For O&P professionals, the decision to become a participating DMEPOS supplier with Medicare represents a fundamental business choice that affects reimbursement, patient relationships, and operational complexities that can be challenging, but not impossible, to navigate. Understanding the implications of this decision is essential for sustainable growth.
What’s the Difference?
One of the most notable differences between a participating and nonparticipating provider is the provider directory available to Medicare beneficiaries. This directory provides Medicare patients with a searchable tool to identify participating providers in their area. This doesn’t mean that patients are obligated to seek care from a participating provider; in fact, one of the benefits of the traditional fee-for-service Medicare program for patients is their freedom to obtain covered services from any provider.
Participating suppliers sign agreements with Medicare, accepting the Medicare Fee Schedule as payment in full for covered items. They receive direct reimbursement from Medicare and generally bill patients for copayments, deductibles, and noncovered services. Participating suppliers are required to accept assignment on all Medicare claims, which puts the responsibility of reimbursement primarily on the supplier. This also means that Medicare pays the supplier directly for all covered services and forwards claims to Medigap insurance, when applicable. Being a participating supplier ensures consistent reimbursement and reduces the administrative burden of billing secondary insurance.
Nonparticipating suppliers are not required to have signed agreements with Medicare, and they can furnish Medicare-covered items to Medicare patients. However nonparticipating suppliers are reimbursed at 95 percent of the Medicare Fee Schedule, and the responsibility for reimbursement typically falls to the patient. Nonparticipating suppliers may choose to submit claims to Medicare on the patient’s behalf, but any payments will be sent to the patient.
Upon submission of Medicare claims, nonparticipating suppliers can choose, on a claim-by-claim basis, to accept assignment for each claim. Being a nonparticipating supplier allows you to set your own fees for services. But Medicare imposes a limiting charge on nonparticipating suppliers of 115 percent of the Medicare Fee Schedule. Therefore, nonparticipating suppliers must take this into consideration when establishing their usual and customary prices for services. Nonparticipating suppliers also have limited appeal rights in the event of a claim denial for a covered service. Appeal responsibilities would fall to the patient unless the patient and supplier agree that appeal rights can be transferred to the patient using the Transfer of Appeal Rights form (CMS-20031).
Business-Practice Decision
In deciding whether your business would benefit from becoming a participating supplier with Medicare, owners and decision-makers must consider numerous factors: patient demographics, specialization, geographic location, and financial capacity. If you primarily provide services to Medicare patients and provide standard items, being a participating supplier may be a consideration for your business. However, if your clinic sees a limited number of Medicare patients, specializes in complex, high-value custom devices, and serves patients who can manage out-of-pocket costs, nonparticipating status may offer greater profitability.
Whether you choose to participate or not, the choice is not permanent. Suppliers can update their participation status by using the Medicare Participating Physician or Supplier Agreement form (CMS-460). Suppliers wishing to make such a change must do so by December 31 for the change to take effect on January 1 of the next calendar year.
Both paths are strategic; the key is aligning your business model with your chosen participation status for consistency in established internal policies and procedures.
Michelle Wullstein, CPCO, has been in the Medicare profession for 20 years and is an AAPC-certified professional compliance officer. She provides O&P-specific medical policy, billing, documentation, and HIPAA-compliance support to internal teams and clients. She can be contacted at michelle@oandpinsight.com. While every attempt has been made to ensure accuracy, The O&P EDGE is not responsible for errors.
