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“Fragmented” Billing for Nonparticipating Suppliers

Suppliers who enroll in the Medicare Program have an option of being a participating or nonparticipating supplier. A supplier who enters into a participation agreement (CMS form 460) with Medicare agrees to accept assignment on all claims for Medicare services. Suppliers who do not enter into a participation agreement with Medicare (i.e., nonparticipating suppliers) may accept assignment on a claim-by-claim basis unless they are required by law to accept assignment.

The CMS IOM, Publication 100-04, Medicare Claims Processing Manual, Chapter 1, Section 30.3.2 advises that nonparticipating suppliers may not attempt to circumvent the Medicare allowed amount limitation by “fragmenting” bills. Bills are considered “fragmented” when a supplier accepts assignment for some services, and payment from the enrollee for other services performed at the same place and on the same date of service.

The DME MACs consider “fragmented” billing when a supplier bills the same HCPCS code as some of the services assigned and some as nonassigned. In particular, there have been many questions regarding “fragmented billing” for external breast prostheses. For example, if a beneficiary receives two mastectomy bras (L8000) on the same day and at the same place, and the beneficiary assigns the claim to a supplier, the nonparticipating supplier may not bill one claim as nonassigned for an L8000 and another claim as assigned for an L8000. If so, this is considered fragmented billing. The nonparticipating supplier must choose to submit the two mastectomy bras (L8000) as either assigned or nonassigned claims.

However, if on the same day a beneficiary receives two mastectomy bras (L8000) and a silicone prosthetic (L8030) and the beneficiary assigns the claim to a nonparticipating supplier, the nonparticipating supplier may choose to either:

  1. Submit the claims as assigned or nonassigned for all services, or
  2. Submit one claim as assigned and the other as nonassigned (e.g., submit the prosthetic (L8030) as assigned on one claim and the mastectomy bras (L8000) as nonassigned on the other claim (or vice versa).

Suppliers may contact the National Supplier Clearinghouse for information on being a participating or nonparticipating supplier at 866-238-9652 from 9 a.m. until 5 p.m. eastern time to reach a customer service representative.

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“Fragmented” Billing for Nonparticipating Suppliers
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