(Medicare Claims Processing Manual)

Section 2(a) of Public Law 95- 142, dated October 25, 1977, modified existing law to preclude the use of power of attorney as a device for reassignment of benefits under Medicare, subject to limited exceptions.  It also provides for a similar prohibition wi th respect to payment for care furnished by providers.  These provisions preclude Medicare payment of amounts due a provider or other person to a person or entity furnishing financing to the provider, whether the provider sells the providers claims to that person or entity or pledges them to that person or ent ity as collateral on a loan.   A.  Who is Supplier of Services   The question of reassignment arises only when assigned payment is made to someone other than the physician or other practitioner or supplier that furnished the services.   A supplier may be an individual, partnership, corporation, trust, or estate.  Any services furnished by an employee of the supplier are considered furnished by the supplier if those services are within the scope of the employment.  Where the supplier is a partnership, any services furnished by a partner are considered furnished by the supplier if those services are within the scope of the partnership agreement.  Therefore, issues of reassignment are limited to claims submitted to B/MACs.   Services that one physician or other supplier purchases from another are not usually considered furnished by the purchasing supplier for purposes of the prohibition on reassignment.    When one supplier purchases or rents items (as distinguished from services) from another supplier and resells or re -rents those items to the beneficiary, no reassignment issue arises.  The supplier that sells or rents the items to the beneficiary is consid ered to furnish them.   In the case of drugs used in conjunction with durable medical equipment (DME) or prosthetic devices, the entity that dispenses the drug must furnish it directly to the patient for whom a prescription is written.  Therefore, those drugs cannot be purchased for resale to the beneficiary by any supplier that is not the entity that dispenses the drugs.  Such a supplier may only bill for the DME or prosthetic devices.  In order for prescription drugs that are used in conjunction with DME or prosthetic devices to be covered by Medicare, the entity that dispenses the drugs must have a Medicare supplier number, must be licensed to dispense the drug in the State in which the drug is dispensed, and must bill and receive payment in its own name.   B.  Effect of Payment to Ineligible Recipient   An otherwise correct Medicare payment made to an ineligible recipient under a reassignment or other authorization by the physician or other supplier does not constitute a program overpayment.  Sanctions may be invoked under 30.2.15 against a physician or other supplier to prevent him from executing or continuing in effect such an authorization in the future, but neither the physician nor other supplier nor the ineligible recipient is required to repay the Medicare payment.  See chap ter 10 of the Medicare Program Integrity Manual for appeal rights of physicians and physician groups when billing numbers are revoked for non- compliance with the reassignment rules.  Appeal rights for prospective and existing providers can be found at 42 C FR 498 of the Medicare regulations.   C.  Effect of Reassignment on Assignment Agreement   An assignment is an agreement between a physician (or other supplier of services) and an enrollee where the enrollee transfers to the physician his/her right to benefits based on covered services specified on the assigned claim. The physician in return agr ees to accept the approved charge determination by the B/MAC as his/her full charge for the items or services.  In effect, the physician who accepts assignment is precluded from charging the enrollee more than the deductible and coinsurance based upon the approved charge determination.   When a qualified entity accepts assignment for a service furnished by a physician (thereby agreeing to collect no more than the Medicare deductible and coinsurance based on the allowed amount from the beneficiary), it is the entity and not the physician that is bound by the terms of the assignment. In this situation, the physician may accept from the entity a set fee or other payment that is greater than the reasonable charge, without violating the terms of the assignment.  If the entity pays the physician such amount, the entity must absorb any loss resulting from the excess of the payment to the physician over the reasonable charge.  An entity may accept assignment for a physicians services only if the employment or other contractual arrangement between t he entity and the physician provides that it alone has the right to bill and receive the payment for the services.  The beneficiary is fully protected against any liability for the difference between the reasonable charge and any higher fee owed by the ent ity to the physician, since only the entity may collect from the beneficiary, and then only in the amount of the applicable deductible and coinsurance.   When a physician or non -physician practitioner opts out of the Medicare program and is a member of a group practice or otherwise reassigns his or her right to bill and receive Medicare payment to an organization, the organization may no longer bill Medicar e or receive Medicare payment for the services that the opt out physician or non- physician practitioner furnishes to Medicare beneficiaries.  However, if the opt out physician or non-physician practitioner continues to grant the organization with the right  to bill and receive payment for the services he or she furnishes to patients, the organization may bill and be paid by the beneficiary for the services that are provided under the private contract. In addition, the decision of a physician or non- physician practitioner to opt out of Medicare does not affect the ability of the group practice or organization to bill Medicare for the services of physicians and/or non -physician practitioners who have not opted out of Medicare.   Suppliers not enrolled in Medicare may not receive payment.   30.2.2.1 - Reassignments by Nonphysician Suppliers - Claims Submitted to FIs (Rev. 1, 10- 01-03)  Definition of Participating From MIM 3005  Nonphysician suppliers may reassign benefits under conditions similar to those under which physicians reassign benefits.  Note, however, that when a supplier furnishes services to patients of a participating provider (e.g., a participating hospital or SNF)  under arrangement (within the meaning of 1861(w)  of the Act), the provider, not the supplier, is reimbursed by Medicare. No reassignment is involved since the provider is then responsible for paying subcontracting providers/suppliers under these payment structures.   To be a participating  provider under Medicare, a provider must be in compliance with the applicable provisions of title VI of the Civil Rights Act of 1964 and must enter into an agreement under 1866 of the Act which provides that it (1) will not charge any individual or other person for items and services covered by the health insurance program other than allowable charges and deductibles and coinsurance amounts; and (2) will return any money incorre ctly collected from the individual or other person on his behalf or make such other disposition as described in 30.1 (See also 30.1 on participation agreements).   30.2.3 - Effect of Payment to Ineligible Recipient  (Rev. 1, 10- 01-03)  An otherwise correct Medicare payment made to an ineligible recipient under an assignment or other authorization by the provider does not constitute a program overpayment.  Sanctions may be invoked against a provider (see 30.2.15) to prevent it from executing or continuing in effect such an authorization in the future.  Neither the provider nor the ineligible recipient is required to repay the Medicare payment.  30.2.4 - Payment to Agent - Claims Submitted to Carriers  (Rev. 1, 10- 01-03) A3-3488.1, B3- 3060.10   A.  Conditions   The FI or carrier makes payment in the name of the provider  (Carriers additionally may pay in the name of supplier or employer, facility, or organized health care delivery system.) to an agent who furnishes billing or collection services if:    The agent receives the payment under an agreement between the provider and the agent;    The agents compensation is not related in any way to the dollar amount billed or collected;    The agents compensation is not dependent upon the actual collection of payment;    The agent acts under payment disposition instructions which the provider may modify or revoke at any time; and   In receiving the payment, the agent acts only on behalf of the provider (except insofar as the agent uses part of that payment to compensate the agent for the agents billing and collection services).   For this purpose, an agency is an entity that provides computer and other billing services to prepare claims, and receive and process Medicare benefit checks for the provider, supplier, physician or other practitioner.   B.  Background   The primary purpose of this exception is to permit computer and other billing services to claim and receive Medicare payment on behalf of and in the name of the provider, supplier or eligible party).  The conditions for payment insure that the billing agent has no financial interest in how much is billed or collected and is not acting on behalf of someone who has such an interest, other than the provider/supplier itself.   The conditions specified in subsection A do not apply if the agent merely prepares bills for the provider and does not receive and negotiate the checks payable to the provider/supplier.   The conditions specified in subsection A also do not apply where the entity receiving payment in the name of the physician qualifies to receive payment for the physicians services by definition in law and regulations.  Thus, a hospital which is entitled t o bill and receive payment in its name for a physicians service under 30.2.7 may bill and receive payment in the physicians name (negotiating the checks under a power of attorney) even though its compensation is related to the amount billed or collected or is dependent on collection.   C.  Documentation   If payment is being made or requested to be made in the name of a provider to an agent, the contractor assumes that the conditions for such payment are met in the absence of evidence to the contrary. If there is evidence to the contrary, the agent must doc ument the agreement by submitting to the contractor a copy of the written agreement.  The written agreement may be a formal legal document or merely an exchange of correspondence.  If there is no written agreement of either a formal or informal nature or a ll the required conditions for payment are not clear in the agreement, the contractor obtains a statement from the agent describing the pertinent terms of the agreement or of those provisions that need to be clarified.  The contractor verifies the agents allegations by obtaining statements from one or more providers/physicians/suppliers that have agreements with the agent.  See 30.2.14.1.D  for reviewing endorsements on benefit checks.  30.2.5 - Payment to Bank  (Rev. 213, 06- 25-04) A3-3488.2, B3- 3060.11   Medicare payments due a provider or supplier of services may be sent to a bank (or similar financial institution) for deposit in the provider/suppliers account so long as the following requirements are met:   The bank may provide financing to the provider/supplier, as long as the bank states in writing, in the loan agreement, that it waives its right of offset.  Therefore, the bank may have a lending relationship with the provider/supplier and may also be the d epository for Medicare receivables; and   The account is in the provider/suppliers name only and only the provider/supplier may issue any instructions on that account.  The bank shall be bound by only the provider/suppliers instructions.  No other agreement that the provider/supplier has with a third party shall have any influence on the account.  In other words, if a bank is under a standing order from the provider/supplier to transfer funds from the provider/suppliers account to the account  of a financing entity in the same or another bank and the provider/supplier rescinds that order, the bank honors this rescission notwithstanding the fact that it is a breach of the provider/suppliers agreement with the financing entity.  Irrespective of the language in any agreement a provider/supplier has with a third party that is providing financing, that third party cannot purchase the provider/suppliers Medicare receivables.   Subject to the above restrictions on the bank and to the banks meeting the conditions specified in 30.2.4, a bank which is the provider/suppliers billing agent pursuant to an agreement with the provider/supplier and receives and deposits in the provider/suppliers bank account the provider/suppliers Medicare payments may, subject to instructions from the provider/supplier, draw on those funds to pay for its billing services.   Subject to the above restrictions on the bank, the provider/suppliers billing agent, other than the bank, that meets the conditions specified in 30.2.4 and receives and deposits in the provider/suppliers bank account the provider/suppliers Medicare payments may, subject to instructions from the provider/supplier, draw on these funds to pay for its billing services.