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Upgrade Billing for Power Mobility Devices

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

An upgrade is an item with features that go beyond what is medically necessary. 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.

Determining Rental or Purchase

Suppliers were informed that effective January 1, 2011, standard power-driven wheelchairs (K0813-K0831 and K0898) are no longer eligible for the purchase option. These standard power-driven wheelchairs with an initial date of service on or after January 1, 2011, must be provided using the capped rental payment guidelines. This change was due to the Patient Protection and Affordable Care Act of 2010.

If a beneficiary meets the medical need for a standard power-driven wheelchair and they request a complex rehabilitative power-driven wheelchair, the supplier must provide the chair as a capped rental due to the beneficiary qualifying only for the standard chair.

Note: This applies if the physician has ordered a complex rehabilitative power-driven wheelchair while the medical records support medical necessity for only a standard power-driven wheelchair.

For suppliers who are contracted under the Competitive Bidding Program, payment will be based upon the payment amount applicable to the item in the area in which the beneficiary resides. If the beneficiary resides in an area that is not a CBA, the payment amount will be based upon the fee schedule payment amount. If the beneficiary resides in a CBA, the payment amount will be based upon the single payment amount. Suppliers may refer to the Competitive Bidding Implementation Contractor (CBIC) Web site for more information on Round One and Round Two Competitive Bidding Program.

Charging the Beneficiary for the Upgrade

In order 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. The supplier must advise the beneficiary on the ABN of the financial responsibility they will have in Section F.

To determine the financial responsibility, suppliers must calculate the Medicare-allowed amount for monthly rentals or the purchase. The calculations are:

  • HCPCS K0823 Medicare fee schedule shows the rental-allowed amount of $545.69
  • Total purchase allowable is $3,637.93 ($545.69 divided by 15%)
  • Months 1–3 allowable is $545.69 ($3,637.93 multiplied by 15%)
  • Months 4–13 allowable is $218.28 ($3,637.93 multiplied by 6%)

The beneficiary liability will be the sum of (a) the difference between the submitted charge for the item received (the upgraded item) and the submitted charge for the item that meets Medicare coverage and (b) the deductible and co-insurance that relate to the allowed charge for the item that meets Medicare coverage. The supplier may charge their “usual and customary” fee for the upgraded item that is provided.

Suppliers are reminded that charging Medicare beneficiaries upfront is acceptable for the deductible and the 20 percent co-insurance unless the claim is a nonassigned claim. With nonassigned claims, suppliers may collect the full amount from the beneficiary. Upfront charging should be done on a monthly basis due to unforeseen circumstances of inpatient stays or discontinuing use of the equipment. This will prevent the supplier from having to refund the beneficiary.

Submitting a Claim for the Upgrade Item and Charging the Beneficiary

On the first claim line the supplier bills with a GA 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.) In this situation, the claim line with the GA modifier will be denied as not medically necessary with a “patient responsibility” (PR) message and the claim line with the GK modifier will continue through the usual claims processing.

  • Line 1: HCPCS K0849RRKHGA – Submitted amount: $600.00
  • Line 2: HCPCS K0823RRKHKXGK – Submitted amount: $550.00

Note: Suppliers are required to use all appropriate modifiers applicable per the LCD. The example provided 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 $113.45 (the difference between the 80 percent allowed amount and the submitted charge). This is an example of a nonassigned claim. In instances of an assigned claim, line 1 would be the same as above. Line 2 would show a beneficiary responsibility of $109.14 since that is 20 percent of Medicare’s allowed amount of $545.69.

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 K0823RRKHKXGL – Submitted amount: $550.00

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 billed with each rental month.

Claim Submission with GZ/GK Modifiers

If the supplier did not obtain a properly executed ABN, the supplier would submit 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 K0849RRKHGZ – Submitted amount: $600.00
  • Line 2: HCPCS K0823RRKHKXGK – Submitted amount: $550.00

Note: Suppliers are required to use all appropriate modifiers applicable per the LCD. The example provided 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 $113.45 (the difference between the 80 percent 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 $109.14 since that is 20 percent of Medicare’s allowed amount of $545.69.

Detailed Product Description

The local coverage determination for PMDs advises the DPD must be sufficiently detailed to identify the PMD that is being delivered to the beneficiary. Suppliers must report the PMD that is being delivered on the DPD, not the PMD that meets the coverage criteria specified in the medical policy for PMDs.

Reminders

Group 2 POVs (K0806-K0808) and Group 4 PWCs (K0868–K0886) are eligible for upgrade billing due to the LCD and related policy article indicate these items are durable medical equipment but are not reasonable and necessary.

Group 4 PMDs (K0830 and K0831) are considered statutorily excluded from coverage and cannot be provided as an upgrade. These Group 4 PMDs have added features that are classified as noncovered. If a beneficiary qualifies for a lower level power mobility device but opts to rent or purchase one of the statutorily noncovered Group 4 PMDs, there will be no reimbursement from Medicare. Suppliers submitting these codes to Medicare will receive an ANSI 96 due to these items being statutorily noncovered.

Suppliers are encouraged to determine correct coding for the base PMDs they are dispensing by utilizing the DMECS that is available on the Pricing, Data Analysis, and Coding Contractor’s Web site.

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Article Revised 08/29/2013

Upgrade Billing for Power Mobility Devices
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