Can contract suppliers turn away patients in bid areas?

Friday, June 21, 2013

For months now, we have heard Medicare competitive bidding Round 2 contract winners and non-contract winners, alike, ask if and how contract winners can turn away patients. The competitive bidding contracts require each contract winner to “agree to furnish items under its contract to any beneficiary who maintains a permanent residence in, or who visit, the [competitive bidding area] and who requests those items from that contract supplier.” See 42 C.F.R. § 414.422(e)(1). Based on this requirement, one would think that a contract winner cannot turn away a patient for any reason. Not necessarily.

Section 414.422(e)(1) leaves out the intrinsic requirement that a patient must “qualify” for DME before a contract winner must provide the DME to the patient. To qualify a patient for DME, the referring physician must address all issues necessary to substantiate medical necessity for the DME item provided, as required by relevant LCD, in a narrative format. Under this system, a contract winner is not required to provide DME to a patient who does not meet “medical necessity” requirements. Consequently, if: (1) the contract winner requires the treating physician to provide all of the patient’s medical records and progress notes upfront, prior to dispensing the DME item to the patient; and (2) the medical record does not address each and every issue necessary to substantiate medical necessity under the relevant LCD, the contract winner can require the referring physician to provide additional detail to substantiate medical necessity. Since the contract winner is the one subject to audit risk and potential overpayment, the level of clinical detail in the patient’s medical record to substantiate medical necessity must be to the satisfaction of the contract winner, not the referring physician. 

In this way, a contract winner can require the referring physician to provide additional detail in the progress notes until the contract winner is convinced the patient satisfies the medical necessity requirements under the relevant LCD. If the physician refuses to address each and every element required by the LCD to substantiate the patient’s medical necessity for the DME item prescribed, the contract supplier may not be obligated to provide the DME item to the patient.

Edward Vishnevetsky is an associate with Munsch Hardt Kopf & Harr in Dallas. Email him at