What constitutes a retail transaction? if you work in HME, it can be a hard question to answer. Because of rules about the mandatory submission of claims, providers that try to accommodate beneficiaries by offering Medicare-covered products for cash may find themselves noncompliant with Medicare program regulations.

Typically, what happens is that patients want to purchase covered items under the Medicare program but are unwilling to provide their Medicare identification numbers, do not have an order, and do not want to go to their physicians. Fortunately, they are willing to pay for the product immediately. Unfortunately, at a later date, when the beneficiaries or their family members have second thoughts about the purchase, they can contact Medicare. They are then told that the provider must submit a claim for the item and the provider is then required to make a refund to the beneficiary. This occurs because there is no documentation on file attesting to the facts surrounding the purchase.

More and more providers operate out of a retail location and sales are the goal. The mix of product includes items that are covered as well as those that are not. To eliminate “after the fact” complications, providers need to have procedures in place to avoid the situation in the first place. But how do providers protect themselves and how do they determine that their policies and file documentation will meet the test of an audit?

Know the Facts
Medicare does not prohibit the private purchase of equipment and services by Medicare beneficiaries; however, section 1848(g) (4) of the Social Security Act does require suppliers to file a claim for all potentially covered items.

Suppliers are not required to submit claims for items that are not covered under any circumstances, nor are they required to submit claims when beneficiaries exercise their right not to disclose medical information under the Privacy Act. In addition, suppliers have the right to not file claims if the beneficiaries refuse to sign an Authorization for Use of Protected Health Information under the Health Insurance Portability and Accountability Act (HIPAA). This would include refusal to obtain an order for the item or to disclose physician or medical information necessary to complete a claim. The supplier should, of course, obtain written documentation of the beneficiary’s refusal to release information under the Privacy Act and/or HIPAA.

The only other situation in which suppliers are not required to submit a claim to Medicare for covered services is where the beneficiaries, or their legal representatives, refuse of thier own free will to authorize the submission of a bill to Medicare. In this situation, the claim would not be submitted “on behalf of” the beneficiary (MCM 3044—Effect of Beneficiary Agreement Not to Use Medicare Coverage).

An Ounce of Prevention
These are the first of the rules protecting the provider. To fully understand what we must do, we need to know what our options are in these situations. The key is to document the events of the sale.

First, in order for an item to be covered by Medicare and most other insurers, it must be ordered by the physician. A supplier must have an order from the treating physician before dispensing any item to a beneficiary (Program Integrity Manual 1.1).

Without an order; the item is not considered covered even though reimbursement might otherwise to available (Program Integrity Manual 1.1.1). Providers should in that case notify the beneficiary that, without an order from the treating physician, a claim cannot be submitted to Medicare.

If the supplier does not have an original, detailed written order that has been both signed and dated by the treating physician, the item is noncovered and the supplier must not submit a claim for the item (Program Integrity Manual 1.1.2). Without the proper documentation of medical necessity, a claim cannot be submitted. In that case, the beneficiary is, in essence, “waiving” his or her right to a claim and reimbursement. Providers should have the beneficiary sign a statement of his or her understanding of this fact prior to completing the sale.

A new EY Modifier has been established by Medicare to submit claims where there is no order. However, it is impossible to do so without a diagnosis code, Unique Physician Identifier Number (UPIN), or other information that is captured on an order.

Again, the beneficiary has the right to refuse to provide this information. Until instructions are released on the use of this modifier, claims will be rejected without all the information necessary for a claim to adjudicate.

Ordinarily, a physician or supplier does not bill the Medicare Program for noncovered services, as mentioned above. However, if the beneficiary (or his or her representative) believes that a service may be covered or desires a formal Medicare determination, the physician or supplier must file a claim for that service to effectuate the beneficiary’s right to a determination.

Suppliers should note on the claim their belief that the service is noncovered and this claim is being submitted at the beneficiary’s insistence (MCM Part 3 3043). Often a beneficiary requires this denial for secondary or supplemental insurance consideration.

In the absence of such insistence, beneficiaries could sign a statement indicating that they understand that in their situation a claim cannot be submitted for the following reasons as long as there is no physician order or the item is clearly noncovered (ie, surgical stockings, underpads, etc). The provider must document that the beneficiaries understand they have the option of visiting their physicians for the appropriate diagnostic evaluation and order/certificate of medical necessity before the item is dispensed. If beneficiaries still insist on purchasing the item without an order, you may have them sign a statement that a claim cannot be submitted for any of the following reasons:

1) The item is not covered.

2) The beneficiary is using a covered item for convenience purposes.

3) There is no medical documentation to support a claim.

4) The equipment is not used in the home.

5) The family wants the equipment for their convenience.

6) The beneficiary wishes to purchase an item that can only be rented (capped rental).

7) Based on your current relationship with this beneficiary, you know that this would be considered same or similar equipment and, therefore, not covered by the program.

8) The beneficiary refuses, of his or her own free will, to authorize submission of a claim to Medicare.

This statement is not an advance beneficiary notice (ABN), since there is no order or other information to determine medical necessity. Therefore, it can be on the provider’s letterhead and attached to the sales receipt. If questioned later on, the provider can produce the information documenting that the beneficiary had the opportunity to meet program requirements, but chose not to.

Remember this applies when there is no order. Any of the above situations could warrant an ABN if there is an order.

Clarity is Key
The statement should clearly spell out why the claim cannot be submitted. Many times it is obvious when patients arrive at your facility. They want wheelchairs, but come in with walkers. A family member wants to purchase a seat lift chair and the patient is clearly nonambulatory. The patient wants an additional wheelchair for another location or to keep in the car. Without an order and all the information necessary on intake, including disclosure of physician and diagnostic information, a claim cannot be submitted. Or what occurs most often is the beneficiaries or their relatives wants to make a purchase.

Signed documentation to the fact that it was agreed no claim would be submitted and the reason why is required to protect the provider. Then it is a sale. And for providers who are willing to obtain this documentation, “All Sales Are Final!”

Terri B. Maggio is vice president of Maggio Enterprises LLC, Medical Express Claims, a consulting firm in Millville, NJ. Contact her at www.medexclaims.com.