With Round 2021 underway, many brace suppliers outside competition areas have been surprised to get competition-related denials, especially those that sell products to walk-in customers. I always hate to bear the bad news that the denials are legitimate when the beneficiary’s address is inside a CBA. Medicare makes payment decisions using the home address on file, not where the supplier sells the product. Fortunately, a simple pre-sale routine can protect suppliers from the same fate.

Prior to filling an order for knee and back braces included in the competitive bid program, all suppliers should:

• Obtain the patient’s address on file with Medicare using one of the Medicare portals or the eligibility checking feature included in most billing software applications.
• Copy the five-digit zip code and paste it into the Find a CBA tool on the CBIC website.

If the CBIC tool results indicate the zip code is not in a current bid area (CBA), suppliers can confidently proceed with the sale without fear of a competition denial.​
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On the other hand, if the CBIC tool results indicate the zip code is part of a CBA for the brace in question, suppliers must document circumstances that justify the customer seeking service outside of his or her home area.
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Traveling Beneficiaries Seeking Service Outside Their Home Area

If the patient needs the brace before returning home, the supplier can add a KT modifier to the claim to signal the item is for a traveling beneficiary. With this modifier, Medicare will override the edits that normally require a contracted supplier to fill the order.

As a condition of using the KT modifier, Medicare requires non-contracted suppliers to accept assignment at the single payment amount (SPA) for the competition area where the beneficiary normally resides. Suppliers should look up the SPA for the HCPCS and beneficiary competition area to make an informed decision before the sale.

There is, of course, potential for misuse of the special exceptions afforded to traveling beneficiaries. Generally, Medicare expects contracted suppliers will service beneficiaries in competition areas. As such, MiraVista advises non-contracted suppliers to limit the use of the KT modifier to cases when patients are far from home or otherwise have an urgent need for a product. Contractors may look more closely at suppliers with unexpected billing patterns and, if contractors identify improper use of the KT modifier, suppliers can find themselves on the wrong side of the False Claims Act.

Following these protocols will prevent denials and ensure that suppliers make informed decisions about the orders they fill and the payment amounts they can expect.

SOURCE LINKS
https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/Downloads/DME_Travel_Bene_Factsheet_ICN904484.pdf
https://dmecompetitivebid.com/cbic/cbicr2021.nsf/DocsCat/H5O2KFK4HO
https://www.dmecompetitivebid.com/SPA
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Every DME supplier understands Medicare only covers competition products provided to beneficiaries in competitive bidding areas (CBAs) when suppliers with contracts provide such items. Less familiar are Medicare’s strict rules about selling competition products to beneficiaries for cash. Non-contracted suppliers that follow two steps, however, can secure payment for competition items in competitive bid areas:

1. Inform the customer Medicare will only pay for such products if they use a contracted supplier.
2. If the customer still wants to buy the product from the non-contracted supplier, execute an ABN.

An ABN is only valid when the beneficiary understands both the meaning and consequences of the notice. To emphasize its point, CMS dedicated an entire section of the Medicare Claims Processing Manual to formalize expectations on ABN messaging for competition products. The example language in section 50.12 leaves very little to the imagination:

“Since we are not a contracted supplier, Medicare will not pay for this item. If you get this item from a contracted supplier such as ABC Medical Supplies, Medicare will pay for it.”

That is awfully specific! Do suppliers really have to call out a competitor by name? Not necessarily.

CMS’s point is to be as specific as possible so the beneficiary can make an informed decision. An acceptable alternative to naming a competitor is to instruct customers to call 1-800-MEDICARE to find a contracted supplier in the area. We suggest suppliers use the following ABN language:

“Since we are not a contracted supplier, Medicare will not pay for this item. If you get this item from a contracted supplier, Medicare will pay for it. You can call 1-800-MEDICARE and representatives will help you find a contracted supplier so this item can be covered.”

Armed with a process to execute valid ABNs, suppliers can confidently sell competition products to willing and informed beneficiaries without a contract.

SOURCE LINKS
https://www.cgsmedicare.com/jc/pubs/news/2020/12/cope20150.html
https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c30.pdf
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On January 13, 2021, Rep Bradley Schneider (D-IL) introduced H.R. 315, a bill to suspend Medicare sequestration until the end of the public health emergency (PHE). The 2 percent payment reductions are scheduled to restart on April 1, 2021. Extending the moratorium through the end of the PHE likely benefits suppliers through the end of this year.

In addition to putting much needed money into suppliers’ pockets to cover rising inventory and operational costs, H.R. 315 delivers a welcome future financial benefit. As it stands, Medicare and Medicare Advantage claims are subject to sequestration through 2030. Because the bill’s current text does not require Congress to extend the total sequestration period to pay for its moratorium extension, the net effect is a shortened sequester.

As of this writing, the bill has only eight co-sponsors. The bill must secure at least 218 votes to pass the House and move to the Senate for debate. Suppliers should encourage their representatives to support this measure because, without persistent pressure from constituents, it is unlikely to advance.

SOURCE LINKS
https://www.congress.gov/bill/117th-congress/house-bill/315/

​It’s tax season. You will soon be in your accountant’s office grappling with the tax implications of the Provider Relief Fund (PRF) payments you received last year. Because DME suppliers aren’t tax experts and tax experts are not necessarily DME specialists, your first meeting may start off with a routine inquiry that leads to a much bigger question:
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Accountant:
What is this big deposit I see on your April bank statement?

Supplier:
Oh, that is money we got from the Provider Relief Fund. Do I have to pay taxes on that?!?

The short answer is yes (unless the recipient is a non-profit entity exempted from income taxes).*

Section 61 of the Internal Revenue Code starts with the position that everything is income unless specifically excluded:

“Except as otherwise provided in this subtitle, gross income means all income from whatever source derived …”

There are no existing rules that exempt PRF payments from income, and unlike forgiven Paycheck Protection Program (PPP) loans, Congress did not stipulate an explicit exception in the enabling (or subsequent) legislation.

In an FAQ on its website, the IRS spoke specifically to the possibility that recipients might exclude the payments as qualified disaster relief payments (emphasis added):

Q1: May a health care provider that receives a payment from the Provider Relief Fund exclude this payment from gross income as a qualified disaster relief payment under section 139 of the Internal Revenue Code (Code)?

A: No. A payment to a business, even if the business is a sole proprietorship, does not qualify as a qualified disaster relief payment under section 139. The payment from the Provider Relief Fund is includible in gross income under section 61 of the Code.

Because recipients had constructive receipt of the funds in 2020, the entire amount is includable in last year’s gross income and subject to income tax.

“Can I use the PRF money to pay the taxes?”

HHS posted an FAQ on its site in December clarifying its position:

Can providers use Provider Relief Fund payment to pay taxes? (Added 12/11/2020)

Yes. HHS considers taxes imposed on Provider Relief Fund payments to be "healthcare related expenses attributable to coronavirus" that are reimbursable with Provider Relief Fund money, except for Nursing Home Infection Control Distribution payments.

Nonetheless, suppliers must return any portion of PRF funds not used to reimburse healthcare-related funds or lost revenues attributable to coronavirus before the current deadline of June 30, 2021. While suppliers should be able to deduct any subsequent repayments in the year repaid, HHS has not said how or if suppliers will account for the tax deduction benefit in future PRF reporting.

*This article is for informational purposes only. It is not tax advice, and you should not rely on it as such. Consult your own tax advisors familiar with your specific circumstances.

SOURCE LINKS
https://www.irs.gov/newsroom/frequently-asked-questions-about-taxation-of-provider-relief-payments#:~:text=Q%3A%20Is%20a%20tax%2Dexempt,under%20section%20501(a).
https://www.hhs.gov/coronavirus/cares-act-provider-relief-fund/faqs/provider-relief-fund-general-info/index.html#auditing-reporting-requirements