Competitive Bidding Round Two

About Grandfathered Patients

• By Joseph Duffy
• Mar 01, 2014

Grandfathering is a policy that allows HME providers that did not win contracts in the competitive bid area to continue to serve beneficiaries, explains Cara Bachenheimer, Senior vice president of Government Relations for Invacare Corp. The policy applies only to beneficiaries on oxygen or who are renting DME from the non-contract supplier. The noncontract supplier must choose to continue serving all beneficiaries for the particular product category. Suppliers that choose to be grandfathered suppliers must continue to service the beneficiary until medical necessity ends or until the rental period ends.

“For oxygen beneficiaries, suppliers are responsible for servicing the beneficiary beyond the 36 month rental cap, for a period of five years, if medical necessity continues that long, consistent with general Medicare rules,” she says. “For capped rental HME items, the grandfathered supplier is required to service the beneficiary until the rental cap ends and ownership of the HME item transfers to the beneficiary, or until medical necessity ends, whichever occurs first. After 60 months, the grandfathered supplier can advise the beneficiary to find a new contract supplier.”

When a provider goes out of business but is servicing patients, Medicare has termed this “Supplier Abandonment of Beneficiaries and Oxygen Equipment.”

“CMS has stated that if a beneficiary is abandoned by an oxygen supplier that has gone out of business, Medicare will consider the equipment ‘lost’ and a new supplier can serve the beneficiary and a new 36-month rental period will begin,” Bachenheimer says. “The problem, however, is that Medicare has stated that in the event of an audit, the new oxygen supplier should be prepared to provide documentation from the old supplier, demonstrating that the supplier was terminating services. As a practical matter, the supplier that has gone out of business will rarely, if ever, be able to provide this type of documentation. In addition, the new supplier is responsible for complying with all the Medicare rules of taking on a new patient, including having a new order, a new CMN and medical necessity documentation.”

Eli Diacopoulos, vice president and general manager of Home Respiratory for Philips, points out that DME providers that choose to become grandfathered providers must do so for all items in a product category and for all patients who choose to remain with that provider.

“The provider cannot ‘cherry pick’ patients to service,” he says. “Grandfathered providers cannot accept new patients for competitively bid items once the program goes into effect. Medicare beneficiaries must be notified of a provider’s intent to grandfather at least 30 days prior to the date that the program goes into effect.”

This article originally appeared in the March 2014 Respiratory & Sleep Management issue of HME Business.