasonable and necessary maintenance and servicing (i.e., parts and labor not covered by a supplier s or manufacturer s warranty) of the item. This provision applies to beneficiaries renting an item for which the first rental month occurs on or after January 1, Suppliers should continue to use modifiers KH, KI, and KJ. For the first month rental suppliers should append modifier KH. For the second and third month rental, modifier KI would be appended to the claim and for the remaining rental months modifier KJ must be appended to the claim. For claims with an initial date of service on or after January 1, 2006, suppliers are no longer required to give beneficiaries a purchase option in the tenth month of rental. Healthcare Common Procedure Coding System (HCPCS) modifiers BP, BR, and BU should not be submitted. However, for rental periods that began prior to January 1, 2006 suppliers should use modifiers BP, BR, and BU. Capped rental items furnished to beneficiaries prior to January 1, 2006, will continue to be paid under the payment rules in effect prior to the Deficit Reduction Act (DRA) of 2005 changes. Flow Chart: Capped Rental (Excluding Power Wheelchairs) with Initial Date of Service Prior to 01/01/2006 No response from beneficiary Payments made through 15th month Day 1 = beneficiary rents DME 10th month = supplier gives beneficiary the option to rent or buy 11th month Beneficiary declines purchase option Beneficiary accepts purchase option Payments made through 15th month Rental paid through 13th month then supplier transfers title to beneficiary Note: The capped rental flow chart excludes power wheelchairs Please refer to the section titled Interruptions During a Period of Continuous Use in this chapter for information regarding interruptions during a period of continuous use. Capped Rental Situations If equipment is changed to different but similar equipment, and the beneficiary s condition has substantially changed to support the medical necessity for the new item, a new 13-month period will begin. Otherwise, the rental will continue to count against the current 13-month period and payment 132_

158 Chapter 15 : DMEPOS Payment Categories [ MARCH 2010] will be based on the least expensive medically appropriate equipment. If the 13-month period has already expired, no additional rental payment will be made for modified or substituted equipment in the absence of substantial change in medical need. If modification is added to existing equipment and there is a substantial change in medical need, the 13-month rental period for the original equipment continues and a new 13-month rental period begins for the added equipment. Change of Address If the beneficiary moves during or after the 13-month period, either permanently or temporarily, it does not result in a new rental episode. Change in Suppliers If the beneficiary changes suppliers during the 13-month rental period, a new rental period will not begin. Replacement of Capped Rental Equipment If a capped rental item of equipment has been in continuous use by the patient and if the item is lost or irreparably damaged prior to the reasonable useful lifetime, which is five years, the patient may elect to obtain a new piece of equipment. Payment for replacement capped rental equipment will be made in accordance with the capped rental guidelines of this chapter or if the item is an electric wheelchair, the item will be paid based in accordance with the electric wheelchair guidelines found in this chapter. Modifiers RR KH KI KJ Rental DMEPOS item, initial claim, purchase or first month rental DMEPOS item, second or third month rental DMEPOS item, PEN pump or capped rental months four to fifteen For monthly billing of capped rental items, suppliers are required to append pricing modifier RR (rental) to their claim. Along with the RR pricing modifier, suppliers are required to append the monthly informational capped rental modifiers KH, KI, or KJ as they relate to the month(s) being billed. Note: Although the description of the KJ modifier is for up to 15 months, for capped rental items, the maximum monthly rental payments that will be processed is 13 months. Power wheelchairs are an exception to this rule. Policy Specific Modifiers KX Specific required documentation on file Modifier KX may be required in certain situations as outlined by policy. Please refer to the LCD for specific requirements regarding modifier KX use. 132_

159 Chapter 15 : DMEPOS Payment Categories [ MARCH 2010] Purchase Options for Power Wheelchairs Suppliers must give beneficiaries entitled to electric wheelchairs the option of purchasing at the time the supplier first furnishes the item. If the beneficiary chooses to purchase, payment will be made on a lump sum purchase basis. If the beneficiary declines the purchase in the first month, payment will be made on a rental basis through the 13th month. On the first day after 13 continuous rental months have been paid, the supplier must transfer title of equipment to the beneficiary. Suppliers are required to report modifier BP or BR when submitting a claim for power wheelchairs. BP BR The beneficiary has been informed of the purchase and rental options and has elected to purchase the item The beneficiary has been informed of the purchase and rental options and has elected to rent the item Refer to the Sample Rent/Purchase Option for Power Wheelchairs Letter at the end of this chapter. INTERRUPTIONS IN A PERIOD OF CONTINUOUS USE Period of Continuous Use Under the Medicare Part B program, monthly rental payments may be made for certain DME that is provided to a beneficiary for a period of continuous use. For capped rental equipment, e.g., manual wheelchairs and hospital beds, Medicare will make up to 13 monthly rental payments during a period of continuous use, after which, title of the equipment is transferred to the Medicare beneficiary. Although payment for PEN pumps is made under the prosthetic benefit, and they do not fall within the capped rental equipment payment category, the payment for PEN pumps follows similar guidelines except that Medicare will make up to 15 monthly rental payments. The instructions pertaining to payments for capped rental items during a period of continuous use now apply to the monthly payment amounts for oxygen and oxygen equipment and the portable oxygen equipment add-on payments. In the case of a beneficiary receiving oxygen equipment on December 31, 2005, the period of continuous use for the equipment begins on January 1, For oxygen equipment, Medicare will make monthly rental payments for up to 36 months during a period of continuous use. However, for oxygen equipment, once the 36-month payment cap has been reached, the supplier retains ownership of the equipment title of the equipment does not transfer to the beneficiary after the 36-month payment cap has been reached. Additionally, the supplier who received payment for the 36th rental month must continue to provide the oxygen equipment and contents until the reasonable useful lifetime of the equipment has been reached (i.e., five years) for as long as the beneficiary has a medical need for the oxygen. After the five year reasonable useful lifetime of the equipment has been reached, if the beneficiary still needs the equipment (i.e., the beneficiary meets the medical necessity for the oxygen), a new capped rental period may begin. Temporary Interruptions Under the DME benefit, a period of continuous use allows for temporary interruptions in the use of equipment. A temporary interruption may last up to 60 consecutive days plus the days remaining in 132_

160 Chapter 15 : DMEPOS Payment Categories [ MARCH 2010] the rental month in which use ceased (this does not mean calendar month, but rather the 30-day rental period) regardless of the reason the interruption occurs. For capped rental items as well as PEN pumps and oxygen equipment, a temporary interruption such as this (i.e., less than 60 consecutive days, plus the days remaining in the rental month in which use ceased) is considered a temporary break in billing and does not entitle the beneficiary to begin a new capped rental period regardless of the reason for the interruption. Interruptions Due to Break in Need If there is an interruption in the use/medical need for the equipment that is greater than 60 days plus the days remaining in the month the use ceases, the period of continuous use leading up to the break ends and a new period of continuous use begins when the beneficiary again has a medical need for the equipment. For oxygen equipment, a new period of continuous use may begin following a break in need that is greater than 60 days plus the days remaining in the last paid rental month, only when that break in need occurs during the 36-month payment period. A new period of continuous use does not begin under any circumstances in the case of oxygen equipment furnished after the 36-month rental cap is reached. For example, a rental period began January 15 and rentals are billed on the 15th of the subsequent months (e.g., February 15 and March 15). The patient recovers and no longer requires use of the equipment. The equipment is returned on March 25. The patient has another injury and requires the same equipment. If the equipment is delivered for use in the home on or after June 15, this would be considered a valid break in need. A new capped rental period begins in these situations if the supplier has on file a new prescription, including a new CMN (if applicable), new medical necessity information, and a statement describing the reason for the interruption which shows the medical necessity in the prior episode ended. On claims following an interruption due to break in need, the supplier must submit a narrative statement describing the reason for the interruption which shows that medical necessity in the prior episode ended. Suppliers who have an Administrative Simplification Compliance Act (ASCA) waiver on file should use the Jurisdiction B DME MAC Break-in-Service Form and submit it with their CMS-1500 claim form. The break-in-service/break-in-need form is located at the end of this chapter and is also available on the National Government Services Web site. Go to the home page: Select the Durable Medical Equipment (DME) Business Type and select the Go button Select the Accept button when presented with the Attestation page Select the Resources category from the navigation menu Select the Forms subnavigation option Select the Break-in-Service Form PDF link For suppliers submitting claims electronically, the break-in-need (BIS) information is reported in the Note (NTE) segment in the order and format as follows. Order: 1. The abbreviation BIS for break in service/break in need 132_

161 Chapter 15 : DMEPOS Payment Categories [ MARCH 2010] 2. The pick up date and the delivery date 3. The beneficiary s previous ICD-9-CM diagnosis code and the new ICD-9-CM diagnosis code The pick up date refers to the date the new and/or previous supplier removes the piece of equipment from the patient s home. The delivery date will be the most recent date the new item was delivered. Format: BIS MMDDYY MMDDYY ICD-9 ICD-9 Note: The format does not require spacing between the required elements. Break in Billing If there is an interruption in monthly billings/part B payments during the period of continuous use, but the medical need for the equipment continues (e.g., Part B payments stop while the beneficiary uses equipment during an institutional stay), a new capped rental period does not begin when the patient is discharged from the inpatient facility and resumes use of the supplier s equipment. This type of interruption does not entitle the beneficiary to begin a new capped rental period regardless of the length of the interruption. The supplier may not submit another claim until the beneficiary is discharged from the inpatient stay and use of the supplier s equipment resumes. National Government Services refers to this situation as a break in billing. Example: A rental period began March 23 and rentals are billed on the 23rd of the subsequent months (e.g., April 23 and May 23, etc.). The patient is admitted to an institutional provider on June 1 and is discharged on August 15. During the institutional stay, the patient still required use of the equipment. Since medical necessity for the item did not end, this is considered a break in billing (BIB). The supplier does not bill months June or July. If, upon discharge from the institutional facility, the beneficiary still requires use of the original equipment (i.e., the item/equipment is still medically necessary), the supplier would resume billing when the item is delivered to the beneficiary following the beneficiary s discharge from the institution. If the interruption in billing does not span the supplier s anniversary date, the monthly billing is not affected by the interruption and monthly billings continue as usual upon the beneficiary s discharge from the institutional stay. However, when a beneficiary s admission to an institutional provider overlaps the suppliers anniversary date, the date of discharge from the inpatient admission becomes the new anniversary date for subsequent supplier claims assuming that use of the supplier s equipment resumed immediately upon discharge from the inpatient stay. The supplier must submit a new claim with the date of discharge from the inpatient stay as the new anniversary date for subsequent monthly billings. The supplier must include an annotation in either the NTE segment of the electronic claim or Item 19 of the CMS-1500 claim form, explaining the reason for the interruption and change in anniversary date. An example annotation would be: ADM TO SNF DISC Note: The DME MACs must continue to make payment for maintenance and servicing of capped rental items regardless of whether the beneficiary is in a Part A stay on the date of service of the maintenance and servicing claim. 132_

162 Chapter 15 : DMEPOS Payment Categories [ MARCH 2010] Please refer to the Jurisdiction B DME MAC Break in Service Flow Chart on the National Government Services Web site for assistance in determining when a new capped rental period begins due to a break in need. Go to the home page: Select the Durable Medical Equipment (DME) Business Type and select the Go button Select the Accept button when presented with the Attestation page Select the Education and Support category from the navigation menu Select the Tools and Materials subnavigation option Select the Break-in-Service Flow Chart PDF link OXYGEN AND OXYGEN EQUIPMENT Medicare covers rental of medically necessary oxygen equipment during a period of continuous use. Payment for monthly rental of oxygen equipment during a period of continuous use will be made for up to 36 months. The oxygen rental payment includes reimbursement for the equipment, oxygen contents, maintenance, supplies and accessories, e.g., tubing or a mouthpiece, and other services necessary for furnishing oxygen and oxygen equipment. The supplier may not bill the patient separately for these items. After 36 monthly rental payments have been made for the oxygen equipment, monthly payments for the oxygen equipment will cease. However, the supplier that furnishes oxygen during the 36th month of continuous use must continue to furnish the oxygen equipment after the 36-month payment period, and continue to provide the equipment, contents, supplies and accessories during any period of medical need, for the remainder of the reasonable and useful lifetime of the equipment (five years). The DME MAC will count as a month, the date the oxygen equipment was initially furnished to the day before the same date in the following month, and each rental month thereafter, until the 36th month anniversary is reached. After the 36-month rental payment cap is reached, the supplier retains ownership of the equipment. The 36-month cap applies to oxygen equipment furnished on or after January 1, The DME MAC will begin the 36-month count on January 1, 2006 for beneficiaries that were receiving oxygen therapy prior to January 1, Months prior to January 2006 will not be included in the 36 month count. The 36-month rental cap applies to all claims for the following HCPCS codes. E0424 E0431 E0434 E0439 E1390 E1391 E1392 E1405 E1406 Stationary gaseous oxygen system Portable gaseous oxygen system Portable liquid oxygen system Stationary liquid oxygen system Oxygen concentrator, single delivery port Oxygen concentrator, dual delivery port Portable oxygen concentrator Oxygen and water vapor enriching system with heated delivery Oxygen and water vapor enriching system without heated delivery Following the 36-month cap, the supplier is responsible for furnishing all of the same necessary services associated with furnishing oxygen equipment that were furnished during the 36-month rental period. For example, as required by the Medicare quality standards for respiratory equipment, 132_

163 Chapter 15 : DMEPOS Payment Categories [ MARCH 2010] supplies, and services established in accordance with 1834(a)(20) of the Social Security Act, the supplier shall provide services 24 hours a day, 7 days a week as needed by the beneficiary. Suppliers may not bill beneficiaries separately for these services. Modifiers The monthly payment amount for stationary oxygen is subject to adjustment depending on the amount of oxygen prescribed (liters per minute [LPM]) and whether or not portable oxygen has been prescribed. QE QF QG QH Use if the prescribed amount of oxygen is less than 1 LPM Use if the prescribed amount of oxygen exceeds 4 LPM and portable oxygen is prescribed Use if the prescribed amount of oxygen is greater than 4 LPM Use if an oxygen conserving device is being used with an oxygen delivery system Interruptions in a Period of Continuous Use of Oxygen and Oxygen Equipment Instructions in the CMS IOM Publication , Medicare Claims Processing Manual, Chapter 20, Section pertaining to payments for capped rental items during a period of continuous use now apply to the monthly payment amounts for oxygen and oxygen equipment and the portable oxygen equipment add-on payments. Please refer to the section titled Interruptions During a Period of Continuous Use in this chapter, located by the Capped Rental Payment Category section. Oxygen Contents If a supplier furnished liquid or gaseous oxygen equipment during the 36-month rental period, the supplier is responsible for furnishing the oxygen contents used with the oxygen equipment for any period of medical need following the 36-month rental cap for the remainder of the reasonable useful lifetime of the equipment. After the 36-month rental payment period, the supplier can bill for and receive a monthly payment for furnishing oxygen contents (see chart below). Payment for Oxygen Contents (When Monthly Payments May Begin) Payment for both oxygen contents used with stationary oxygen equipment and oxygen contents used with portable oxygen equipment is included in the 36 monthly payments for oxygen and oxygen equipment (stationary oxygen equipment payment) for HCPCS codes E0424, E0439, E1390, or E1391. Beginning with dates of service on or after the end date of service for the month representing the 36th payment for code E0424, E0439, E1390, or E1391, the supplier may bill on a monthly basis for furnishing oxygen contents (stationary and/or portable) but only in accordance with the following chart: Equipment Furnished in Month 36 Oxygen concentrator (E1390, E1391, or E1392) Portable gaseous transfilling equipment (K0738) Portable liquid transfilling equipment (E1399) Stationary gaseous oxygen system (E0424) Stationary liquid oxygen system (E0439) Portable gaseous oxygen system (E0431) Monthly Contents Payment after Stationary Cap None None None Stationary gaseous contents (E0441) Stationary liquid contents (E0442) Portable gaseous contents (E0443) 132_

164 Chapter 15 : DMEPOS Payment Categories [ MARCH 2010] Equipment Furnished in Month 36 Portable liquid oxygen system (E0434) Monthly Contents Payment after Stationary Cap Portable liquid contents (E0444) A supplier may not bill for stationary oxygen contents if the beneficiary uses a stationary concentrator and a supplier may not bill for portable oxygen contents if the beneficiary uses a portable concentrator or transfilling equipment. Note: The descriptors for HCPCS codes E0441 E0444 reflect older policies and regulations and need to be revised to reflect current policies and regulations. For now, each of these four codes represents monthly delivery of either stationary or portable oxygen contents. If the beneficiary began using portable gaseous or liquid oxygen equipment (HCPCS codes E0431 or E0434) more than one month after they began using stationary oxygen equipment, monthly payments for portable gaseous or liquid oxygen contents (HCPCS codes E0443 or E0444) may begin following the stationary oxygen equipment payment cap and prior to the end of the portable equipment payment cap (HCPCS code E0431 or E0434). As long as the beneficiary is using covered gaseous or liquid portable oxygen equipment, payments for portable oxygen contents may begin following the stationary oxygen equipment payment cap. This will result in a period during which monthly payments for HCPCS codes E0431 and E0443, in the case of a beneficiary using portable gaseous oxygen equipment, or HCPCS codes E0434 and E0444, in the case of a beneficiary using portable liquid oxygen equipment, overlap. In these situations, after the 36-month portable oxygen equipment payment cap for HCPCS codes E0431 or E0434 is reached, monthly payments for portable oxygen contents (HCPCS codes E0443 or E0444) would continue. If the beneficiary began using portable gaseous or liquid oxygen equipment (HCPCS codes E0431 or E0434) following the 36-month stationary oxygen equipment payment period, payments may be made for both the portable equipment (HCPCS codes E0431 or E0434) and portable contents (HCPCS codes E0443 or E0444). In all cases, separate payment for oxygen contents (stationary or portable) would end in the event that a beneficiary receives new stationary oxygen equipment and a new 36-month stationary oxygen equipment payment period begins (i.e., in situations where stationary oxygen equipment is replaced because the equipment has been in continuous use by the patient for the equipment s reasonable useful lifetime, or is lost, stolen, or irreparably damaged). Again, the monthly payment for stationary oxygen equipment includes payment for both stationary and portable oxygen contents. Therefore, under no circumstances can you receive both the monthly stationary oxygen equipment payment and payment for either stationary or portable oxygen contents. Proof-of-Delivery Requirements for Oxygen Contents Following the stationary oxygen equipment payment cap, the supplier may bill for oxygen contents (stationary and/or portable in accordance with the chart above) on the anniversary date of the oxygen equipment billing. For example, if the 36th month of continuous use of the stationary oxygen equipment begins on 03/11 and ends on 04/10, the supplier may begin billing for monthly oxygen contents that the beneficiary will use after the cap on 04/ _

165 Chapter 15 : DMEPOS Payment Categories [ MARCH 2010] For subsequent months, the supplier does not need to deliver the oxygen contents every month in order to continue billing for the contents on a monthly basis. A maximum of three months of oxygen contents can be delivered at one time. In these situations, the delivery date of the oxygen contents does not have to be the date of service (anniversary date) on the claim. However, in order to bill for contents for a specific month, the supplier must have previously delivered quantities of oxygen that are sufficient to last for one month following the date of service on the claim. The supplier is required to have proof of delivery for each actual delivery of oxygen, but as noted above, this may be less often than monthly. For example, if the supplier delivers 30 oxygen tanks on 04/11 and the beneficiary only uses 15 tanks from 04/11 05/10, and 15 tanks from 05/11 06/10, the supplier may bill for contents on 04/11 and again on 05/11 for contents delivered on 04/11 that were used for two months. REPAIRS, MAINTENANCE, AND REPLACEMENT Under the circumstances specified below, payment may be made for repair, maintenance, and replacement of medically required DME, including equipment which had been in use before the user enrolled in Part B of the program. In addition, payments for repair and maintenance may not include payment for parts and labor covered under a manufacturer's or supplier s warranty. A) Repairs To repair means to fix or mend and to put the equipment back in good condition after damage or wear. Repairs to equipment which a beneficiary owns are covered when necessary to make the equipment serviceable. If the expense for repairs exceeds the estimated expense of purchasing or renting another item of equipment for the remaining period of medical need, no payment can be made for the amount of the excess. Repairs of rented equipment are not covered. This includes items in the frequent and substantial servicing, oxygen equipment, capped rental, and inexpensive or routinely purchased payment categories which are being rented. For dates of service on or after January 1, 2009, modifier RB should be used on a DMEPOS claim to indicate replacement parts of a DMEPOS item (base equipment/device) furnished as part of the service of repairing the DMEPOS item (base equipment/device). Supplier should report the new noncovered HCPCS code K0740 to indicate the labor associated with the repair of stationary or portable oxygen equipment. HCPCS modifier RP, previously used for repairs and replacement of a piece of equipment, which was discontinued effective December 31, 2008, remains in effect for repair and replacement claims with dates of service prior to January 1, A new CMN and/or physician s order is not needed for repairs. Repairs of Supplier-Owned Oxygen Equipment It is the supplier s responsibility to ensure the oxygen equipment rented to the beneficiary is maintained in proper working order at all times. Therefore, suppliers must understand that they are required to provide any maintenance and servicing and repairs of the rented equipment at any time 132_

166 Chapter 15 : DMEPOS Payment Categories [ MARCH 2010] throughout the reasonable useful lifetime of the equipment. The Centers for Medicare & Medicaid Services has determined that under no circumstances would it be reasonable and necessary to pay for any maintenance and servicing or repair of supplier-owned oxygen equipment, with the exception of an in-home visit by suppliers to inspect oxygen concentrators and transfilling equipment and provide general maintenance and servicing six months after the 36-month rental cap. B) Maintenance Routine periodic servicing, such as testing, cleaning, regulating, and checking of the beneficiary s equipment, is not covered. The beneficiary is expected to perform such routine maintenance rather than the supplier or some other person who charges the beneficiary. Normally, purchasers of DME are given operating manuals which describe the type of servicing an owner may perform to properly maintain the equipment. It is reasonable to expect that beneficiaries will perform this maintenance. Thus, hiring a third party to do such work is for the convenience of the beneficiary and is not covered. However, more extensive maintenance which, based on the manufacturers recommendations, is to be performed by authorized technicians, is covered as repairs for medically necessary equipment which a beneficiary owns. This might include, for example, breaking down sealed components and performing tests which require specialized testing equipment not available to the beneficiary. Maintenance of purchased items that require frequent and substantial servicing or oxygen equipment is not covered. When billing for maintenance and servicing claims suppliers must add modifier MS to the HCPCS code. The following is a description of modifier MS: Six-month maintenance and servicing fee for reasonable and necessary parts and labor which are not covered under any manufacturer or supplier warranty Maintenance and Servicing of Supplier-Owned Oxygen Equipment Maintenance and servicing payments only apply to oxygen equipment falling under HCPCS codes E1390, E1391, E1392, and K0738, and only when the supplier physically makes an in-home visit to inspect the equipment and provide any necessary maintenance and servicing. Payment may be made every six months, beginning six months after the 36-month rental cap (as early as July 1, 2009, in some cases), and the allowed payment amount for each visit is equal to the 2009 fee for HCPCS code K0739 (HCPCS code K0739 replaced code E1340 effective April 1, 2009), multiplied by 2, for the state in which the in-home visit takes place. Suppliers should use the appropriate HCPCS code for the equipment E1390, E1391, E1392, and/or K0738, along with modifier MS in order to bill and receive payment for these maintenance and servicing visits. If the supplier visits the beneficiary s home to provide the periodic maintenance and servicing for a stationary concentrator (HCPCS codes E1390 or E1391) and a transfilling unit (HCPS code K0738), payment can be made for maintenance and servicing of both units (E1390MS or 1391MS, and K0738MS). If the supplier visits the beneficiary s home to provide the periodic maintenance and servicing for a portable concentrator (HCPCS code E1392), payment can only be made for maintenance and servicing of the one unit/hcpcs code (E1392MS). 132_

167 Chapter 15 : DMEPOS Payment Categories [ MARCH 2010] Payment shall not be made for any repairs or maintenance and servicing, other than the maintenance and servicing payments described above. In no case shall payment be made for any replacement part furnished as part of any repair or maintenance and servicing of oxygen equipment. Payment shall not be made for loaner equipment furnished during periods when these repairs or maintenance and servicing services are performed. The DME MAC will make payment for maintenance and servicing (i.e., parts and labor not covered by a supplier s or manufacturer s warranty) of patient-owned stationary or portable oxygen equipment following the same rules and methods that apply to patient-owned equipment in the inexpensive or routinely purchased DME and capped rental DME payment categories. These rules are located in the CMS IOM Publication , Medicare Benefit Policy Manual, Chapter 14, Section C) Replacement Replacement refers to the provision of an identical or nearly identical item. Equipment which the beneficiary owns or is a capped rental item may be replaced when it has been in continuous use for the reasonable lifetime designated for the equipment, or in cases of loss, theft, or irreparable damage. Irreparable damage refers to a specific accident or to a natural disaster (e.g., fire, flood, etc.). Irreparable wear refers to deterioration sustained from day-to-day usage over time and a specific event cannot be identified. Replacement of equipment due to irreparable wear takes into consideration the reasonable useful lifetime of the equipment. If the equipment has been in continuous use by the patient on either a rental or purchase basis for the equipment's useful lifetime, the beneficiary may elect to obtain a new piece of equipment. The reasonable useful lifetime of DME is determined through program instructions. In the absence of program instructions, carriers may determine the reasonable useful lifetime of equipment, but in no case can it be less than five years. Computation of the useful lifetime is based on when the equipment is delivered to the beneficiary, not the age of the equipment. Replacement due to wear is not covered during the reasonable useful lifetime of the equipment. During the reasonable useful lifetime, Medicare does cover repair up to the cost of replacement (but not actual replacement) for medically necessary equipment owned by the beneficiary. Replacement may be reimbursed when a new physician order and/or new initial CMN, when required, is needed to reaffirm the medical necessity of the item. When oxygen equipment is replaced because the equipment has been in continuous use by the patient for the equipment s reasonable useful lifetime, or is lost, stolen, or irreparably damaged, and the patient elects to obtain a new piece of equipment, a new 36-month rental period and new reasonable useful lifetime is started on the date that the new, replacement item is furnished. Replacing Equipment Due to Reasonable Useful Lifetime When submitting a claim for a replacement item when the equipment has been in use for the reasonable useful lifetime, the claim for the replacement equipment s first month of use must be 132_

168 Chapter 15 : DMEPOS Payment Categories [ MARCH 2010] billed using the HCPCS code for the new equipment and modifier RA (effective for equipment replaced on or after January 1, 2009) or RP (replacement of equipment prior to January 1, 2009). The supplier should include on the claim, a narrative explanation of the reason why the equipment was replaced. The narrative explanation should include the reason for replacement and the date the beneficiary received the original equipment that is being replaced. Suppliers must provide the required narrative explanation in loop 2400 (line note), segment NTE02 (NTE01=ADD) of the ASC X12, version 4010A1 professional electronic claim format. If billing using the CMS-1500 paper claim form, suppliers may report this information in Item 19 of the claim form. The following information should be included in the narrative explanation: The abbreviation RUL which indicates reasonable useful lifetime The date the beneficiary received the original equipment that is being replace (MMDDYY) Example: RUL In the example shown above, the supplier is informing the contractor that the equipment is being replaced due to the reasonable useful lifetime of the equipment being met, and that the original equipment was delivered to the beneficiary on May 1, For oxygen equipment being replaced due to RUL, a new initial CMN is required; however, new testing is not required. The test date to be entered on the CMN is the most recent qualifying test. That may be the original test for group 1 patients or the retest (on 61st 90th day) for group 2 patients. However, if a test has been done since then, and if the results of that test are in the qualifying range, that is the test that should be reported on the CMN. The recertification date should be 12 months following the initial date when the value on the initial CMN (for the replacement equipment) meets Group I criteria or three months following the initial date when the qualifying blood gas value on the initial CMN meets the Group II criteria. (Note: The initial date [for the replacement equipment] should be entered on the recertification CMN.) As is the case for all DME items, the supplier must maintain proof-of-delivery documentation in their files for replacement oxygen equipment. In addition, for equipment that is being replaced due to continuous use by the beneficiary for the reasonable useful lifetime and the beneficiary has elected to obtain new equipment, the supplier must also have proof-of-delivery documentation in their files for the item being replaced that documents that the oxygen equipment has been in use for at least five years. These guidelines do not apply to breast prosthesis, knee orthoses, or limb prosthesis. Please refer to each individual local coverage determination and policy article on the National Government Services Web site for the exception to the reasonable useful requirements of five years for these items. Go to the home page: Select the Durable Medical Equipment (DME) Business Type and select the Go button Select the Accept button when presented with the Attestation page Select the Coverage category from the navigation menu Select the Local Medical Policy subnavigation option Select the LCD and/or Policy Article link from the Active Polices index as appropriate 132_

169 Chapter 15 : DMEPOS Payment Categories [ MARCH 2010] Lost, Stolen, Irreparably Damaged For dates of service on or after January 1, 2009, modifier RA must be submitted on the claim when filing a Medicare claim for replacement equipment prior to the reasonable useful lifetime (lost, stolen, or irreparably damaged). For claims submitted with dates of service prior to January 1, 2009, modifier RP must be used. When billing modifiers RA or RP, documentation must be maintained in the beneficiary s file and be available upon request from the DME MAC or the program safeguard contractor (PSC). The following documentation must be included, but is not limited to: Reason for replacement New initial CMN when required Medical records Police reports Written explanations from the beneficiary To avoid unnecessary denials, suppliers should include a narrative explanation when submitting the initial claim for a replacement item. Suppliers must provide the required narrative explanation in loop 2400 (line note), segment NTE02 (NTE01=ADD) of the ASC X12, version 4010A1 professional electronic claim format. If billing using the CMS-1500 paper claim form, suppliers may report this information in Item 19 of the claim form. In the narrative explanation, include information as to why the patient can no longer use the prior item, or why the item cannot be repaired. Example: item lost, item stolen, or item irreparably damaged. This information should appear first in the NTE segment, followed by details about the replacement item, including the manufacturer and/or model number. Cases suggesting malicious damage, culpable neglect, or wrongful disposition of equipment will be investigated and denied where the DME MAC determines that it is unreasonable to make program payment under the circumstances. The DME MACs refer such cases to the PSC. Note: If a HCPCS code requires a KX modifier on initial claim submission, the KX modifier is also required if the item is repaired/replaced to ensure proper adjudication of claims submitted to the Jurisdiction B DME MAC. D) Labor Durable Medical Equipment Suppliers should use the new HCPCS code K0739 on DME claims to bill for the labor associated with the reasonable and necessary repair of beneficiary-owned DME. The new noncovered K0740 code should be used by suppliers to indicate the labor associated with the repair of stationary or portable oxygen equipment. Claims for the labor component of repair of patient-owned DME are billed using HCPCS code K0739 (repair or nonroutine services for durable medical equipment requiring the skill of a technician, labor component, per 15 minutes). This code may be billed and can be covered only if the skill of a technician is required. Charges for the replacement of items that do not require the skill of a technician must not be submitted with HCPCS code K0739. Payment for repair of rented equipment is included in the monthly rental allowance or in the maintenance and servicing allowance. HCPCS code K0739 must not be used in this situation. 132_

170 Chapter 15 : DMEPOS Payment Categories [ MARCH 2010] HCPCS code K0739 must not be used on an initial claim for equipment. Payment for any labor involved in assembling, preparing, or modifying the equipment is included in the allowance for the equipment. HCPCS code K0739 must not be used for time involved in the pick-up or delivery of an item for repair. Payment for any delivery or service charges is included in the allowance for parts and labor that are correctly billed. A claim for HCPCS code K0739 must be accompanied by an explanation of what is being repaired. If this information is not included with the claim, code K0739 will be denied. Replacement parts for equipment repair are billed using the specific HCPCS code (if one exists) or a miscellaneous HCPCS code, E1399 or K0108, for other accessories/parts. If HCPCS code E1399 or K0108 is billed, there must be a description of each item that is billed. If this information is not included with the claim, the code will be denied. If a supplier s warranty or a manufacturer s warranty is valid at the time of repairs, charges for parts and labor should not be submitted to Medicare for reimbursement. Note: Effective April 1, 2009, HCPCS code E1340 (Repair or nonroutine service for durable medical equipment requiring the skill of a technician, labor component, per 15 minutes) is no longer valid form Medicare claims. Suppliers should use the new K0739 code on DME claims to bill for the labor associated with the reasonable and necessary repair of beneficiary-owned DME. The new noncovered K0740 code should be used by suppliers to indicate the labor associated with the repair of stationary or portable oxygen equipment. The revised 2009 labor payment amounts for E1340, provided as part of Change Request 6297, map directly to the new K0739 HCPCS code and shall be used to pay claims for code K0739 with dates of service on or after April 1, K0739 K0740 Repair or nonroutine service for durable medical equipment other than oxygen equipment requiring the skill of a technician, labor component, per 15 minutes Repair or nonroutine service for oxygen equipment requiring the skill of a technician, labor component, per 15 minutes Orthotics and Prosthetics The HCPCS codes for the labor component of repairs of orthotics and prosthetics are L4205 for orthoses and L7520 for prostheses. The unit of service for both HCPCS codes is 15 minutes. However, the labor code is not always separately billable for repairs of orthotics and prosthetics (refer below). Replacement parts for orthotics and prosthetics are billed using the specific HCPCS code (if one exists) or a miscellaneous code, HCPCS L4210 (for orthoses) or HCPCS L7510 (for prostheses), for other parts. If HCPCS code L4210 or L7510 is billed, there must be a description of each item that is billed. If this information is not included with the claim, the code will be denied. If a specific HCPCS code is billed for the replacement part, there is no separate billing for labor. Reimbursement for labor is included in the allowance for the specific HCPCS code. If HCPCS code L4210 or L7510 is billed for a replacement part, the labor component for that part is billed separately using HCPCS code L4205 or L _

171 Chapter 15 : DMEPOS Payment Categories [ MARCH 2010] HCPCS codes L4205 or L7520 must not be used on an initial claim for equipment. Payment for any labor involved in assembling, preparing, or modifying the item is included in the allowance for the base and addition codes. HCPCS codes L4205 or L7520 must not be used for time involved in evaluation of the patient. Only the actual repair time may be billed using these codes. HCPCS codes L4205 or L7520 must not be used for time involved in the pick-up or delivery of an item for repair. Payment for any delivery or service charges is included in the allowance for parts and labor that are correctly billed. A claim for HCPCS code L4205 or L7520 must be accompanied by an explanation of what is being repaired. If this information is not included with the claim, the code will be denied. If a supplier s warranty or a manufacturer s warranty is valid at the time of repairs, charges for parts and labor should not be submitted to Medicare for reimbursement. 132_

172 Chapter 15 : DMEPOS Payment Categories [ MARCH 2010] SAMPLE RENT/PURCHASE OPTION FOR POWER WHEELCHAIRS LETTER If you meet the Medicare coverage criteria for a power wheelchair prescribed by your physician, Medicare may help pay for it. Upon delivery of the power wheelchair, Medicare requires (specify name of supplier) to give you the option of either renting or purchasing the electric wheelchair. If you choose to purchase the power wheelchair, upon approval, Medicare pays 80 percent of the allowed purchase price in a lump sum amount. You are responsible for the 20 percent coinsurance amounts and, for nonassigned claims, the balance between the Medicare allowed amount and the supplier s charge. However, you must elect to purchase the electric wheelchair at the time your medical equipment supplier furnishes you the item. If you choose to rent the power wheelchair and the Medicare coverage criteria are met, Medicare may pay a monthly rental fee for a period not to exceed 13 months, after which ownership of the electric wheelchair is transferred to you. During the rental period, you will be responsible for the 20 percent coinsurance payment for each month of the rental period, and for nonassigned claims: you will be responsible for the balance between the Medicare allowed amount and the supplier s charge. Medicare requires (specify name of supplier) to convert your rental agreement to a purchase agreement after 13 months of rental. This means once Medicare has made the final 13th rental payment, title to the equipment is transferred to you and you will own the equipment. Once the power wheelchair is purchased, you are responsible for 20 percent of the service charge each time your equipment is actually serviced or repaired and, for nonassigned claims, the balance between the Medicare allowed amount and the supplier s charge. Option: Continued Rental Purchase Beneficiary Signature: Date: 132_

173 Chapter 15: DMEPOS Payment Categories [DECEMBER 2009] SAMPLE RENT/PURCHASE OPTION FOR POWER WHEELCHAIRS LETTER If you meet the Medicare coverage criteria for a power wheelchair prescribed by your physician, Medicare may help pay for it. Upon delivery of the power wheelchair, Medicare requires (specify name of supplier) to give you the option of either renting or purchasing the electric wheelchair. If you choose to purchase the power wheelchair, upon approval, Medicare pays 80 percent of the allowed purchase price in a lump sum amount. You are responsible for the 20 percent coinsurance amounts and, for nonassigned claims, the balance between the Medicare allowed amount and the supplier s charge. However, you must elect to purchase the electric wheelchair at the time your medical equipment supplier furnishes you the item. If you choose to rent the power wheelchair and the Medicare coverage criteria are met, Medicare may pay a monthly rental fee for a period not to exceed 13 months, after which ownership of the electric wheelchair is transferred to you. During the rental period, you will be responsible for the 20 percent coinsurance payment for each month of the rental period, and for nonassigned claims: you will be responsible for the balance between the Medicare allowed amount and the supplier s charge. Medicare requires (specify name of supplier) to convert your rental agreement to a purchase agreement after 13 months of rental. This means once Medicare has made the final 13th rental payment, title to the equipment is transferred to you and you will own the equipment. Once the power wheelchair is purchased, you are responsible for 20 percent of the service charge each time your equipment is actually serviced or repaired and, for nonassigned claims, the balance between the Medicare allowed amount and the supplier s charge. Option: Continued Rental Purchase Beneficiary Signature: Date: 132_

174 DEPARTMENT OF HEALTH & HUMAN SERVICES CENTERS FOR MEDICARE & MEDICAID SERVICES 1. NAME (Last, First, Middle Initial) ESRD BENEFICIARY SELECTION (Home Patients Only) PLEASE READ INSTRUCTIONS ON REVERSE BEFORE COMPLETING THIS FORM Form Approved OMB No HEALTH INSURANCE CLAIM NUMBER (Medicare Claim Number) 3. DATE OF BIRTH (month/day/year) 4. SEX Male Female 5. PROVIDER NUMBER OF FACILITY PROVIDING HOME DIALYSIS TRAINING 5A. NAME AND ADDRESS OF FACILITY PROVIDING HOME DIALYSIS TRAINING 6. PROVIDER NUMBER OF FACILITY PROVIDING HOME DIALYSIS SUPPORT SERVICES 6A. NAME AND ADDRESS OF DIALYSIS FACILITY PROVIDING SUPPORT SERVICES 7. BENEFICIARY SELECTION, CHANGE OR CANCELLATION Initial Selection Cancellation Routine Method Selection Change 9. DATE HOME DIALYSIS TRAINING IS COMPLETED 8. TYPE OF DIALYSIS (Check One) Hemodialysis CAPD CCPD Method Exception (Refer to PRM, Part I-Chap. 27, D.) Intermediary approval required. Reason for Exception 10. CHECK METHOD I OR II METHOD I The ESRD facility indicated in #6 will supply all the equipment, supplies, and support services necessary for me to dialyze at home. METHOD II I will deal directly with one supplier for my home dialysis supplies and equipment, and my support services will be provided by the dialysis facility indicated above. 11. NAME AND ADDRESS OF THE DURABLE MEDICAL EQUIPMENT SUPPLIER THAT WILL PROVIDE THE SUPPLIES AND EQUIPMENT (Only appropriate if beneficiary chooses Method II) 12. If I have chosen Method II, by signing this form, I certify that I have only one Method II supplier. Further, I understand that if my supplier does not take assignment, Medicare will not pay anything toward my supplier s bill. 13. CHECK LOCATION WHERE HOME DIALYSIS IS PROVIDED Private Residence Skilled Nursing Facility Nursing Home 14. BENEFICIARY SIGNATURE 15. DATE BENEFICIARY SIGNS FORM (month/day/year) 16. DATE METHOD EXCEPTION TO BE EFFECTIVE (month/day/year) (INITIAL SELECTION CHANGES, ROUTINE SELECTION CHANGES, AND CANCELLATIONS BECOME EFFECTIVE ON JANUARY 1 OF THE YEAR FOLLOWING THE YEAR IN WHICH THIS FORM IS SIGNED) 17. The dialysis facility providing the home dialysis training is responsible for supplying this form to Medicare beneficiaries who select home dialysis and for sending the white copy of the completed form to the local Part A Intermediary (both Method I and Method II selections). Blank forms are available from the Intermediary. The white copy of this form must be sent to: THE LOCAL INTERMEDIARY ATTN: MEDICARE PROGRAM ADMINISTRATOR A copy of the form must also be sent to the dialysis facility providing support services and to the supplier if the beneficiary chooses Method II. Form CMS-382 (01/05) EF 02/2005 1

175 INSTRUCTIONS FOR COMPLETING THE ESRD BENEFICIARY SELECTION FORM Centers for Medicare & Medicaid Services regulations provide two (2) ways that a Medicare beneficiary dialyzing at home can choose to have the Medicare program pay for his/her dialysis care (exclusive of physician services). The purpose of the Beneficiary Selection form is for you, the beneficiary, to select the method that best suits your requirements. It is important you choose one of these two methods, complete and sign the form and return it to the dialysis facility that supervises your care as soon as possible. You must complete all sections of this form. This form is to be filled out only by Medicare beneficiaries dialyzing at home and not by Medicare beneficiaries who are currently dialyzing in a facility. Your selection of either Method I or Method II in no way inhibits your return to incenter treatment or selection for any other treatment options should that be necessary. METHOD I The first method is for your dialysis facility to assume the responsibility for your care. Under this method, the facility is required to provide to you any and all dialysis equipment, supplies and home support services that you need to dialyze at home. It also is required to order, store, deliver, and pay the manufacturers and suppliers for these items. Under this arrangement you are responsible to your dialysis facility for the Medicare Part B deductible and 20% coinsurance. METHOD II While your facility is responsible for assuring that you receive all items and services that you require for home dialysis, the second method allows you to deal directly with a single supplier for securing the necessary dialysis equipment and supplies. Then your supplier bills the Medicare program for payment. Under this arrangement, you are responsible to the supplier for the Medicare Part B deductible and 20% coinsurance. METHOD CHANGES Once you have made your initial selection, your reimbursement must be handled in that manner until December 31 of the year in which you signed the ESRD Beneficiary Selection form. If you wish to continue your initial selection beyond December 31, you do NOT complete another ESRD Beneficiary Selection form. You will automatically continue to have your reimbursement handled in the manner you selected. If you do not wish to continue with your initial selection beyond December 31, you MUST complete another ESRD Beneficiary Selection form. This subsequent form must be signed, dated and postmarked PRIOR to January 1 of the year you wish your selection change to be effective. This is the only way changes are made, and this is the only reason you should ever complete more than one ESRD Beneficiary Selection form. PRIVACY ACT STATEMENT As required by 5 U.S.C. 552a (the Privacy Act of 1974), you are advised that the Centers for Medicare & Medicaid Services is authorized to collect the data on this form by Section 1881(b)(1) of the Social Security Act and 42 CFR The purpose for collecting this information is stated above. Your response to the questions on this form is not required by law. However, if you do not provide this information, requests for end-stage renal dialysis reimbursement may be denied or delayed until it is provided. You should be aware that the information you provide may be verified by a computer match (P.L ). Individually identifiable patient information will not be disclosed except as provided for by the Privacy Act. According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it displays a valid OMB control number. The valid OMB control number for this information collection is The time required to complete this information collection is estimated to average 5 minutes per response, including the time to review instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have any comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to CMS, Attn: PRA Reports Clearance Officer, 7500 Security Boulevard, Baltimore, Maryland Form CMS-382 (01/05) EF 02/2005 2

176 Chapter 16: Pricing [DECEMBER 2009] 16 Pricing The Centers for Medicare & Medicaid Services (CMS) is responsible for the accurate and appropriate calculation and implementation of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) prices. Note: The beneficiary s permanent address, rather than the location of the DMEPOS supplier, will determine the amount allowed by Medicare for a particular service. There are three DMEPOS payment methodologies: Fee schedules applies to the allowed amount for inexpensive items, those items that require frequent and substantial servicing, other prosthetic and orthotic devices, capped rental items, oxygen and oxygen supplies, and parenteral and enteral nutrition (PEN). Fee schedule amounts are updated annually. Reasonable charge applies to the allowed amount for certain dialysis equipment and supplies and therapeutic shoes claims. Reasonable charge amounts are updated annually. Drug pricing applies to the allowed amount for immunotherapy, bronchodilator, and other drugs. Most fees determined under drug pricing are subject to quarterly updates. Note: Fee schedules can change as the result of CMS revisions and/or through the application of inherent reasonableness, which is a review to determine if the existing prices are appropriate. The factors used to determine inherent reasonableness include, but are not limited to, price markup, differences in charges, costs, and utilization. FEE SCHEDULES Most payments of durable medical equipment (DME) are based on a fee schedule. A standard fee is established for each DMEPOS item by state. Payment is calculated using either the fee schedule amount or the actual charge submitted on the claim, whichever is lower. The fee schedule allowances include the application of national floors and ceilings. The DME fee schedules include items of DME, as well as supplies needed to use the DME, and are divided into the following categories: Inexpensive or other routinely purchased DME Items requiring frequent and substantial servicing Customized items Other prosthetic and orthotic devices Capped rental items Oxygen and oxygen equipment Surgical dressings PEN (effective January 1, 2002) Therapeutic shoes and inserts (effective January 1, 2005) 132_1209 1

177 Chapter 16: Pricing [DECEMBER 2009] For each class of equipment, payment is based on fees established effective January 1, 1989, and these fees are indexed annually. After application of the annual fee update for all categories of DME except prosthetics and orthotics, the national floor and ceiling payment limits are applied. Alaska and Hawaii are not subject to national floors and ceilings. Prosthetic and orthotic items and/or supplies are subject to regional limits. Payment for surgical dressing fees is an exception and is calculated using a 1992 base period. The Balanced Budget Act of 1997, Section 4315, authorized the Secretary to implement a fee schedule for PEN items and services. These items were previously paid on a reasonable charge basis. Gap Filling The fee schedule for items for which charge data is not available is calculated based on: fee schedule amounts for comparable equipment; fee schedule amounts of other durable medical equipment Medicare administrative contractors (DME MACs); and supplier price lists. Where supplier price lists are used, efforts are made to obtain prices in effect during the base year ( ). Mail order catalogs are often used as sources of price information. A deflation factor is applied if the price information is from a period other than the base period. This is done in order to approximate the base year price for gap filling purposes. The DMEPOS fee schedules can be located on the National Government Services Web site at The DMEPOS fee schedules can also be located on the CMS Web site at REASONABLE CHARGES The manner in which reasonable charge allowances by Medicare are determined is stipulated by Medicare law and not left to the discretion of the Medicare carrier. Medicare law specifically states that the amount allowed by Medicare must be the lowest of: The actual charge The supplier s customary charge or the 50th percentile of arrayed and weighted customary charges in the absence of a customary charge for the specific service rendered The prevailing charge, or The inflation-indexed charge (IIC) Data regarding suppliers fees is obtained by compiling information from claims that have been submitted. Records of all charges are kept on each claim processed during a calendar year. This information identifies the supplier, the type of service, the area in which the service was rendered, and the charge for that service. Effective with the 1995 reasonable charge updates, the data will be compiled using beneficiaries state of residency, rather than the area from which the service was rendered. 132_1209 2

178 Chapter 16: Pricing [DECEMBER 2009] Beginning January of each year, the data accumulated from July 1st of the second preceding year through June 30th of the preceding year is arrayed to develop the current year s annual pricing update of Medicare allowances. For example, data accumulated from July 1, 1999 to June 30, 2000, is arrayed to develop the annual pricing update of Medicare allowances for The annual update reflects the changes in the fees most frequently charged by suppliers for a particular service, within a specific locality, during the 12-month period ending June 30th of the previous year. This time frame is referred to as the base year. The customary and reasonable charge effective for the new annual pricing update does not necessarily reflect the fees currently being charged. Customary Charges The customary charge is the charge that best represents the most frequently charged amount by a supplier for a particular service. In order to determine the customary charges for each individual supplier, the actual charges the supplier has submitted for services rendered during the year ending June 30th immediately preceding the start of the annual pricing update (January of each year) for a given service, are arrayed in ascending order and the median charge is calculated. If you do not have at least three charges for a procedure code, then the 50th percentile of all other suppliers customary charges weighted by frequency will be used as the customary charge. The lowest actual charge, which is high enough to include the median of the arrayed charge data, is then selected as the suppliers customary charge for the service. For example, if ABC supplier charges $12 for a particular service 75 times during a calendar year and $15 twelve times for the same service, $12 would best represent the actual charge made by that supplier. The following is an example of how charges for a supplier would be arrayed in order to determine the customary charge. Charge Frequency Billing Cumulative Frequency $ times 20 $ times 60 $ times 95 $ times 100 Based on the cumulative frequency of 100 submitted charges, the median charge would be the 50th charge. In this example, the median charge submitted is $ There must be at least three billed charges for the same procedure by the same supplier to establish a customary for that procedure within the base year. Prevailing Charges The prevailing charge is the 75th percentile of all suppliers customary charges, within the beneficiary state for a specific service or procedure, weighted by frequency. Prevailing charges are calculated in much the same way as customary charges. The customary charge for each procedure is arrayed in ascending order, and weighted by how often the supplier rendered the services as reflected by the data used to calculate the customary charge. The prevailing charge is established at the 75th percentile of these cumulative services. There must be at least four customary charges for a given procedure to establish a prevailing charge for that service. 132_1209 3

179 Chapter 16: Pricing [DECEMBER 2009] The proper procedure for establishing prevailing charges is illustrated in the following example: Number of Supplies Rendered by Suppliers Customary Charge With Customary Charges as Indicated Cumulative Services $ $ $ $ Total 100 In this example, 75 percent of the total of 100 supplies falls at the 75th supply. The 75th supply falls within the cumulative frequency of 82 submitted supplies; therefore $7 becomes the prevailing charge. Inflation-Indexed Charge for Nonphysician Services The inflation-indexed charge (IIC) is the lowest of the reasonable charges for the previous annual pricing update year updated by an inflation index factor. (The inflation index factor is based on the change in the consumer price index [CPI].) The reasonable charges include the prevailing charge, customary charge, lowest charge level (if applicable), and the IIC. The IIC calculation does not take into account any reasonable charge limitation resulting from the application of comparability, inherent reasonableness, or the 50th percentile in the absence of a customary charge. Lowest Charge Level The lowest charge level (LCL) is calculated the same way that the prevailing charge is, except that the LCL is based on the data derived from claims processed during the preceding months of July through September prior to the annual fee screen pricing update. The charge at the 25th percentile is selected as the LCL prevailing. LCL calculations must be derived based on at least 20 charges for an item and no less than four suppliers within the locality. Note: The only charges subject to the LCL limitations are PEN services. DRUG PRICING The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MPDIMA), changed the basis for payment of drugs and biologicals not paid on a cost or prospective payment basis. The different instructions for 2004 and 2005 dates of service are listed below. Effective January 1, 2005, drugs and biologicals not paid on a cost or prospective payment basis will be paid based on the new average sale price (ASP) drug payment system. The new payment system is based on quarterly data submitted to CMS by manufacturers. CMS will supply contractors with the ASP drug pricing files for Medicare Part B/DME MAC drugs on a quarterly basis. Beginning January 1, 2005, the payment allowance limits for Medicare Part B/DME MAC drugs and biologicals that are not paid on a cost or prospective payment basis are 106 percent of the ASP. CMS will update the payment allowance limits quarterly. Please note the following exceptions to this general rule. 132_1209 4

180 Chapter 16: Pricing [DECEMBER 2009] The payment allowance limits for infusion drugs furnished through a covered item of DME on or after January 1, 2005 will continue to be 95 percent of the average wholesale price (AWP) reflected in the published compendia as of October 1, 2003 regardless of whether or not the DME is implanted. The payment allowance limits will not be updated in The payment allowance limits for drugs not included in the ASP Medicare Part B Drug Pricing File are based on the published wholesale acquisition cost (WAC) or invoice pricing. Effective for January 1, 2004 to December 31, 2004, payments for drugs billed to the DME MACs are based on 85 percent of the AWP for Healthcare Common Procedure Coding System (HCPCS) payment amounts based on the April 1, 2003, AWP fees. Exceptions to this calculation are as follows: The payment limits for infusion drugs furnished through an item of DME on or after January 1, 2004, will be 95 percent of the October 1, 2003 AWP. The payment limits for new drugs or biologicals will be 95 percent of the AWP. A new drug is defined as an unlisted drug (not currently covered by a HCPCS code) that was Food and Drug Administration approved subsequent to April 1, A drug would not be considered new if: (1) the brand or manufacturer of the drug changed; (2) a new formulation of the vial size is developed; or (3) the drug received a new indication. The payment limits for certain drugs studied by the Office of the Inspector General and Government Accounting Office are based on the percentages of the April 1, 2003 AWPs specified on Table 1 in the CMS Internet-Only Manual Publication , Medicare Claims Processing Manual, Chapter 17, Section 20. Payment limits determined under this instruction shall not be updated during The ASP fees or reasonable charge fees (prevailing [per state] fees) can be accessed from the National Government Services Web site at INDIVIDUAL CONSIDERATION Unusual services and items are generally reported to the carrier with miscellaneous HCPCS codes. It will be necessary in these situations for the supplier to furnish documentation describing the service or item, manufacturer name, product name and number, and the suggested retail price. When necessary, consultants advice will be obtained. INHERENT REASONABLENESS Where a review of customary and prevailing fees indicates excessive or deficient amounts, applying inherent reasonableness may be appropriate. Notice of proposed inherent reasonableness charges will always be published and a minimum of a 30-day comment period will be provided. This notice will include the HCPCS code, the current prevailing charge and the proposed charge. Source documentation that supports the proposed charge will also be included. After comments are reviewed, a final decision and responses to the issues raised in the comments will be published. 132_1209 5

181 Chapter 17: Medicare Benefit and Denial Categories [ DECEMBER 2009 ] 17 Medicare Benefit and Denial Categories BENEFIT CATEGORIES Medicare Part B covered services processed by the durable medical equipment Medicare administrative contractor (DME MAC) fall into benefit categories as specified by the Social Security Act (the Act). These benefit categories include: 1) Durable medical equipment (DME) 2) Prosthetic devices 3) Braces (orthoses) 4) Arm prostheses 5) Leg prostheses 6) Eye prostheses 7) Home dialysis supplies and equipment 8) Surgical dressings 9) Immunosuppressive drugs 10) Erythropoietin for home dialysis patients 11) Therapeutic shoes for diabetics 12) Oral anticancer drugs 13) Oral antiemetic drugs (replacement for intravenous antiemetics) 14) Intravenous immune globulin for primary immunodeficiency Some general definitions and coverage issues relating to DME, prosthetic devices and braces are listed below. Detailed information relating to specific items may be found in each individual medical policy. There are multiple individual policies for items described by benefit categories 1 3. Items described by benefit categories 5 13 each have a unique medical policy. Refer to those policies for information on definitions and coverage and payment rules. Durable Medical Equipment Durable medical equipment is equipment which; (a) can withstand repeated use, and (b) is primarily and customarily used to serve a medical purpose, and (c) generally is not useful to a person in the absence of an illness or injury, and (d) is appropriate for use in the home. Supplies and accessories which are required for the effective use of medically necessary durable medical equipment are covered. Supplies may include drugs and biologicals, which must be put directly into DME (e.g., nebulizers, infusion pumps) in order to achieve the therapeutic benefit of equipment. Medically necessary repairs, skilled maintenance and replacement of medically necessary durable medical equipment are covered. Refer to individual policies for specific information on definitions and coverage and payment rules. 132_1209 1

182 Chapter 17: Medicare Benefit and Denial Categories [DECEMBER 2009] Home Use of Durable Medical Equipment Medicare law limits Part B payment for DME items/services used (delivered) in the patient s home. If a hospital is a participating hospital, and emergency hospital or a hospital which meets the requirements of Section 1861(e)(1) of the Act, it does not qualify as the patient s home. The following apply when the individual is in a skilled nursing facility (SNF): Where an institution is classified as a participating SNF, a Section 1819(a)(1) institution (i.e., an institution primarily engaged in providing skilled nursing care and related services or rehabilitation services for the rehabilitation of injured, disabled or sick persons, and is not primarily for the care and treatment of mental diseases), or where a SNF has a part classified as participating and part classified as meeting Section 1819(a)(1) of the Act, it cannot be considered the individual s home. If an institution has a part which is participating or a part which meets Section 1819(a)(1), and a remaining part which does not meet Section 1819(a)(1), the institution may be considered the individual s home only if he/she was in the part which does not meet Section 1819(a)(1) of the Act. If a DME rental start date coincides with the patient s discharge date from an institution not classified as a home, DME MACs pay for medically necessary DME. Note: These rules apply only to DME claims. Orthotic and prosthetic devices are not subject to the home use requirement for coverage and payment purposes. Definition of Beneficiary s Home for DME Purchase or Rental Reference: Centers for Medicare & Medicaid Services (CMS) Internet-Only Manual (IOM) Publication , Medicare Benefit Policy Manual, Chapter 15 (Covered Medical and Other Health Services), Section d. For purposes of rental and purchase of DME, a beneficiary s home may be his/her own dwelling, an apartment, a relative s home, a home for the aged, or some other type of institution. However, an institution may not be considered a beneficiary s home if it: meets at least the basic requirement in the definition of a hospital, i.e., it is primarily engaged in providing by or under the supervision of physicians, to inpatients, diagnostic and therapeutic services for medical diagnosis, treatment, and care of injured, disabled, and sick persons, or rehabilitation services for the rehabilitation of injured, disabled, or sick persons; or meets at least the basic requirement in the definition of a skilled nursing facility, i.e., it is primarily engaged in providing to inpatients skilled nursing care and related services for patients who require medical or nursing care, or rehabilitation services for the rehabilitation of injured, disabled, or sick persons. Thus, if an individual is a patient in an institution or distinct part of an institution which provides the services described in the bullets above, the individual is not entitled to have separate Part B payment made for rental or purchase of DME. This is because such an institution may not be considered the individual s home. The same concept applies even if the patient resides in a bed or portion of the institution not certified for Medicare. 132_1209 2

183 Chapter 17: Medicare Benefit and Denial Categories [DECEMBER 2009] If the patient is at home for part of a month and, for part of the same month is in an institution that cannot qualify as his or her home, or is outside the U.S., monthly payments may be made for the entire month. Similarly, if DME is returned to the provider before the end of a payment month because the beneficiary died in that month or because the equipment became unnecessary in that month, payment may be made for the entire month. Prosthetic Devices Prosthetic devices are items that replace all or part of an internal body organ or replace all or part of the function of a permanently inoperative or malfunctioning internal body organ. The test of permanence is considered met if the medical record, including the judgment of the attending physician, indicates that the condition is of long and indefinite duration. Coverage under this benefit includes, but is not limited to, the following: Breast prostheses Facial prostheses Parenteral and enteral nutrition Ostomy supplies Urological supplies in patients with permanent urinary incontinence, and Glasses or contact lenses in patients with aphakia or pseudophakia Medically necessary supplies that are required for the effective use of a medically necessary prosthetic device are covered. Nutrients that are administered through repairs, adjustments and replacement of medically necessary prosthetic devices are covered. Refer to individual policies for specific information on definitions and coverage and payment rules. Dental prostheses (i.e., dentures) are excluded from coverage. Claims for internal prostheses (e.g., intraoral devices, intraocular lenses, joint implants, etc.) are not processed by the DME MAC. Braces (Orthoses) A brace is a rigid or semi-rigid device, which is used for the purpose of supporting a weak or deformed body member, or restricting or eliminating motion in a diseased or injured part of the body. Medically necessary repairs and replacement of medically necessary braces are covered. DENIAL CATEGORIES The Medicare program provides coverage for a wide range of services that improve the health of the elderly and disabled. Medicare, however, does not cover every service that is related to the health care of its beneficiaries. Coverage and exclusion of services are defined in the Act, which in turn are implemented through federal regulations, Medicare manuals, instructions from the Centers for Medicare & Medicaid Services (CMS) and decisions by the individual DME MACs that administer the Medicare program in each jurisdiction. 132_1209 3

184 Chapter 17: Medicare Benefit and Denial Categories [DECEMBER 2009] This section provides an overview of the denial categories for services billed to Medicare. It is important to understand the basic concepts for proper submission and to understand supplier and beneficiary liability issues. The Medicare program is complex and there are occasional exceptions to some of the statements made below. Special coverage guidelines are published in the individual medical policies, which can be found on the National Government Services Web site at and the quarterly Jurisdiction B Connections. Section 1861(s) of the Act defines the medical and other health services that are covered by Medicare. Services that are not included in the benefit category definitions are considered benefit category denials. While these services are often reasonable and important health care services, they are just not included in the benefit package specified by the law. Examples (not all-inclusive) of items in this category include: 1) Disposable supplies other than surgical dressings or supplies required for the effective use of DME or prosthetic devices 2) Equipment that does not serve an exclusively medically therapeutic function 3) Most oral and injectable medications Note: Denials for this reason are described by the term noncovered in the Medical Policy Information chapter. Medical Necessity Denials Section 1862(a)(1) of the Act excludes services that are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member. CMS issues national coverage determinations (NCDs) that are binding on all Medicare carrier jurisdictions. In addition, the DME MAC has the authority and responsibility to make medical necessity determinations on all aspects of medical practice not defined nationally. Services that are considered investigational or experimental are denied under this exclusion. Preventative services are excluded from coverage under this section of the Act because they do not diagnose or treat an established condition (not because they are inherently unreasonable or unnecessary). Note: Denials under this provision of the law are described by the term not medically necessary in the Medical Policy Information chapter. Other Statutory Exclusion Denials Sections 1862(a)(2) 1862(a)(16) of the Act list other categories of services that are excluded from coverage by Medicare. Those that may be related to durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) items are as follows: A) Routine services and appliances (Section 1862[a][7]). Some examples of items excluded from coverage under this section are: 1) Eyeglasses and contact lenses except in those patients who have had cataract extraction or have had their lens removed for other indications 2) Hearing aids 132_1209 4

185 Chapter 17: Medicare Benefit and Denial Categories [DECEMBER 2009] B) Orthopedic shoes or other supportive devices for the feet. An exception is a shoe that is an integral part of a leg brace. Another exception is a special shoe and inserts used for the prevention or management of foot ulcers in diabetics. C) Personal comfort items. D) Services received outside of the United States. E) Services for which another government program is primary (e.g., Veteran s Administration). F) Services provided to an immediate relative or members of the household. G) Services relating to war injuries received after the beneficiary is eligible for Medicare coverage. H) Services for which the beneficiary has no legal obligation to pay. I) Services paid under Workers Compensation. Note: Denials for these reasons are described as noncovered in the Medical Policy Information chapter. Fragmented Coding The Medicare allowance for an individual Healthcare Common Procedure Coding System (HCPCS) code often includes several component items. An individual HCPCS code will be denied if it is determined that the item described by that code is included in the allowance for another code that has also been billed. In this case, even though the item provided may be covered the payment for the code is being denied. Note: Denials for this reason will be described as not separately payable in the Medical Policy chapter. Other Denials Duplicate Claims If a claim is received for a service that has been previously processed, and a Medicare allowed amount has been established, the second claim will be denied as a duplicate. Incomplete Claims Suppliers are required to submit completed CMS-1500 claim forms, or the most current version of American National Standards Institute (ANSI) and/or National Council for Prescription Drug Programs (NCPDP) electronic formats, for items provided to Medicare beneficiaries. Claims lacking beneficiary information, diagnosis coding (where necessary), procedure coding, ordering physician s name, and National Provider Identifier (NPI) or billing supplier information will be denied as incomplete claims. However, these claims will be considered for payment when the missing information is supplied. Reduction to the Least Costly Alternative In certain circumstances, the DME MAC may determine that the item that was provided and billed contains either deluxe features or a feature of a medical nature not required by the patient s condition. If there is a medically appropriate alternative item that is less costly than the item furnished, the amount paid will be based on the allowance for the item that meets the patient s medical needs. This will result in a payment reduction rather than a complete denial. 132_1209 5

186 Chapter 17: Medicare Benefit and Denial Categories [DECEMBER 2009] PREVENTION OF COMMON CLAIM SUBMISSION ERRORS The following chart identifies the most common claim submission errors, as well as helpful tips on how to decrease the number of errors. Note that suppliers should always refer to their remittance advice to determine the ANSI code assigned to the service line. ANSI codes are used to convey appeals information and other claim-specific information, providing additional explanation for claim-level adjustments. ANSI Code Category Denial Type CO-18 Duplicate claim Duplicate CO-151 Payment denied/reduced because the payer deems the information submitted does Same/similar not support this level of service, this many services, this length of service, this dosage, or this day s supply. OA-109 Claim not covered by this payer/contractor. You must send the claim to the correct Jurisdiction payer/contractor. CO-16 Claim/service lacks information which is needed for adjudication. Return/Reject CO-176 Payment denied because the prescription is not current. Return/Reject CO-173 Payment adjusted because this service was not prescribed by a physician. Return/Reject PR-13 The date of death precedes the date of service. Eligibility CO-22 Payment adjusted because this care may be covered by another payer per MSP coordination of benefits. PR-31 Claim denied as patient cannot be identified as our insured. Eligibility PR-27 Expenses incurred after coverage terminated. Eligibility ANSI Reason Code CO-18 Definition: Duplicate claims Prevention Tips: The Jurisdiction B DME MAC receives a large quantity of claims that result in duplicate denials. The duplicate claim submission is the number one claims submission error. Generally, claim submission errors are services/items previously processed for the same patient, date of service and/or HCPCS code. Suppliers are reminded to allow 14 days for electronically submitted claims and 29 days for hard-copy claims before resubmitting a claim to the DME MAC. Suppliers should utilize the Claim Status Inquiry (CSI) or interactive voice response (IVR) system at before resubmitting the claim for payment. If a supplier has documentation to support that the services are not actual duplicate services, but rather, medically necessary services that are in addition to the services submitted on the initial claim and should be paid by Medicare, the supplier may submit an appeal request along with documentation to support medical necessity. If the reason for denial was due to a minor error or omission, the supplier may use the reopening process rather than filing an appeal. Refer to the Reopenings and Appeals Chapter of the Jurisdiction B DME MAC Supplier Manual for reopening criteria. ANSI Reason Code CO-151 Definition: Payment denied/reduced because the payer deems the information submitted does not support this level of service, this many services, this length of service, this dosage, or this day s supply. 132_1209 6

187 Chapter 17: Medicare Benefit and Denial Categories [DECEMBER 2009] Prevention Tips: Suppliers should evaluate the patient s history during the intake process to determine if the same or similar equipment was previously obtained. Suppliers may utilize CSI to check for same/similar items on file within the Jurisdiction B processing system or utilize the IVR unit at to check both the Jurisdiction B processing system and the Common Working File (CWF) to determine if the beneficiary has same/similar items on file. If the beneficiary wants the same/similar equipment and agrees to be financially liable, the supplier should have the beneficiary sign an Advance Beneficiary Notice of Noncoverage (ABN) and submit the claim with modifier GA to indicate an ABN is on file. However, if a claim denies because the patient has previously received the same/similar equipment, and the supplier was unaware of the previous purchase, the supplier should refund the beneficiary (if applicable). The supplier may choose to exercise his/her right to request a redetermination. Redetermination requests should be submitted to the following address: National Government Services, Inc. Redeterminations P.O. Box 6036 Indianapolis, Indiana ANSI Reason Code OA-109 Definition: Claim not covered by this payer/contractor. You must send the claim to the correct payer/contractor. Prevention Tips: National Government Services is the Jurisdiction B DME MAC that processes DMEPOS claims for the states of Illinois, Indiana, Kentucky, Michigan, Minnesota, Ohio, and Wisconsin. DMEPOS jurisdiction is based on the beneficiaries address on file with the Social Security Administration. Claims submitted to an incorrect DME MAC jurisdiction will receive this type of denial. Suppliers should verify that the address you are using on the claim for the beneficiary is the same address on file with Social Security Administration (SSA). This will help to ensure claims are sent to the correct DME MAC jurisdiction for processing. Claims received at the Jurisdiction B DME MAC via electronic submission for a beneficiary who resides in another Jurisdiction, will be automatically transferred to the appropriate DME MAC based on the beneficiary s address submitted on the claim. A transferred claim will not be processed by the DME MAC Jurisdiction that received the transferred claim, unless the supplier has a signed EDI enrollment form on file with that Jurisdiction. Claims received at the Jurisdiction B DME MAC via electronic submission for a beneficiary who resides in Jurisdiction B, will enter the processing system once accepted on the front end. If within the processing system, it is determined that the address is incorrect and the beneficiary actually resides outside of Jurisdiction B, the claims will be denied with this type of denial. 1st Example: An electronic claim is submitted to Jurisdiction B for John Doe in Virginia (VA). John Doe s address with SSA is Florida (FL). The claim passes the front-end and enters the processing system. Since John Doe's address with SSA is FL, the claim will be denied with OA-109. The supplier may resubmit the claim with the correct address of FL to Jurisdiction B. When the electronic claim is submitted with the FL address to Jurisdiction B, it will be transferred to Jurisdiction C. The supplier will need to have an EDI enrollment form on file with Jurisdiction C for them to accept that claim electronically. Suppliers may also choose to bill that claim directly to Jurisdiction C, since the beneficiary resides in that Jurisdiction. 132_1209 7

188 Chapter 17: Medicare Benefit and Denial Categories [DECEMBER 2009] 2nd Example: An electronic claim submitted to Jurisdiction B for John Doe in Florida (FL). John Doe's address with SSA is FL. The electronic claim will be automatically transferred to Jurisdiction C and will not enter the Jurisdiction B processing system. The supplier will need to have an EDI enrollment form on file with Jurisdiction C for them to accept that claim electronically. Suppliers may also choose to bill that claim directly to Jurisdiction C, since the beneficiary resides in that Jurisdiction. ANSI Reason Code CO-16 Definition: Claim/service lacks information which is needed for adjudication. Prevention Tips: Claims were submitted to the Jurisdiction B DME MAC that contained incomplete or invalid information and cannot be processed as submitted. Refer to the Remark Code (REM) located on the far-left side of the standard paper remittance (SPR) advice. The REM advises what information is missing or incomplete on the claim. Resubmit a new claim with the missing/incomplete information. ANSI Reason Code CO-176 Definition: Payment denied because the prescription is not current. Prevention Tips: The Jurisdiction B DME MAC encourages suppliers to review the medical policies to verify whether or not an initial, revised or recertification Certificate of Medical Necessity (CMN) is required. When submitting claims that require a CMN, suppliers should ensure that all sections of the CMN are completed prior to claim submission to the DME MAC. Suppliers should submit the CMN with initial claim only and wait hours before submitting any subsequent claims. The medical policies are located on the National Government Services Web site at ANSI Reason Code CO-173 Definition: Payment adjusted because this service was not prescribed by a physician. Prevention Tips: The Jurisdiction B DME MAC encourages suppliers to review medical policies to verify whether or not the items or services routinely provided to Medicare beneficiaries require an initial, revised or recertification CMN. When submitting claims that require a CMN, suppliers should ensure that all sections of the CMN are completed prior to submitting the claim to the DME MAC. Suppliers should submit the CMN with the initial claim only and wait hours before submitting any subsequent claims. The medical policies are located on the National Government Services Web site at ANSI Reason Code CO-13 Definition: The date of death precedes the date of service. Prevention Tips: Medicare Part B coverage was not valid when the patient received this item and/or service. This means that expenses were incurred under on of the following circumstances: After coverage was terminated Prior to coverage 132_1209 8

189 Chapter 17: Medicare Benefit and Denial Categories [DECEMBER 2009] The date of death precedes the date of service, or Medicare was unable to identify the patient as an insurer Suppliers should check the patient records for valid coverage dates and for correct patient information prior to claim submission. Suppliers may resubmit claims denied in error only after the beneficiary s record has been updated with the correct information. ANSI Reason Code CO-22 Definition: Payment adjusted because this care may be covered by another payer per coordination of benefits. Prevention Tips: The Jurisdiction B DME MAC records indicate that Medicare is the secondary payer. Suppliers must send the claim to the correct payer/contractor first and then submit the claim to Medicare with a copy of the primary payment notice. When claims are submitted to Medicare as primary and another insurer is actually the primary payer, claims will be denied and suppliers will receive the following denial message: Our records show that Medicare is your secondary payer. This claim must be sent to your primary insurer first. Resubmit this claim with a copy of the primary payment notice. Suppliers who receive this edit must send the claims to the correct payer/contractor first and then resubmit the claim to Medicare with a copy of the primary payment notice or the Explanation of Benefits. If the beneficiary s record/control file at the Common Working File (CWF) contains incorrect or outdated payer information, which has caused the claim to deny for the above mentioned reason, the supplier should advise the beneficiary to contact the Coordination of Benefits Contractor toll free at to have their Medicare Secondary Payer control file updated. The supplier should resubmit the claim only after the payer information on the beneficiary s record has been updated to reflect the correct payer information. ANSI Reason Code PR-31 Definition: Claim denied as patient cannot be identified as our insured. Prevention Tips: Medicare Part B coverage was not valid when the patient received this item and/or service. This means that expenses were incurred under on of the following circumstances: After coverage was terminated Prior to coverage The date of death precedes the date of service, or Medicare was unable to identify the patient as an insurer Suppliers should check the patient records for valid coverage dates and for correct patient information prior to claim submission. Suppliers may resubmit claims denied in error, only after the beneficiary s record has been updated with the correct information. 132_1209 9

190 Chapter 17: Medicare Benefit and Denial Categories [DECEMBER 2009] ANSI Reason Code PR-27 Definition: Expenses incurred after coverage terminated. Prevention Tips: Medicare Part B coverage was not valid when the patient received this item and/or service. Expenses incurred after coverage was terminated, prior to coverage, or Medicare was unable to identify the patient as an insurer. Suppliers should check the patient records for valid coverage dates and for correct patient information prior to claim submission. Suppliers should utilize the CSI or the IVR system at to validate patient eligibility. To find out more about CSI, visit the National Government Services Web site at 132_

191 Chapter 18: Supplier Remittance Notice [JUNE 2008] 18 Supplier Remittance Notice GENERAL INFORMATION Once a claim has completed processing through the Medicare system, a supplier remittance notice is generated for all suppliers for all claims, whether they file paper or electronic claims. For those suppliers that file nonassigned claims, a supplier remittance notice will be sent and the beneficiary will receive notice of adjudication on nonassigned claims in the form of the Medicare Summary Notice (MSN). The supplier remittance notice includes a list of all claims paid or denied during a particular payment period. Included with the supplier remittance notice is the Medicare check for those claims that are approved for payment. The standard paper remittance (SPR) notice is the product of the Centers for Medicare & Medicaid Services (CMS) standardization of provider/supplier payment notification. This remittance form was created to: provide a new remittance notice that is uniform in both content and format; and ease the transition to the electronic remittance notice media. As part of the effort to eliminate any variations in the administration of Medicare across the country, and to furnish a uniform level of information to all providers of health care about the decisions made on their claims, a standardized set of codes have been created to explain how a claim has been processed. Under the standard format, only codes approved by the American National Standards Institute (ANSI) insurance subcommittee, and Medicare-specific supplemental messages approved by CMS, may be used. ANSI is a nongovernmental association of which CMS is a member. TIPS FOR READING THE REMITTANCE NOTICE One claim is listed in each block of the remittance, and is separated from other claims with a line. Claims are listed in alphabetical order by patient s last name. The columnar dollar amount fields for each line of the claim are totaled down and are displayed in the CLAIM TOTALS fields; these lines cannot be totaled across. ANSI Group, Reason, Remark and Medicare Outpatient Adjudication (MOA) codes are listed in the key at the end of the remittance notice. A TOTALS line that includes all claims on the remittance notice, as well as offsets and other adjustments, is located at the end of the suppler remittance notice. The net pay field on this line equals the amount of the check. Claim Control Numbers When claims are entered into the Medicare system, they are issued a tracking number known as a claim control number (CCN) (also referred to as the internal control number [ICN]). 1

192 Chapter 18: Supplier Remittance Notice [JUNE 2008] The first five digits of the 14-digit ICN/CCN indicate the date (in Julian date format) when Medicare received the claim. The Julian date is expressed by the first two digits being the year and the next three digits are the sequential numbering of the days of the year. The CCN/ICN also indicates whether the claim was submitted on paper or electronically or if it was electronically transferred from another durable medical equipment Medicare administrative contractor (DME MAC) jurisdiction (6th digit). Finally, the last digit of the CCN indicates if the claim is an initial claim or an adjusted claim. If the last digit is 1 or higher, the claim has been adjusted. ANSI and MOA Codes Medicare uses codes to explain the determination of a claim. All Medicare contractors are required to use ANSI codes. The DME MACs also use some Medicare specific codes called MOA codes. Each twodigit ANSI Reason code is preceded by one of the following two-letter ANSI group codes: PR = Patient responsibility; it indicates that the patient is financially responsible for the claim or claim line CO = Contractual obligation; it means that the supplier is financially responsible for the claim or claim line OA = Other adjustment The narrative description of each Remark code is given in the Glossary at the end of the supplier remittance notice. Note: Effective June 1, 2006, the CMS mandated the discontinuation of SPRs for suppliers that are set up to receive the electronic remittance advice (ERA). As a result, suppliers receiving the ERA will no longer receive the SPR 45 days after the ERA activation, and must rely solely on downloading the ERA files. This is true whether the ERA is received directly or through a billing agent, clearinghouse or other entity representing the supplier s company. For more information on the suppression of SPRs, refer to CMS Medicare Learning Network Matters article MM4376 at 2

193 Chapter 18: Supplier Remittance Notice [JUNE 2008] SAMPLE REMITTANCE NOTICE 3

194 Chapter 18: Supplier Remittance Notice [JUNE 2008] REMITTANCE NOTICE KEY Remittance Notice Header: Individual Claim Summary: Field PROVIDER NAME AND ADDRESS PROVIDER NUMBER PAGE NUMBER DATE CHECK/EFT # STATEMENT # PROVIDER BULLETIN PERF PROV SERV DATE POS NOS PROC MODS BILLED ALLOWED DEDUCT COINS Description The name and address of the billing supplier. The National Provider Identifier (NPI) of the billing supplier and the number used to process the claims listed. This field lists the current page number and the total number of pages of the remittance notice. The date the remittance notice was generated. This date is the same as the date on the check. The number in this field corresponds to the number on the check (if issued). The EFT # is the bank tracer number. System generated number for tracking. This field is reserved for a general notice that is published to all suppliers on each remittance notice. The NPI of the performing supplier. Service date as submitted on the claim. The lines within each claim are in descending order by the service date. Place of Service as billed on the claim. Number (or units) of services as billed on the claim. The HCPCS procedure code as submitted on the claim. If we change the code during processing, the billed code is listed below the approved code. HCPCS modifiers which were submitted on the claim. The supplier s submitted charge. The Medicare allowed amount prior to any deductions or offsets. The portion of the Medicare allowed amount that was applied to the patient's deductible. The 20 percent coinsurance (based off the allowed amount after deductible) which is due by the patient. 4

195 Chapter 18: Supplier Remittance Notice [JUNE 2008] Total Remittance Summary: Field PROV PD RC-AMT NAME HIC AC ICN ASG MOA REM PT RESP CLAIM TOTALS ADJUSTMENTS NET REMITTANCE TOTALS ADJS Description The amount Medicare is paying to the supplier. The Adjustment Reason Code amount. These amounts are deducted from claim payment and do not include the deductible and coinsurance due by the patient. If there is more than one code, additional adjustment codes and remarks appear on the next line. The patient s name on the claim. The patient s Medicare number. The patient s account number that has been assigned by the supplier. This number is listed when submitted on an electronic claim. Internal Control Number. The CCN assigned to the claim in Julian date form. The assignment value of the claim. Y indicates the claim is assigned, N means the claim is nonassigned. Medicare Outpatient Adjudication Remark code. Up to five codes per line item may appear. These codes define the processing action taken on the line item of the claim. Remark Codes. Additional information regarding the claim. Patient responsibility. This column will include amounts for noncovered services, deductible and coinsurance. This is the claim total line for each column. Adjustments that are made to the allowed amount for each individual claim and affect the total net. Net amount paid for individual claim. The net amount of the supplier s check. The net amount is determined by: Claim Total Allowed Amount Deductible Coinsurance Reason Code Amounts Previous Paid Interest Other dollar amounts Adjustments which are made to the allowed amount and affect the total net. These include the fields below. 5

196 Chapter 18: Supplier Remittance Notice [JUNE 2008] Glossary: Field PREV PD PD TO PATIENT INT MSP OTHER OFFSET CODES Description On adjusted claims, this is the amount previously paid on the original claim. Paid to patient. When the patient has paid the supplier more than the applicable coinsurance and deductible, that overpayment is refunded to the patient from the supplier s payment. Interest that has accrued because a clean claim did not complete processing within 30 days. The amount paid by the primary insurer for Medicare Secondary Payer (MSP) claims. Other adjustments to the supplier s payment. These could include a reduction due to overpayment recovery offset, a waiver offset, or IRS withholdings. The Financial Control Number (FCN), Health Insurance Claim Number (HICN) and dollar amount regarding offset. Detailed information defining the codes. RESOURCES CMS Web-based Training: Understanding the Remittance Advice for Professional Providers; 6

197 Chapter 19: Medicare Summary Notice [JUNE 2008] 19 Medicare Summary Notice For each claim that is processed, a Medicare Summary Notice (MSN) is sent to the Medicare beneficiary. On nonassigned claims, MSNs are issued as the claims are processed. On assigned claims, MSNs are mailed in 30-day cycles. Even though the supplier may have received notification of payment, the patient may not have received their MSN. Refer to the sample MSN on the following pages, as well as the corresponding details of the various numbered fields following the sample notice. 1

198 Chapter 19: Medicare Summary Notice [JUNE 2008] SAMPLE MSN 2

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