Billing for Canceled Orders

If an order for a custom fabricated device is canceled, providers may be able to bill and receive reimbursement for any non-refundable costs. This article will summarize when and how to bill Medicare for a canceled order.

What You Need to Know

Medicare allows providers to bill for labor and parts invested into the custom fabrication process of prosthetic and orthotic devices that were not delivered to a patient for any of the following reasons:

• Patient passed away; or

• Beneficiary canceled the order; or

• Beneficiary's condition changed and the item is no longer reasonable and necessary.

The allowed amount for the claim is determined by the DME MAC based on the supplier's expenses before the cancellation date (i.e., the date of the patient's death, the date the beneficiary canceled the order, or the date the provider determined the device is no longer medically necessary). They will consider the services furnished and materials used by the provider, but also adjust for any salvage value of the device(s), including parts that can be returned or reused for a different beneficiary.

What this Means for You

If you are unable to deliver a custom fabricated device to a patient for any of the reasons listed above, you can bill Medicare and receive payment for unrecouped costs. To prevent a denial or delay in payment, include the following information on the claim for a canceled order:

• Date of Service - either the date the patient passed away or the date the order was canceled/determined to no longer be medically necessary.

• HCPCS Codes and Modifiers - include appropriate HCPCS codes and applicable modifiers for the canceled item(s).

• Narrative - include a clear and concise explanation for why the order was canceled.

In your medical records, include a detailed explanation of why the device could not be delivered and a thorough description of any unsalvageable expenses. It is also important to remember that all coverage criteria must still be documented. Although the patient's condition may have changed, your documentation must support medical necessity before the order was canceled to ensure coverage and payment.

For more information on canceled orders, review the CMS Internet Only Manual (IOM), Publication 100-02, Medicare Benefit Policy Manual, Chapter 15, Section 20.3.