Published 12/1/2017
Sarah Wiskerchen, MBA, CPC

Coding Best Practices Streamline Dispensing DME for Medicare

Managing documentation criteria and medical necessity policies is key
Although orthopaedic practices often provide patients with supplies or durable medical equipment (DME) as part of a treatment plan, this aspect of coding is frequently overlooked in training courses. This article addresses documentation criteria and medical necessity policies. For information on how to select appropriate codes and file claims correctly, see Part 1 (Dispensing DME in Orthopaedics for Medicare, AAOS Now, October 2017).

Q. What type of documentation is needed when ordering and dispensing an orthotic or DME item?

According to the U.S. Centers for Medicare & Medicaid Services (CMS) Program Integrity Manual, two different orders apply—a dispensing order and a detailed written order (DWO). The dispensing order is used when supplying an item to a patient in the physician's office. It may be written or verbal, and must include the name of the beneficiary, the name of the ordering physician or provider, the date of the order, and a description of the item.

The DWO must be completed before the orthotic or DME item can be billed to the DME Medicare Administrative Carrier (MAC), and is more extensive than the dispensing order. By definition, the DWO must be written. It must include the same reporting items as the dispensing order, as well as the diagnosis, the quantity and frequency of use for the item, the length of time the item will be needed, and a legible signature and date provided by the ordering physician. If the item was dispensed on a date prior to the DWO date, that date must also be reported.

Ideally, practices can save time by completing the DWO at the time of dispensing and using it for both dispensing and reporting. A DWO is valid for 1 year from the signature date, or until the number of refills has been met.

Practices must also retain a proof of delivery record. By adding a patient signature field to the DWO form, practices can reduce the number of documents necessary for recordkeeping when items are dispensed in the office. If the items are mailed to a patient, the proof of delivery records must include the patient's name, delivery address, detail about the delivered item (name, description, quantity), the delivery date, and the signature of the patient beneficiary or a designee.

Q. What medical necessity policies must be met when billing for DME?

Practices that dispense DME prosthetics, orthotics, and supplies (DMEPOS) must include data elements like the item name, the patient's diagnosis, and the prescribed length of use in the DWO. However, the record should also describe the medical necessity for the item relative to the complaint or condition that caused the patient to make the appointment.

Some supply items fall under written CMS local coverage determination (LCD) policies and supporting documentation is required to meet the criteria within that LCD policy. Examples include canes, crutches, and walkers, as well as various orthotics for the knee, ankle, foot, and spine. Some LCD policies include both narrative guidelines and specific diagnoses required for coverage; others include only narrative guidelines of necessity elements that must be documented within the patient's medical record.

Specific DME items also require completion of a certificate of medical necessity form. These include oxygen, pneumatic compression devices, osteogenesis stimulators, TENS (transcutaneous electrical nerve stimulation) units, and seat-lift mechanisms.

Both Noridian and CGS Administrators, LLC, two MACs, have documentation checklists available on their websites to help suppliers keep track of the documentation needs for each category of supply item.

Q. What are the differences between the terms prefabricated, custom fitted, and custom fabricated? Who is qualified to fit patients for the custom items?

The DMEPOS Quality Standards document defines these terms (Table 1). The Healthcare Common Procedure Coding System (HCPCS) codes for prefabricated and custom-fitted orthotics were significantly modified in 2014.

Dispensing custom-fitted and custom-fabricated orthotics requires more expertise than is needed for prefabricated items. According to Appendix C of the Quality Standards guidelines, "Individuals supplying the item(s) set out in this appendix must possess certification and/or licensing and specialized education, training, and experience in fitting." Appendix C also outlines requirements for orthotics assessment, training, and follow-up.

Orthotists meet this requirement based on their certification. Providers who meet the description of "specialized training" include physicians, physician assistants (PAs), nurse practitioners (NPs), clinical nurse specialists (CNSs), occupational therapists, and physical therapists. By definition, prefabricated orthotics, also called "off-the-shelf" items, require only minimal self-adjustment and do not require the services of a certified orthotist or other individual with specialized training.

Q. When should modifier KX be used? What other modifiers might apply?

Modifier KX is used when the medical necessity requirements for a supply have been met, such as those outlined in an LCD policy. It is not correct to apply modifier KX to every orthotic or DME claim. It is also not correct to apply modifier KX when the policy requirements for an item have not been met.

For example, code L1833 is one of several knee orthoses that requires both a supporting diagnosis of instability and documentation of joint laxity through physical examination. Reporting L1833-KX to the DME MAC would communicate that the documentation requirements were met.

Q. How does the Stark Law and regulations apply to DME?

The Stark Law is highly complex and beyond the scope of this article. Although portions of the Stark regulations prohibit healthcare providers from referring to or providing designated health services in facilities they own, some DME items are exceptions to the self-referral restrictions. These include canes, crutches, walkers, and folding manual wheelchairs when the DME items are essential to enabling the patient to ambulate.

Q. What do we need to know about face-to-face encounters and DME?

Under the Affordable Care Act, dispensing and billing for selected DME items require that a physician, PA, NP, or CNS have a face-to-face encounter with the Medicare patient within the 6 months prior to the written order. The encounter is required for manual wheelchairs and associated accessories, for example, but not for canes, crutches, and orthoses. For a complete list of the affected HCPCS codes, refer to the MLN Matters document MM8304 (link provided in the online version). If the practice dispenses manual wheelchairs (many orthopaedic practices do not), review the MM8304 requirements carefully.

Sarah Wiskerchen, MBA, CPC, is a senior consultant with KarenZupko & Associates, Inc. Information in this article has been reviewed by the members of the AAOS Coding, Coverage, and Reimbursement Committee.

Editor's Note: In this second installment of a two-part series, the author answers key questions asked by physicians, managers, and billing staff about durable medical equipment (DME) in a physician practice setting.