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“Grandfathering” for Non-Contract DME Suppliers: How You Can Continue Serving Your Patients Even if You Didn’t Win the Competitive Bid

Written by: Mediware Bloggers on Thursday, November 3, 2016 Posted in: HME/DME

By: Rebecca Ingalls, Mediware Reimbursement Services

A Glimpse into the HME Crystal Ball Predicting the Future of HMEDME TechnologyEvery three years, suppliers have to battle competitive bidding contracts. Those who win have to find ways to service patients on slim margins, and non-contract suppliers lose revenue as their patients migrate to the winning bidder.

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On the bright side for non-contract suppliers—there are ways to maintain your revenue by grandfathering in patients to whom you provide oxygen, oxygen equipment, and/or rented durable medical equipment. This means that you have the option to continue renting these items to beneficiaries in CBAs as long as you are renting the items at the time of program implementation—when contracts for a given round of bidding take effect.

However, there are many specific rules that govern this process. In addition, whether patients continue your services or transfer to a contract supplier, you must ensure that patients always maintain access to their equipment.

Here are some guidelines to help you navigate your way through the potentially treacherous terrain of the grandfathering process.

  1. General Rules
  • Grandfathering is only applicable to patients already on service at the time that competitive bidding is implemented for your competitive bid area (CBA).
  • Any non-contract supplier who decides to grandfather must make the option available for all eligible beneficiaries and cannot turn a beneficiary away if he or she elects to continue receiving the item from the grandfathered supplier.
  • A supplier that chooses to become a grandfathered supplier for a product category is required to grandfather all items within the product category that the supplier currently provides.
  • Grandfathered suppliers must accept assignment on all claims for grandfathered equipment furnished to beneficiaries in a CBA.
  • Grandfathered suppliers may furnish competitively bid accessories and supplies used in conjunction with, and that are necessary for, the use of the grandfathered items.
  • Grandfathered suppliers will be paid the single payment amount established under the competitive bid program.
  • Grandfathering also applies to beneficiaries who transition from a Medicare Advantage Plan.
  • When a beneficiary transitions to a contract supplier, the previous supplier and new supplier need to coordinate the pickup and delivery, so there is no break in service for the beneficiary.
  1. Oxygen Rules
  • The grandfather option applies only to suppliers that are furnishing oxygen to beneficiaries who maintain a permanent residence in the CBA at the time of program implementation.
  • The supplier that furnishes the oxygen during the 36th month of use must continue to furnish the oxygen and oxygen equipment for any period of medical need for the remainder of the RUL.
  • The supplier that furnishes the oxygen in the 36th month is prohibited from transferring its ongoing obligations to a contract supplier, regardless of whether the supplier has elected to become a grandfathered supplier and regardless of whether the beneficiary remains in the CBA.
  1. Capped Rental DME
  • Grandfathered suppliers must furnish the grandfathered items until ownership of the items is transferred to beneficiaries or the items are no longer medically necessary.
  • A beneficiary who would otherwise be entitled to receive rented equipment from a grandfathered supplier may elect to transition to a contract supplier at any time before the 13th month of continuous use.
  • If a beneficiary transitions to a contract supplier, the DME item must be returned to the supplier.
  • A new rental period begins if there is a break in medical necessity for more than 60 days plus the days remaining in the last paid rental month. When that occurs, a beneficiary must obtain new or additional equipment from a contract supplier.
  1. Capped Rental Accessories
  • Once the DME item is capped, the beneficiary must get replacement supplies and accessories for the equipment from a contract supplier.
  • If the beneficiary already owns the equipment, they must use a Medicare contract supplier for replacement supplies and accessories.
  • Repairs and maintenance for the equipment you own can be supplied by any Medicare-approved supplier (even a non-contract supplier), including replacement parts needed for the repair.
  1. Notification Requirements
  • If you elect to grandfather, you must provide a 30-day written notification to each Medicare beneficiary.
    • If beneficiaries decide to switch to contract suppliers, current suppliers must provide two additional notices—at 10 days prior and again at two days prior—in advance of picking up their equipment.
    • Old and new supplier must coordinate so no break in service occurs
  • If you do not elect to grandfather, you are required to pick up the items that you are currently renting from the beneficiary’s home after proper notification.
    • Proper notification includes a 30-day, a 10-day, and a 2-day notice of the supplier’s decision not to become a grandfathered supplier to its Medicare beneficiaries who are currently renting competitively bid DME or oxygen and oxygen equipment and who reside in a CBA.
    • Old and new supplier must coordinate so no break in service occurs.

Staying on top of competitive bidding and managing your reimbursement can be a challenge. See how Mediware’s reimbursement services team can streamline billing for HME, DME, and home infusion providers today.


“The Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program: Grandfathering Requirements for Non-Contract Suppliers”;

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