Physicians are required to certify to the medical necessity for any service for which they submit bills to the Medicare program. Physicians are involved in attesting to medical necessity when ordering services or supplies that must be billed and provided by an independent supplier or provider. Medicare requires physicians to certify to the medical necessity for many of these items and services through prescriptions, orders, or, in certain specific circumstances, Certificates of Medical Necessity (CMNs). These documentation requirements substantiate that the physician has reviewed the patient’s condition and has determined that services or supplies are medically necessary.

Two areas where the documentation of medical necessity by physician certification plays a key role are (i) home health services and (ii) durable medical equipment (DME). In one of the OIG audits, we have discovered that physicians sometimes fail to discharge their responsibility to assess their patients’ conditions and need for home health care. Similarly, the OIG has found numerous examples of physicians who have ordered DME or signed CMNs for DME without reviewing the medical necessity for the item or even knowing the patient.

Physician Certifies Medical Necessity for DMEPOS

DME is equipment that can withstand repeated use, is primarily used for a medical purpose, and is not generally used in the absence of illness or injury. Examples include hospital beds, wheelchairs, and oxygen delivery systems. Medicare will cover medical supplies that are necessary for the effective use of DME, as well as surgical dressings, catheters, and ostomy bags. However, Medicare will only cover DME and supplies that have been ordered or prescribed by a physician. The order or prescription must be personally signed and dated by the patient’s treating physician.

DME suppliers that submit bills to Medicare are required to maintain the physician’s original written order or prescription in their files. The order or prescription must include:

• the beneficiary’s name and full address;
• the physician’s signature;
• the date the physician signed the prescription or order;
• a description of the items needed; # the start date of the order (if appropriate); and
• the diagnosis (if required by Medicare program policies) and a realistic estimate of the total length of time the equipment will be needed (in months or years).

For certain items or supplies, including supplies provided on a periodic basis and drugs, additional information may be required. For supplies provided on a periodic basis, appropriate information on the quantity used, the frequency of change, and the duration of need should be included. If drugs are included in the order, the dosage, frequency of administration, and, if applicable, the duration of infusion and concentration should be included.

Medicare further requires claims for payment for certain kinds of DME to be accompanied by a CMN signed by a treating physician (unless the DME is prescribed as part of a plan of care for home health services). When a CMN is required, the provider or supplier must keep the CMN containing the treating physician’s original signature and date on file.

Generally, a CMN has four sections:

• Section A contains general information on the patient, supplier, and physician. Section A may be completed by the supplier.
• Section B contains the medical necessity justification for DME. This cannot be filled out by the supplier. Section B must be completed by the physician, a nonphysician clinician involved in the care of the patient, or a physician employee. If the physician did not personally complete section B, the name of the person who did complete section B and his or her title and employer must be specified.
• Section C contains a description of the equipment and its cost. Section C is completed by the supplier.
• Section D is the treating physician’s attestation and signature, which certifies that the physician has reviewed sections A, B, and C of the CMN and that the information in section B is true, accurate, and complete. Section D must be signed by the treating physician. Signature stamps and date stamps are not acceptable.

By signing the CMN, the physician represents that:

• he or she is the patient’s treating physician and the information regarding the physician’s address and unique physician identification number (UPIN) is correct;
• the entire CMN, including the sections filled out by the supplier, was completed prior to the physician’s signature; and
• the information in section B relating to medical necessity is true, accurate, and complete to the best of the physician’s knowledge.

Reference:

Department of Health and Human Services

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When you outsource your medical billing operations, the billing team focuses exclusively on the filing of claims, so there is no pressure on them to treat urgent patients or save lives. They take the workload off your back, freeing up your doctors and team to focus on other matters.

There are several advantages of outsourcing Durable Medical Equipment Billing, some of the advantages are listed below:

1. More Control:

It is a common misconception that by outsourcing your medical billing services you can lose control over your business processes. In fact, many people feel that they have better control over their medical billing processes and the money involved due to a trained and dedicated outsourced billing staff. This increased control directly ties in with your operational benefits, which stand to benefit from outsourcing.

2. Increased Revenues:

Employing staff for billing purposes can get expensive. Hiring one new person means the costs of training, the employee’s salary, and taxes, as well as compensation for a turnover. Professional billing services eliminate these headaches by already having trained professionals.

3. Better Customer Service:

When patients call to discuss the DME billing, they will be able to talk to medical representatives provided by the billing service. This will reduce the burden placed on the hospital staff. The medical billing representatives will be able to answer questions, handle complaints, and provide the services your customers need without the pressure of trying to run an ED at the same time. Customer satisfaction is the purpose of any business and it will definitely increase.

4. Better Safety:

Outsourcing your billing processes to a third-party service provider is completely safe. Well-established outsourcing companies provide a very transparent billing process. Most of the service providers have a HIPAA-compliant and 100% secure medical billing processes to safeguard against any hacking attempts. Companies need to have the assurance that their data is kept confidential at all times, and well-regarded outsourcing providers have the desired security and infrastructure to provide a safe haven for medical billing outsourcing operations.

5. Changing Regulations:

The rules and regulations of the medical billing world are constantly changing. Keeping up with all the changes can be time-consuming and cumbersome for any firm. By outsourcing your medical billing requirements, the changes in rules and regulations will be managed by the outsourcing partner, as they would make it a point to stay up-to-date with the latest changes. This frees up time for you to focus on other operational areas.

6. More Time for Patients:

When the medical billing processes are outsourced to a third-party, health practitioners have more time to concentrate on the patients rather than spending time on their billing processes. It makes good business sense to invest your business time into your core competencies like quality patient care and outsource ancillary business functions to service providers.

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Additionally, payment on a fee schedule basis is a regulatory requirement at 42 Code of Federal Regulation (CFR) Section 414.102 for Parenteral and Enteral Nutrition (PEN), splints, casts, and Intraocular Lenses (IOLs) inserted in a physician’s office.

The DMEPOS and PEN fee schedule files contain Healthcare Common Procedure Coding System (HCPCS) codes that are subject to the adjusted fee schedule amounts under Section 1834(a)(1)(F) as well as codes that are not subject to the fee schedule Competitive Bidding Program (CBP) adjustments.

New Codes Added

New DMEPOS codes added to the HCPCS file, effective January 1, 2019, where applicable, are A4563, A5514, A6460, A6461, B4105, E0447, E0467, L8608, L8698, L8701, L8702, V5171, V5172, V5181, V5211, V5212, V5213, V5214, V5215, and V5221. The new codes are not to be used for billing purposes until they are effective on January 1, 2019.

As part of this update, fee schedules for the following new codes will be added to the DMEPOS fee schedule file effective January 1, 2019: A4563, A5514, E0447, and E0467. Beginning January 1, 2019, the DMEPOS fee schedule file also includes fees for G0068, G0069, and G0070 three home infusion G-codes.

For other new CY 2019 codes, fee schedule amounts will be established as part of the July 2019 DMEPOS fee schedule update when applicable. The DME MAC shall establish local fee schedule amounts to pay claims for new codes listed from January 1, 2019, through June 30, 2019.

For gap-filling pricing purposes, deflation factors are applied before updating to the current year. The deflation factors for 2018 by payment category are:

• 435 for Oxygen
• 437 for Capped Rental
• 439 for Prosthetics and Orthotics
• 556 for Surgical Dressings
• 605 for Parental and Enteral Nutrition
• 927 for Splints and Casts
• 911 for Intraocular Lenses

Codes Deleted

One HCPCS code (K0903) will be deleted from the DMEPOS fee schedule files effective January 1, 2019

Multi-Function Ventilators

Effective January 1, 2019, fees are added for new HCPCS code E0467 (Home ventilator, multifunction respiratory device, also performs any or all of the additional functions of oxygen concentration, drug nebulization, aspiration, and cough stimulation, includes all accessories, components, and supplies for all functions). Pursuant to 42 CFR 414.222(f), the fee schedule amounts for code E0467 are established using the Medicare fee schedule amounts for ventilators and the average cost of the additional functions performed by multi-function ventilators.

The multi-function ventilator is classified under the frequent and substantial servicing payment category at Section 1834(a)(3) of the Act and payment will be made on a continuous monthly rental basis for beneficiaries who meet the Medicare medical necessity coverage criteria for a ventilator and at least one of the four additional functions of the device.

Therapeutic Shoe Modification Codes

CMS is also adjusting the fee schedule amounts for shoe modification codes A5503 through A5507 as part of this update in order to reflect more current allowed service data. Section 1833(o)(2)(C) of the Act required that the payment amounts for shoe modification codes A5503 through A5507 be established in a manner that prevented a net increase in expenditures when substituting these items for therapeutic shoe insert codes (A5512 or A5513).

To establish the fee schedule amounts for the shoe modification codes, the base fees for codes A5512 and A5513 were weighted based on the approximated total allowed services for each code for items furnished during the second quarter of CY 2004. For 2019, CMS is updating the weighted average insert fees used to establish the fee schedule amounts for the shoe modification codes with more current allowed service data for each insert code.

The base fees for A5512 and A5513 will be weighted based on the approximated total allowed services for each code for items furnished during the CY 2017. The fee schedule amounts for shoe modification codes A5503 through A5507 are revised to reflect this change, effective January 1, 2019.

Diabetic Testing Supplies

The fee schedule amounts for non-mail order Diabetic Testing Supplies (DTS) (without KL modifier) for codes A4233, A4234, A4235, A4236, A4253, A4256, A4258, and A4259 are not updated by the annual covered item update. In accordance with Section 1834(a)(1)(H) of the Act, the fee schedule amounts for these codes were adjusted in CY 2013 so that they are equal to the SPAs for mail order DTS established in implementing the national mail-order CBP under Section 1847 of the Act.

For dates of service between January 1, 2019, and December 31, 2019, the National Mail-Order Recompete SPAs are updated by the projected change of 2.5%. The national mail-order adjusted fee schedule amounts will be used in paying mail-order diabetic testing supply claims in all parts of the United States.

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The use of durable medical equipment in the home, while not a recent development, was formally recognized by the Congress with the passage of the original Medicare legislation. Since that time the statute has been amended to provide for a more workable, economical, and desirable interface among the administrative, supplier, and user communities.

So with regards to renting, purchasing or repairing and maintenance of Durable Medical equipment here are some developments you should keep in mind for perfect reimbursement.

Durable medical equipment billing recent policy developments:

• As a thumb rule, DME requires a prescription to rent or purchase, as applicable, before it is eligible for coverage.
• Certain items must be rented and may not be purchased (under “Capped Rentals”). Certain other items must be rented prior to being converted to purchase in accordance latest DME billing developments.
• Medical Billers need to charge the applicable modifier after all HCPCS codes.
• As a DME biller, you need to charge maintenance and repair modifier codes first after the procedure code.
• Submit all claims for repairs with a complete description of services provided.
• Always submit a complete description of the item.
• With the initial claim, submit a factory invoice for the item (catalogs and retail price listings are not acceptable) and, if appropriate, a certificate of medical necessity form with the physician’s signature. Though this is not a recent development, don’t follow this procedure, and stand to lose reimbursement.
• Do not staple this documentation to the claim form; also check HER or EMR prerequisites.
• Submit all initial claims on paper to ensure that the appropriate documentation is received in the same envelope.
• The additional documentation cannot be transmitted with electronically submitted claims.

 Durable Medical Equipment Guidelines for renting

DME rental against purchase coverage is based on the article prescribed, the patient’s prognosis, the time frame required for use, and the total cost (rental vs. purchase) for the equipment.

Remember that when DME is rented, the benefits cannot exceed the total of the cost to purchase the DME or the contracted fee schedule. This is one vital DME billing recent development policy.  Items that are considered to be a capped rental will be rented up to the allowed amount for purchase.

Durable Medical Equipment may be rented when: (Point to remember for the DME suppliers)

• DME is not classified as “Routinely Purchased DME” (costing more than $200) or “Inexpensive DME” and anticipated medical need is for a limited time frame, or if the equipment requires high maintenance (i.e., requires specialized skills to service the item).

DME Billing requirements for Rentals

• Always include modifier code on rental claim forms.
• Indicate the beginning and ending dates of the rental period.
• Always include the modifier “RR” in the first modifier location of field 24D on claims for rented items. Items filed without the “RR” modifier and without the rental dates will be considered as purchases and will be reimbursed accordingly.
• Only bill for services already provided to a member.
• Bill every 30 days of rental as one unit unless classified as a daily rental.
• If an item is still being rented at the time of the claim, the claim must include the beginning date of the rental and indicate the last day of the billing cycle as the ending date of service.

Though with the ICD 10 transition, there is lots more development to look after, it should more or less be the work of your accounts department, rather than you (owner) have to dig deep into the new developments. As of now, the smooth passage of the new federal health care policy is what everybody is looking at. Is it good or bad for the DME, along with the overall healthcare industry is anybody’s guess?

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In simple terms, Durable Medical Equipment refers to wheelchairs, braces, shower chairs, and other assisted living equipment needed by the patients. These gears are generally purchased as an outpatient entity.

Preapproval in DME billing is critical

It does not matter if your patients are insured through Medicare, Medicaid, and Workers’ Compensation or through a private insurance carrier. Almost all DME claims must be pre-approved prior to the submission of the medical billing claims.

Many of these policies have strict guidelines, which must be followed in order for the DME medical billing claim to be reimbursed. Some providers will require that the DME be purchased through their own sources and have a listing of specified providers. Many HMOs are very strict about the DME they will reimburse a medical billing claim for.

Keep in mind that documentation and pre-approval is the key. And when you think you have enough, go for one more item to make sure you have a strong claim.

Do remember that Durable Medical Equipment is one of the stringent and watched aspects of medical billing and coding. This is due to the amount of fraud that has been committed by dishonest people.

Here are some important guidelines for handing your DME medical billing claims:

• Ensure you have the required letters of medical necessity/doctor’s prescription on hand to prove a legitimate need.
• If pre-approval is required for equipment, services, or procedures, make sure you have that documentation on file.
• There may be an exclusion of certain equipment or other benefits associated with the DME. The patient may qualify for a wheelchair, but not a specialized wheel for the chair to accommodate an aspect of the patient’s home.
• Usually, there are yearly or lifetime dollar limits on DME claims paid.

Medicare has the authority to set the standard for many carriers as to what they will and will not pay for in a DME claim.

To give you an example, Medicare will not pay for bathroom equipment such as commode chairs that might be needed by an MS patient. Many private insurance providers use the guidelines of Medicare and consequently exclude such equipment from reimbursement. This is where preapproval and documentation are the strong suits for getting these DME claims paid.

Conclusions

The codes for DME billing are broad because there can be so many different circumstances surrounding the need for this type of equipment. Durable medical equipment can be anything from a wheelchair to cochlear implants to complete or partial prosthetics.

For this reason, it is important to note not only what kind of durable medical equipment is required, but also what conditions caused the need for this type of equipment. Ensuring this will make the coding process simpler for DME billing companies and will allow the insurance company to have a better understanding of the diagnosis and procedure.

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Also, it plans to call for immediate reduced payment rates for certain non-CBP products, while CMS works on incorporating them into the CBP.

Alternatively, there are plans to recommend a policy option that would have CMS consider capping balance billing (specialty billing) at a percentage of the fee schedule rate and reduce the allowed amount by 5% for non-participating providers.

Shifting the Bidding Program can DMEs a fortune

A new research paper published in Health Affairs found that Medicare’s competitive bidding program is expected to save CMS $25.7 billion on durable medical equipment. This amount is calculated on a 10-year basis.  The program is expected to save about as much as what large commercial insurers save by negotiating with suppliers.

• The research found out that the early stages of the Medicare Durable Medical Equipment Billing; Competitive Bidding Program resulted in an average of 35% lower prices than the CMS’ 2010 fee schedule, which is how CMS determined payment for DME before the bidding program.
• The authors found ‘competitive bidding for durable medical equipment and similar items may be an effective mechanism for achieving savings in Medicare.’
• Medicare spent more than $11.3 billion on DME Billing in 2010, the year before the bidding program started. It went national this year after beginning in nine metropolitan areas.
• The study authors compared prices from the first round of the Medicare competitive bidding program to prices paid by national commercial insurers. The study reviewed seven prices, including six rental prices of six products and a new purchase price for one of the six products.

In their summation, the authors said, “Our results suggest that the initial years of the program produced prices comparable to those obtained, on average, by large commercial insurers — sophisticated purchasers that presumably were able to negotiate prices with suppliers of DME and similar items.

The authors further added that savings were ‘impressive,’ but warned that they were compared to the Medicare fee schedule, which is known to be high.

Despite those savings, the CMS announced earlier this year that it is temporarily delaying the next steps of the DME program, which were expected for 2019, following complaints from program critics. If we go by their 2019 program, DME billing companies will also have to undergo certain changes, especially through the specialty billing route.

Opponents of the bidding program, such as the Council for Quality Respiratory Care, are of the view that suppliers submit unrealistically low bids. This is after knowing that if they are selected, and the ultimate bid price is too low to cover their expenses, they can simply refuse to enter into a binding contract.

The Moran Company issued a white paper on the same topic in September 2016. The report questioned the “sustainability of the prices, the ability of suppliers to remain in the market, and beneficiary access to needed DMEPOS products and services.”

DME billing service is now in a holding pattern with Price leading the HHS. However, the $25.7 billion in savings over 10 years will likely interest a future HHS secretary when it comes time to look for ways to cut Medicare spending.

In conclusion, we would like to say that yes CMS shift more DME products to bid programs!!!

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AR is calculated as:

Total charges for last 6 months/number of days in last 6 months = average daily charges

Total AR / average daily charges = days in AR

AR can be duly managed if the medical billing and coding professionals are knowledgeable about coding parameters, insurance rules, timely claim filing and follow up (of regular and rejected claims). Usually, the healthcare facility is paid by the insurance and the patient. A delay in either of these negatively affects revenues and leaves a great deal on the table. Hence, it is imperative to monitor the AR on a continuous basis. And this must be done by professionals who know the healthcare practices’ contract terms claims adjudication. The professionals managing AR must also know how to calculate copays which the patients are required to pay.

Other practices to be followed are: prior authorization, copays collection, insurance verification, referral management, and financial policies made clear to the patient.

Technology:

For an effectual revenue cycle, the workflow of the revenue cycle must have standard processes that need to be followed, including a unified front and back office. For this, a practice management system (PMS) or the electronic medical record (EMR) must be in use. Technology makes work a lot easier and must be embraced. The EMR maintains vital information such as patient records, visits, reimbursement related documents, and other details of claims and follows ups, assisting in managing ARs well.

Metrics:

Although other metrics are equally important in the healthcare business, with tighter margins, it is getting all the more imperative to manage the number of days in AR (the days refers to the number of days between the patient discharge and when the payment is made, creating a direct impact on the revenues). Further, the personnel responsible for collecting AR must be informed of the applicable benchmarks to be used for measuring performance. AR’s performance must be measured each month to know of any potential collection issues and the result it has been having on cash flows. The ultimate goal is to minimize the time between the claim submitted and the payments received. AR days measure this time and let the healthcare facility know their medical financial stability.

Benchmarks for collections:

30 days for a high performing, 40-50 days for an average performing and 60 days or more for a below-average performing medical billing department.

Variables of A/R:

1) Payer mix:
The medical billing and coding professionals handling AR must know the payers who pay sooner and those who don’t. “Cash in 60 days” is the time shown for newer bills. If this is not shown, it indicates a delay.

2) Payment discrepancies:
Meeting with payers is a good option to solve discrepancies, taking steps to avoid them in the future, and dealing with pending claims to ensure timely payments.

3) Aging bucket:
This bucket deals with 0-30 days, 31-60 days, and 61-90 days. A report must show the amount of A/R in each aging bucket. This is then converted to a percentage of total AR. A monthly report showing these measures can be particularly helpful to monitor AR and its performance.

If these practices are followed well, there should be no concern in getting reimbursed timely and accurately. Minimizing AR must be a team effort. The quicker the turnover in AR, the lesser amounts of efforts required in looking around for cash from other sources.

For more information on medical billing and coding visit us on Medical Billers and Coders (MBC) with over 18 years of experience in Medical Reimbursement management.

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