On the surface, accepting assignment is something providers easily understand. However, upon closer examination, this requirement raises many questions about business conduct and overall operations management. In this article I will explore many options providers should consider when deciding whether or not to accept assignment.
What is Assignment?
According to Medicare law, accepting assignment means a provider agrees to accept the Medicare allowable (approved) charge as full payment. Medicare will reimburse providers 80 percent of the allowable, and the beneficiary is responsible for the remaining 20 percent and any unmet deductible. A new $100 deductible must be satisfied every Jan. 1.
If a beneficiary has a secondary insurance policy that reimburses for the co-pay portion, this secondary insurance carrier may be billed no more than 20 percent of the allowed charges. Differences between the allowable and actual charges, known to many as the contractual allowance, may never be billed to the beneficiary or the insurance carrier if assignment is accepted. Repeated and deliberate failure to comply with this rule is subject to a $2000 fine and/or a six-month prison term.
Medicare providers do not have to accept assignment on every claim. Each claim is a separate transaction and with each claim a provider may change assignment decisions. However, if the provider fails to inform Medicare whether or not he or she will accept assignment because he or she did not check the assignment box, Medicare will process the claim as non-assigned, and the beneficiary will receive Medicare's portion of the payment.
Although most providers may pick and choose whether or not to accept assignment, if a provider has signed an additional agreement with Medicare to accept assignment for all services, he or she must always accept assignment. This agreement, the participating provider/supplier agreement (PAR), will automatically renew itself each Jan. 1 unless the provider notifies the National Supplier Clearinghouse (NSC) in writing toward the end of the year. Once a provider has notified the NSC, he or she will revert to a regular, non-participating provider beginning Jan. 1. It will then be the provider's prerogative to accept assignment case by case.
Assignment on Rental Products
When providers rent equipment to a beneficiary, each month is considered a separate transaction. Therefore, providers may change assignment status each month if they choose. For example, if providers are renting a manual wheelchair to a beneficiary on an assigned basis in month one, they may decide not to accept assignment in month two.
For capped rental items like the wheelchair, if providers decide to switch assignment status after the patient has elected the purchase option, providers must bill the beneficiary in three equal payments rather than one lump sum payment in the eleventh. For example Providers would bill the beneficiary $50 in months 11, 12 and 13 rather than $150 in month 11.
Changing Assignment Status
Moreover, providers are also permitted to change assignment status before the claim is processed, according to the Durable Medicare Equipment Regional Carrier (DMERC) Supplier Manual.
It states that "once the assignment agreement is made, it cannot be revoked in whole or in part without the consent in writing of both the supplier and the beneficiary."
During a recent discussion, Judy, a home medical equipment (HME) provider in southern California, said when a doctor will not cooperate and complete and sign a CMN, her company switches the beneficiary to non-assigned.
In another meeting, a provider from New York indicated he changes certain capped rental patients to non-assigned if the patient elects to purchase specific items. He lets them know in writing and has them sign that this change will take place.
I am not suggesting necessarily that all providers mimic either one of these examples, I recommend providers evaluate their company policy with regard to assignment and determine what is in the beneficiary's and the company's best interest.
Remember that if a provider decides not to accept assignment, he or she must still file a claim on behalf of the beneficiary.
Assignment Decision Table
To be exact, I believe providers should create an assignment decision table that compares their acquisition and other related costs to the Medicare allowable charge. This should clearly expose potential profitability, or lack thereof, for each Medicare covered item.
Thus, it will help providers determine their policy on assignment. (Please note that this exercise may apply but will not impact participating providers' company policies for this calendar year because they must accept assignment on all Medicare covered items as described above).
From the knowledge gleaned from this chart, providers should be able to instruct staff about accepting assignment. Either software or a computer printout (a price list with an accept assignment column) should be used to guide the staff. The results should include reduced time spent conferring about assignment decisions.
As important as it is to set these policies, realize that for every rule there will be exceptions.
For example, if a patient receives an item for which a provider cannot recoup costs under assignment, as a rule that provider would train the staff not to take assignment. However, if the patient is also receiving several other items for which the provider will make a profit, the provider may decide to take assignment.
In a different example, it may be that the provider cannot accept assignment for patients requiring a larger quantity of supply than the company's maximum under assignment.
This assignment decision is driven on quantity needed. Therefore, when developing the assignment table by item code, list exceptions or ask that staff consult with management in these situations.
Marketing efforts may also impact providers' assignment decision. For example, it may be that to keep his or her best referral source satisfied, a provider must take assignment.
Since they send the provider mostly profitable patients, which he or she trends and tracks monthly, the provider may decide to take assignment on all of their patients. This is a marketing- or management-level decision.
Further, if the market in which a provider is located demands that he or she accept assignment for competitive reasons, the provider may decide to take assignment even though he or she will not be profitable in each case.
However, I caution providers to track this policy extraordinarily close. They may be losing more than they are making. It may cause providers to sit down face-to-face with referral sources to explain their predicament. Whatever the outcome, it undoubtedly requires management to evaluate the situation.
An astute staff person will notice the imbalance and point it out to management. Therefore, just because a provider may have always accepted assignment or just because a provider has never accepted assignment does not mean he or she cannot change.
Non-Medicare Assignment Decisions
While most decisions relating to assignment revolve around Medicare patients, it is also critical that providers consider assignment decisions for private insurance and other third party patients.
For example, if during the insurance verification process a provider determines that a patient has not yet met the annual deductible, which exceeds the cost of the HME, the provider should not accept assignment.
Similarly, if the policy does not reimburse the provider, rather it only pays the beneficiary, do not accept assignment. The provider should have the patient pay even if the provider still assists the patient in filing his or her claim.
Finally, if a provider is not a contracted party or a preferred provider and thus the insurance company pays the beneficiary, do not accept assignment. Sometimes with contracts a provider may be able to negotiate to accept the contracted rate and service the patient.
Additionally, as with Medicare, there may be exceptions where a provider will take assignment knowing that he or she will lose money or not be paid directly. These exceptions should be few and far between and should be approved by management. Too many exceptions will cause considerable damage between providers and referral sources; and, most importantly it will deeply aggravate the provider's bottom line.
In summary, evaluate assignment decisions carefully and apply a business strategy. Weigh existing marketing factors against profitability and future business prospects. As with everything else in the HME industry, change occurs so rapidly that even if a provider evaluates assignment policies today, they may become obsolete with a government change or market shift.
Periodic examination with core billing, customer service and marketing staff will help prepare providers and their managers to make sound assignment policy decisions.
The National Supplier Clearinghouse may be reached by mail at P.O. Box 100142, Columbia, S.C. 29202, or by phone at (803) 754-3951.
This article originally appeared in the January 2000 issue of HME Business.