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Medicare Lets Patients Pay for Equipment Upgrades

Kate Traynor

A policy adopted this past summer allows Medicare to pay for a basic level of durable medical equipment (DME) and the program's beneficiaries to pick up the cost of upgrades.

Rather than issue a regulation, the Centers for Medicare & Medicaid Services (CMS) revised the "advance beneficiary notice" (PDF) (ABN) used in the federal health care program that covers Americans age 65 or over.

Update 4 September 2002—In late July, CMS issued a new ABN known as Form CMS-R-131. English and Spanish versions of the form are included in the 42-page memo (PDF) that explains how suppliers and providers should use the form.

CMS requires health care providers to fill out the ABN whenever they believe that Medicare might not cover the expense of a recommended product or service. The health care provider must note on the form the expected cost of the nonreimbursable item and state why the provider believes the item will not be covered by Medicare.

Health care providers can use the ABN to document the estimated cost of an upgraded version of medically necessary DME. A patient indicates on the form whether he or she will accept the upgraded product and agree to pay for all costs not covered by Medicare. If the patient consents to the plan, the government would then pay the portion of the claim attributable to the cost of the standard version of the item in question, and the beneficiary would pay the remainder of the claim.

Health care providers must correctly complete the form to avoid having to absorb the cost of claims denied by Medicare.

Patients can use the ABN system to obtain upgraded DME for reasons of convenience or aesthetics but must upgrade between similar items. A list of frequently asked questions compiled by Medicare notes that a wheelchair may not be substituted for a prescribed cane and that a hospital bed cannot be ordered in place of a wheelchair. But with proper documentation (PDF), an upgraded model of DME can be substituted for a basic one if the prescribing physician does not object to the change.

An Oct. 31 memorandum (PDF) from CMS noted that DME suppliers can choose to provide a beneficiary with an upgrade but bill Medicare for the standard item and not attempt to collect from the patient at all. In such cases, the supplier does not use an ABN and does not include in the claim a "modifier" indicating that an upgrade was provided instead of the basic model.

Starting in April 2002, suppliers who choose to provide an upgraded item but bill only for the basic Medicare-covered DME should include on the claim submitted to CMS the new "GL" modifier, which indicates that a medically unnecessary upgrade was supplied in place of the standard item. Again, no ABN is needed.