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Upgrade Billing for Hospital Beds Clarification

National Government Services has developed this article to provide clarification to all DMEPOS suppliers, billers, and billing entities regarding the billing of upgrades for hospital beds.

An upgrade is an item with features that go beyond what is medically necessary. The CMS defines an upgrade as an item that is more expensive, contains more components or features, or is greater in quantity than what is medically necessary under Medicare’s coverage requirements. With respect to an upgrade for an item, feature, or service that is “more expensive,” this refers to increased charges attributable to furnishing something that is clearly more extensive, that is, more in number, more frequent, for a longer period of time, or with added features; it does not suffice to claim that an item or service is “better” or “higher quality.” When a beneficiary prefers an item with features or upgrades that are not medically necessary, a supplier may collect the difference between the charges for the upgraded item and the charges for the nonupgraded item, if the beneficiary agrees to be financially liable by signing an ABN.

Charging the Beneficiary for the Upgrade

To hold the beneficiary liable for the additional charge of an upgraded item, a properly executed ABN is required prior to the item being provided. Suppliers must advise the beneficiary of their financial responsibility in Section F of the ABN.

The beneficiary liability will be the sum of:

The difference between the submitted charge for the item received (the upgraded item) and the submitted charge for the reasonable and necessary item and

  1. The deductible and co-insurance amounts that relate to the allowed charge for the item that meets Medicare coverage criteria. The supplier may charge their “usual and customary” fee for the upgraded item that is provided.

Suppliers are reminded that if a claim is billed as assigned they can charge a Medicare beneficiary up front for the deductible, 20 percent co-insurance and for statutorily noncovered items (i.e., hearing aids, adult diapers, etc.). If the claim is billed as nonassigned, the supplier may collect the full amount from the beneficiary. Suppliers should collect the amounts described above on a monthly basis. This will prevent potential overpayments by the beneficiary and will prevent suppliers from having to refund beneficiaries due to unforeseen circumstances (i.e., inpatient stays, change in medical need, discontinued use, etc.).

Submitting a Claim for the Upgrade Item and Charging the Beneficiary

Suppliers must bill two line items for upgraded DMEPOS items in the following order:

Line 1: Bill the appropriate HCPCS code for the upgraded item actually provided to the beneficiary with the dollar amount for the upgraded item. If the supplier has a properly executed ABN on file signed by the beneficiary the supplier appends the GA modifier to the HCPCS code. In this situation the claim line submitted with the GA modifier will be denied as not reasonable and necessary with a “patient responsibility” denial.

Line 2: Bill the appropriate HCPCS code for the reasonable and necessary item and append the GK modifier. The claim line submitted with the GK modifier will continue through the claims processing system.

  • Line 1: HCPCS E0265RRKHGA – Submitted amount: $180.00 –  Medicare Fee Schedule   $175.82
  • Line 2: HCPCS E0260RRKHKXGK – Submitted amount: $130.00 – Medicare Fee Schedule $126.99

Note: Suppliers are required to use all appropriate modifiers applicable per the LCD. The example does not include all modifiers (i.e. 99, KB, or competitive bidding modifiers).

Based on the example, for line 1 the remittance advice would show a beneficiary responsibility of $50.00 (the difference between the submitted amount for line 1 and line 2). For line 2 the remittance advice should show a beneficiary responsibility of $28.41 (the difference between 80 percent of the allowed amount and the submitted charge). This is an example of a nonassigned claim.

In the instances of an assigned claim, line 1 would be the same as above. Line 2 would show a beneficiary responsibility of $25.40 since that is 20 percent of Medicare’s allowed amount of $126.99.

Not Charging the Beneficiary for the Upgrade

Suppliers may furnish upgrade items to a beneficiary without charging the beneficiary. In these instances, an ABN is not required.

Claim Submission with the GL Modifier

DMEPOS suppliers may provide upgraded items at no additional charge to the beneficiary or the Medicare program. The supplier submits one claim line with a GL modifier to the HCPCS code that describes the item that is covered based on the LCD. In this situation, the supplier does not bill the HCPCS code that describes the item that was provided.

  • Line 1: HCPCS E0260RRKHKXGL – Submitted amount: $130.00

Item 19 or the NTE segment: specific make and model of the item actually furnished (the upgrade item) and the reason behind the upgrade.

Note: The GL modifier should be appended to each rental month billed.

Claim Submission with GZ/GK Modifiers

If the supplier did not obtain a properly executed ABN the supplier submits the GZ modifier. On the first claim line the supplier bills with a GZ modifier the HCPCS code that describes the item that was provided. On the second claim line the supplier bills with a GK modifier the HCPCS code that describes the item that is covered based on the LCD. (Note: The codes must be billed in this specific order on the claim.)

  • Line 1: HCPCS E0265RRKHGZ  Submitted amount: $180.00 – Medicare Fee Schedule   $175.82
  • Line 2: HCPCS E0260RRKHKXGK – Submitted amount: $130.00 – Medicare Fee Schedule $126.99

Note: Suppliers are required to use all appropriate modifiers applicable per the LCD. The example does not include all modifiers (i.e. 99, KB, or competitive bidding modifiers).

Based on the example, for line 1 the remittance advice would show a supplier responsibility of $50.00 (the difference between the submitted amount for line 1 and line 2). For line 2 the remittance advice should show a beneficiary responsibility of $28.41 (the difference between 80 percent of the allowed amount and the submitted charge). This is an example of a nonassigned claim.

In the instances of an assigned claim, line 1 would be the same as above. Line 2 would show a beneficiary responsibility of $25.40 since that is 20 percent of Medicare’s allowed amount of $126.99.

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Article Revised on 4/3/2012

Upgrade Billing for Hospital Beds Clarification
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