A Medicare Administrative Contractor (MAC) has identified improper payment rates as high as 79 percent for L0648, 88 percent for L0650, and 91 percent for L1833 within its jurisdiction.

1. Billing and Receiving
Reimbursement for DME in
Orthopaedics
Lynn M. Anderanin, CPC,CPMA,
CPC-I,CPPM, COSC
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2. Agenda
• Current CMS information
• Current OIG Work Plan for DME
• Documentation guidelines
• Assigning the HCPCS code
• Determining the charge
• Insurance compliance
• Inventory management
• Replacements and returns
• Resources
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3. Stark Law
• Prohibits healthcare providers from referring
to or providing certain services in facilities
they operate/own.
• Exceptions: canes, crutches, walkers, and
orthotics (L codes)
• Wheelchairs and scooters are not permitted
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4. 4

5. Article Changes November, 2017
• Documentation must be maintained in the
supplier's files for seven (7) years from DOS
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6. 2018 OIG Work Plan
• https://oig.hhs.gov/reports-and-
publications/workplan/active-item-table.asp
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7. 2018 OIG Work Plan
• Since 2014, claims for three off-the-shelf orthotic
devices (L0648, L0650, and L1833) have grown by
97 percent and allowed charges have grown by
116 percent, reaching $349 million in 2016.
• A Medicare Administrative Contractor (MAC) has
identified improper payment rates as high as 79
percent for L0648, 88 percent for L0650, and 91
percent for L1833 within its jurisdiction.
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8. 2018 OIG Work Plan
• A top concern of the MAC is a lack of
documentation of medical necessity in
patients' medical records.
• Specifically, they will evaluate the extent to
which Medicare beneficiaries are being
supplied these orthotic devices without an
encounter with the referring physician within
12 months prior to their orthotic claim.
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9. CMS Program Integrity Manual
Chapter 5
https://www.cms.gov/Regulations-and-
Guidance/Guidance/Manuals/Downloads/pim8
3c05.pdf
‒ DME Documentation requirements
– Physician order
– Signed medical necessity statement
– Chart documentation requirements
– Proof of Delivery
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10. ORDERS
 Ordering/referring physician must be a Medicare
enrolled physician
 Must be identified on claim 1/6/14
 Chiropractor not eligible
 Name must match what stored in PECOS
• Denied CO-16 claim lacks information
o N264 missing/incomplete/invalid ordering provider name
o N575 mismatch between submitted ordering/referring provider name &
records
 Include NPI and match what stored in PECOS
• Denied CO-16 claim lacks information
o N265 missing/incomplete/invalid ordering provider name
o N276 mismatch between submitted ordering/referring provider name &
records
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11. DETAILED WRITTEN ORDERS
 Detailed written order
 Written=original, fax or electronic
 Must be signed and dated by ordering physician before
item billed
 Name of the beneficiary
 Diagnosis
 Detailed description of all items provided including quantity
and frequency of use when applicable
 Length of need for accessories/supplies
 Legible physician signature and signature date
 If for an item already dispensed, must clearly indicate the
start date
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12. Medical Necessity Statement
• Must be signed by the ordering physician
before dispensing or billing the item
“I certify that the above prescribed items, its setup
and related patient education are medically
indicated in my opinion both reasonable and
necessary to the accepted standards of medicine of
this patient’s condition”
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