While testing the Medicare claims processing system under Competitive Bidding, CMS discovered a flaw in the payments allotted to grandfathered suppliers. According to a recent release from Palmetto GBA there is a “possible problem” with the way the system handles claims for certain accessories purchased for use with grandfathered equipment.
Under Competitive Bidding, non-contract suppliers should be able to submit claims for supplies and accessories billed with rented, grandfathered equipment, regardless of whether the supply itself is rented or purchased (Note: Only contracted suppliers may bill for supplies when the base equipment has capped). However, testing has found that the Medicare payment system is denying accessories associated with hospital beds, walkers, CPAPs and RADs when billed by grandfathered, non-contracted suppliers.
To resolve the issue, CMS has created a quick fix that will temporarily enable grandfathered suppliers to submit claims for HCPCS affected by the processing error. Effective January 1, 2011 suppliers must append the KY modifier to claims for the following HCPCS when billed as a purchase for a covered, grandfathered item currently under rental (not capped):
- Continuous Positive Airway Pressure Devices, Respiratory Assistive Devices, and Related Supplies and Accessories: A4604, A7030, A7031, A7032, A7033, A7034, A7035, A7036, A7037, A7038, A7039, A7044, A7045, A7046, E0561, E0562
- Hospital Beds and Related Accessories: E0271, E0272, E0280, E0310
- Walkers and Related Accessories: E0154, E0156, E0157, E0158
This solution is not perfect. By appending the KY modifier, the system will incorrectly pay for the aforementioned HCPCS at Medicare’s standard fee schedule amount, rather than at the appropriately reduced single payment amount. This will result in grandfathered suppliers receiving higher payments than is allotted under Competitive Bidding.
At this time, it is unclear whether CMS plans to go back and adjust these claims at a later date. According to the release, suppliers may mitigate the need for future claim adjustments by submitting the single payment amount (Competitive Bidding price in the patient’s home state) as their submitted charge for each affected accessory or supply on the claim.
We will keep you apprised of any updates as they are released.