Contractor Application of Fee Schedule and Determination of Payments and Patient Liability for DME Claims (Rev. 1, 10-01-03)

by  Jared Staheli
June 18th, 2015

The following instructions apply to all contractors processing DMEPOS claims:

First the 'allowable amount' is determined. This is the lower of the fee schedule amount or the billed charge.

The application of deductible and coinsurance are calculated as follows.

A. Claims to Carriers and DMERC

Any unmet deductible is subtracted from the allowed amount and 80 percent of the remainder is paid.

B. Claims to FIs

NOTE: Per 42 CFR 410.2, a nominal charge provider means a provider that furnishes services free of charge or at a nominal charge, and is either a public provider or another provider that (1) demonstrates to CMS's satisfaction that a significant portion of its patients are low-income; and (2) requests that payment for its services be determined accordingly.

1. Payment to a Provider Other Than Nominal Charge Provider

To determine the Part B payment to a provider other than nominal charge provider, FIs and RHHIs subtract any unmet Part B deductible from the lower of the actual charge or the fee schedule amount for the item or service and multiply the remainder by 80 percent. This is the final payment. (If the item or service is furnished by a HHA and is covered under a plan of care, the payment is determined in the same way, except that no deductible is applicable.)

2. Payment to a Nominal Charge HHA

To determine the Part B payment to a nominal charge HHA, RHHIs subtract any unmet Part B deductible from the fee schedule amount and multiply the remainder by 80 percent. This is the final payment. (If the item or service is covered under a plan of care, the payment is determined in the same way, except that no deductible is applicable.) For these items and services, no providers other than HHAs are considered nominal charge providers.

3. Payment to a Nominal Charge Provider Other Than a Nominal Charge HHA

To determine the Part B payment to a nominal charge provider other than a nominal charge HHA, FIs subtract any unmet Part B deductible from the lower of the actual charge or the fee schedule amount and multiply the remainder by 80 percent. This is the final payment.

4. Patient Liability to a HHA Other Than a Nominal Charge HHA

To determine the patient liability to a HHA other than a nominal charge HHA under Part B, RHHIs subtract any unmet deductible from the lower of the actual charge or fee schedule amount and multiply the remainder by 20 percent. The result, plus the unmet deductible is the patient's liability. If the item or service is covered under a plan of care, the deductible does not apply.

5. Patient Liability to a Nominal Charge HHA

To determine patient liability to a nominal charge HHA under Part B, RHHIs subtract any unmet deductible from the fee schedule amount and multiply the remainder by 20 percent. The result, plus the unmet deductible is the patient's liability. If the item or service is covered under a Plan of Care, the deductible does not apply.

6. Patient Liability to a Provider Other Than a HHA

To determine patient liability to a provider other than a HHA (including nominal charge providers other than a HHA), FIs subtract any unmet deductible from the actual charge and multiply the remainder by 20 percent. The result, plus the unmet deductible is the patient's liability. Coinsurance is applied as applicable.

The following describes application of deductible and coinsurance on HHA bills by bill type:

a. Patient Under Part B Plan of Treatment (Bill Type 32X)

• No deductible applicable; and

• No coinsurance applicable

Exception: Coinsurance applies on DME and orthotic/prosthetic claims.

b. Patient Under Part A Plan of Treatment (Bill Type 33X)

• No deductible applicable; and

• No coinsurance applicable

EXCEPTION: Coinsurance applies on DME and orthotic/prosthetic claims.

c. Patient Not Under Plan of Treatment, Part B Medical and Other Health Services and Osteoporosis Injections (Bill Type 34X)

• Deductible applies; and

• Coinsurance applies

The following examples illustrate how to calculate provider payment and patient liability in various situations. The examples like the proceeding rules for HHAs address items and services not under a Plan of Care and, therefore, include deductible application. The Note following each HHA example addresses items and services obtained under a Plan of Care and, therefore, do not address deductible application.

EXAMPLE 1: CLAIM CONTAINING ONLY ORTHOTIC/PROSTHETIC CHARGES

$200.00 Orthotic/prosthetic charges

$140.00 Orthotic/prosthetic fee schedule amount

$100.00 Part B deductible to be met

To determine the payment to all providers (other than nominal charge HHAs) apply the following steps:

Step 1: Determine the lower of the actual charge or the fee schedule amount: $140.00 (do not apply the provider's interim rate)

Step 2: Subtract any unmet Part B deductible from the amount determined in Step 1: $140.00 - $100.00 = $40.00

Step 3: Apply 80% to the amount determined in Step 2: $40.00 X 80% = $32.00

The Part B payment to the provider in this example is $32.00.

To determine payment to nominal charge HHAs apply the following steps:

Step 1: Subtract any unmet deductible from the fee schedule amount: $140.00 - $100.00 = $40.00

Step 2: Apply 80% to the amount determined in Step 1: $40.00 x 80% = $32.00

The Part B payment to the nominal charge HHA in this example is $32.00

NOTE: If the item or service is covered under a Home Health Plan of Care, the payment is determined the same way, except no deductible is applicable. In the above examples the payment would be $112.00 ($140.00 x 80%).

To determine beneficiary liability to providers other than HHAs apply the following steps:

Step 1: Subtract any unmet Part B deductible from the actual charge: $200.00 - $100.00 = $100.00

Step 2: Multiply the amount determined in Step 1 by 20% coinsurance: $100.00 x 20% = $20.00

Step 3: Add the result of Step 2 to the unmet deductible: $20.00 + $100.00 = $120.00

The beneficiary's liability in this example is $120.00. ($100.00 Part B deductible and $20.00 coinsurance.)

To determine beneficiary liability to HHAs (other than nominal charge) apply the following steps:

Step 1: Subtract any unmet deductible from the lower of the actual charge or the fee schedule amount: $140.00 - $100.00 = $40.00

Step 2: Multiply the amount determined in Step 1 by 20% coinsurance: $40.00 X 20% = $8.00

Step 3: Add the result of Step 2 to the unmet deductible: $8.00 + $100.00 = $108.00

The beneficiary's liability in this example is $108.00 ($100.00 Part B deductible an $8.00 coinsurance.)

NOTE: If the item or service is covered under a Home Health Plan of Care, the beneficiary's liability is determined the same way, except no deductible is applicable. In this example the beneficiary's liability would be $28.00 ($140.00 x 20% coinsurance).

To determine beneficiary liability to nominal charge HHAs apply the following steps:

Step 1: Subtract any unmet Part B deductible from the fee schedule amount: $140.00 - $100.00 = $40.00

Step 2: Multiply the amount determined in Step 1 by 20% coinsurance: $40.00 x 20% = $8.00

Step 3: Add the result of Step 2 to the unmet deductible: $8.00 + $100.00 = $108.00

The beneficiary's liability in this example is $108.00 ($100.00 Part B deductible and $8.00 coinsurance).

NOTE: If the item of service is covered under a Home Health Plan of Care, the beneficiary's liability is determined the same way, except no deductible is applicable. In this example, the beneficiary's liability would be $28.00 ($140.00 x 20% coinsurance).

Example 2: CLAIM CONTAINING ONLY ORTHOTIC/PROSTHETIC CHARGES - NEGATIVE PAYMENT

$120.00 Orthotic/prosthetic charges

$80.00 Orthotic/prosthetic fee schedule amount

$100.00 Part B deductible to be met

To determine the payment to all providers (other than nominal charge HHAs) apply the following steps:

Step 1: Determine the lower of the actual charge or the fee schedule amount: $80.00 (do not apply the provider's interim rate)

Step 2: Subtract any unmet Part B deductible from amount determined in Step 1: $80.00 - $100.00 = -$20.00

Do not apply the 80 percent since the result of Step 2 is a negative amount. There is no Part B payment to the provider in this example because the result equals a negative payment amount. FIs do not take the negative amount of (-$20.00) from future payments to the provider.

To determine payment to nominal charge HHAs, apply the following step:

Step 1: Subtract any unmet deductible from the fee schedule amount: $80.00 - $100.00 = -$20.00

Do not apply the 80 percent since the result of Step 1 is a negative amount. There is no Part B payment to the nominal charge HHA in this example because the result equals a negative payment amount. RHHIs do not take the negative amount of (-$20.00) from future payments to the HHA.

NOTE: If the item or service is covered under a Home Health Plan of Care the payment is determined in the same way, except no deductible is applicable. In the above examples the payment would be $64.00 ($80.00 x 80%).

To determine beneficiary liability to providers other than HHAs, apply the following steps:

Step 1: Subtract any unmet Part B deductible from the actual charge: $120.00 - $100.00 = $20.00

Step 2: Multiply the amount in Step 1 by 20% coinsurance: $20.00 x 20% = $4.00

The beneficiary's liability in this example is $104.00 ($100.00 Part B deductible and $4.00 coinsurance).

The beneficiary's liability to HHAs (nominal charge and other than nominal charge) in this example is $80.00 (the fee schedule amount for nominal charge HHAs or the lower of the fee schedule amount or the actual charge for other than nominal charge HHAs). The HHA cannot charge the beneficiary the $100.00 deductible since it exceeds $80.00.

$80.00 is credited to the beneficiary's deductible. The beneficiary's deductible to be met on the next claim is $20.00. The beneficiary has no coinsurance obligation.

NOTE: If the item or service is covered under a Home Health Plan of Care, the beneficiary's liability is determined the same way, except that no deductible is applicable. The beneficiary's liability in this example would be $16.00 coinsurance ($80.00 x 20%).

References:

Contractor Application of Fee Schedule and Determination of Payments and Patient Liability for DME Claims (Rev. 1, 10-01-03). (2015, June 18). Find-A-Code Articles. Retrieved from https://www.findacode.com/articles/contractor-application-of-fee-schedule-and-determination-of-payments-and-patient-liability-for-dme-claims-rev-1-10-01-03-26763.html

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