A common scenario occurs when an order is billing filled, or after being completed but not yet delivered, the patient passes away. Is the provider stuck? Can the vendor still insist on payment?
While this common scenario may not often play out in your office, it is nevertheless a common scenario seen by many vendors providing offices with DME. How this plays out depends on what is being ordered and how the supplier attempts to claim payment.
If the DME was prefabricated, then one cannot obtain payment from the third party payer. If the DME was custom fabricated, then the provider will have to jump through a few hoops, not only be paid, but if done properly the final note if documented correctly can stand up to any audit and attempt at recoupment.
The issue of how to obtain payment for an order that was either canceled by the patient or because the patient moved, or the order was no longer necessary is a rather common scenario. Successful payment from Medicare and other third-party payers is possible for custom fabricated items only. Prefabricated off the shelf items may be returned to the vendor, or having a residual value can be dispensed to another patient. Hence for pre-fabricated items, you will need to negotiate those orders with your vendor.
To address canceled orders of custom fabricated Artificial Limbs, Braces, and Other Custom-Made Items Ordered but Not Furnished Chapter 5, “Other Prosthetic and Orthotic Devices CMS Manual System, Pub. 100-04, Medicare Claims Processing Manual, Chapter 20, §30.4” contains the following language: “If a custom-made item was ordered but not furnished to a beneficiary because the individual died or because the order was canceled by the beneficiary or because the beneficiary’s condition changed and the item was no longer reasonable and necessary or appropriate, payment can be made either on an assigned or unassigned claim basis, based on your expenses. If the beneficiary, for any other reason, canceled the order, payment can be made to the supplier only. In such cases, the expense is considered incurred on either: The date the beneficiary died; The date that you learned of the cancellation of the item; or the date that you learned that the item was no longer reasonable and necessary or appropriate for the beneficiary’s condition.
Thus, if you are upfront with the payer and submit documentation that the patient passed away (and when you learned of it), that they no longer required the device (e.g., amputation), etc. then your chances of successfully passing an audit will dramatically improve. As opposed to having written proof of delivery, document the date you found out the order needed to be cancelled, why and who you spoke with. That or the date of death, will be your Date of Service. Document all your costs associated with providing the device, this includes your staff labor charges, rent in your office for the time it took to examine and cast the patient, clean up the room, shipping charges to and from the lab, invoice from the lab, your labor charges, etc. All this information should be accounted for on an invoice and submitted to the third-party payer.
