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A Primer on Assignment of Payment

Many Medicare practitioners, providers, and suppliers do not directly bill for the services they supply and similarly do not directly receive reimbursement. Billing and reimbursement may occur through an employment or independent contractor relationship, through a billing company, or through another arrangement. However, each of these arrangements must comply with the Medicare assignment of payment rules that dictate how and to whom the practitioner, provider, or supplier may assign their right to receive reimbursement from Medicare.

The general rule is that Medicare will pay assigned benefits only to the physician, practitioner, or supplier who furnished the service, and not to another person or entity. To reassign payment to another person or entity, an arrangement must meet one of several enumerated exceptions. The most common exceptions are:

Payment to Agent: Medicare may make payment, in the name of the provider, to an agent who furnishes billing or collection services. In general, the agent or billing company may not have a financial interest in the dollar amount billed or the actual collection of payment, and the agent must act under payment disposition instructions which the provider may modify or revoke at any time. Different provisions may apply if the agent merely prepares bills and does not receive payment for the provider or supplier.

Payment to Employer: Medicare may pay the employer of the physician or other supplier if the terms of the employment provide that the employer and not the provider has the right to receive the payment for all the latter’s services within the scope of the employment. The employer must establish the employment relationship and may be required to submit IRS documentation.

Payment for Services Provided Under a Contractual Arrangement: Medicare may make payment to an entity enrolled in the Medicare program for services provided by a physician or other person under a contractual arrangement with that entity. The services may be furnished on or off the premises of the entity submitting the claim. Both the entity submitting the claim and receiving payment and the physician or other person under contract are considered jointly and severally liable for any overpayments by Medicare. Further, the person furnishing the service must also have unrestricted access to claims submitted by an entity for services provided by that person.

Exceptions also exist, under certain circumstances, for payment under Reciprocal Billing Arrangements, Fee-For-Time Compensation Arrangements / Locum Tenens Arrangements, and a few other arrangements.

For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, and our attorneys can assist providers and suppliers in structuring business relationships and complying with the assignment of payment rules. If you or your healthcare entity has any questions pertaining to  healthcare compliance , please contact an  experienced healthcare attorney   at 248-544-0888 or  [email protected] .

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OIG Issues Advisory Opinion Regarding the Assignment of Billing Rights to a Practice by a Part-Time CRNA

On November 10, 2021, the U.S. Department of Health and Human Services, Office of Inspector General (“ OIG ”), published an Advisory Opinion (AO# 21-15) regarding a proposal to employ a Certified Registered Nurse Anesthetist (“ CRNA ”), on a part-time basis, in exchange for the CRNA’s assignment of billing rights to the requestor.

The requestor of the Advisory Opinion is a pain management practice solely owned by a physician. The same physician also owns an 80% stake in an ambulatory surgical center. The physician proposed employing the CRNA to render anesthesia services at both the practice and the center.

The question posed to the OIG was a narrow one: whether part-time employment of a CRNA, in exchange for which the CRNA assigns all billing rights to the employer, is permitted under the Federal Anti-Kickback Statute.

The OIG advised that the proposed arrangement implicates the Federal Anti-Kickback Statute in two ways. As an initial matter, the OIG opined that the requestor’s payment of a salary to the CRNA implicates the Federal Anti-Kickback Statute because the CRNA orders and arranges for items and services related to the provision of anesthesia, some of which may be reimbursable by Federal health care programs. Nevertheless, the flow of remuneration from the requestor to the CRNA could be protected under the Employment Safe Harbor. More importantly, however, the OIG addressed the issue of remuneration flowing from the CRNA to the requestor, in the form of the assignment of billing rights. With respect to the second remuneration stream, the OIG opined that the Employment Safe Harbor does not protect the arrangement because the Safe Harbor only protects renumeration flowing from employer to employee, not employee to employer.

Nevertheless, the OIG set forth that “employment arrangements in which a health care professional who is a bona fide employee reassigns billing rights to an employer in exchange for salary payments are a commonplace practice in the health care industry, explicitly authorized by the laws and regulations governing the Medicare program.” As such, the OIG concluded that it would not impose administrative sanctions pursuant to such an arrangement.

How Frier Levitt Can Help

Nearly every healthcare transaction involves potential federal and state fraud and abuse issues, even an arrangement as potentially straightforward as the employment relationship described above.

Frier Levitt has extensive experience providing compliance advice to health care providers, practices, and management organizations, including as it relates to employment and other financial arrangements. Contact Frier Levitt to discuss any existing regulatory concerns that you may have, or to obtain a regulatory review of a proposed business arrangement.

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What Is Assignment Of Benefits In Medical Billing – AOB Complete Guide

The healthcare industry operates with a diverse network of payers and various reimbursement means. From government to private insurance companies, a healthcare practice is simultaneously engaged with multiple payer parties, each linked to a different patient with unique regulations and requirements. This reimbursement workflow and many other factors alone make this already hectic environment business a bit more chaotic if not dealt with properly. With the development and execution of several policies, every healthcare service strives to bring more efficiency and seamlessness to its operations, and the reimbursement system is not an exception in this regard. This is where the assignment of benefits in medical billing comes into play. 

What is Assignment of Benefits in Medical Billing?

An assignment of benefits in medical billing is a type of agreement between the healthcare provider, insurance company, and the patient through which a patient authorizes the medical service to collect healthcare policy coverage benefits on their behalf from their insurer for the service they have received from the facility. Once the patient signs this agreement, a direct payment link is made between the facility and the insurance company without communicating every time with the patient, which brings seamlessness and efficiency to the reimbursement process. 

Read More: Medical Billing vs Revenue Cycle Management – Key Differences Explained

Medical Services That Use the Assignment of Benefits

Various healthcare providers across different specialties and settings may use Assignment of Benefits (AOB) as part of their billing practices. Some examples of healthcare providers that commonly use AOB include:

• Physicians and Medical Practices
• Hospitals and Medical Centers
• Dentists and Dental Clinics
• Physical Therapy and Rehabilitation Centers
• Ambulatory Surgery Centers
• Imaging Centers

So how does this assignment of benefits in medical billing work? Let’s explore:

What is the Procedure for the Assignment of Benefits in Medical Billing ? – the Methodology

Patient visit.

In the first step, the patient receives medical service from a healthcare facility like a hospital, clinic, etc.

AOB Agreement 

Once the services are rendered, the healthcare facility presents an AOB agreement to the patient to transfer their healthcare insurance coverage benefits to the facility directly. The patient is advised to thoroughly review the form before signing for consent as they are establishing a direct form of communication and payment action by authorizing the medical service to collect monetary benefits on their behalf.

Claim Submission

In this stage, the healthcare service document and code all the service encounters with the patient into medical bills and claim, comprising all the details and treatment procedures that are associated with curing the patient. These claims are then sent to the insurance company. 

Claim Reviewing

After claim submission, the insurance company meticulously evaluates it on the criteria of its unique requirements, standard policies, and regulations. They also analyze the accuracy of the claim and assess the coverage limit against the payment listed in the claim. If the claim is found to be inaccurate or ineligible for coverage by the insurance company, it reverts back to the facility for denial management. 

In the case the claim is approved, the insurance company makes payment directly to the medical service given the AOB policy. This reimbursed amount may cover the full or half of the patient’s medical bills, based on the coverage plan.

Patient Responsibility

Once the insurer pays the billed amount to the medical service, any remaining payment responsibilities come on the shoulder of the patient, like deductibles, co-pays, or services not covered by insurance. The patient may receive an explanation of benefits (EOB) from the insurance company, outlining the details of the claim and any patient responsibility.

Read More: Why Outsourcing Ophthalmology Medical Billing is the Smart

What are the Complications in the Assignment of Benefits in Medical Billing? – the Hindrances

Assignment of benefits does not work well necessarily for all patient encounters. There are some instances where it fails to be applicable or may get denied. So what are those cases? Let’s explore:

Out-of-Network Providers

An insurance policy can deny the assignment of benefits claim if the service acquired by the patient is out of its network of carriers. In this case, the healthcare facility can’t establish any type of reimbursement connection with the insurance policy and must obtain the payments directly from the patient. The patient can then cover their expenditure from their insurance policy. 

Non-Covered Services

It is not necessary that a health insurance policy cover all types of patient medical encounters. Every policy has its own limitations and offers reimbursements for medical services according to its regulations. So if a patient seeks a medical facility that is not covered by their healthcare policy, no AOB agreement will be applicable here. In this scenario, a patient is required to pay all the charges from their own pocket. 

Preauthorization Requirements

Insurance policies require preauthorization for certain medical treatments, procedures, or medications, and if a patient fails to obtain this preauthorization, the insurance company rejects the assignment of benefits claim, leaving the patient to pay the bills out of their pocket.

Claims Rejection

Even with an AOB in place, insurance companies may reject or deny claims for various reasons, such as incomplete documentation, coding errors, or policy exclusions. In such cases, the provider and the patient may need to work together to resolve the issue and resubmit the claim.

If an AOB gets accepted, it will only cover the services eligible for insurance coverage. Patients are still responsible for any deductibles, co-pays, or non-covered services as per their insurance policy. If the patient fails to pay their portion, it can lead to complications in the billing process.

Billing Disputes

Moreover, billing disputes between healthcare providers and insurance companies are another reason for AOB complications. Occasionally, disputes may arise between the healthcare provider and the insurance company regarding reimbursement rates or claim processing. These disputes can delay or hinder the AOB process, requiring additional efforts to resolve the billing issues. Read More: What Is Down Coding In Medical Billing? – The Complete Guide

Assignment of benefits is an excellent way to increase the efficiency of the reimbursement process in the medical industry. However, for a patient, it is important to thoroughly and meticulously review all the terms and complications associated with the agreement of AOB as it transfers their monetary rights directly to the healthcare service. 

Concerning healthcare services, they must ensure a well-communicated, clear, and detailed preparation of this agreement to help patients better understand all the things related to their financial obligations and insurance benefits transfer. Further, the medical facilities should also bring more accuracy and compliance with standards to their billing and overall financial landscape to make the whole process conducive to the acceptance of AOB, effectively navigating the complex web of reimbursements.

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What is Assignment of Benefits in Medical Billing?

An assignment of benefits is the act of signing documentation authorizing a health insurance company to pay a physician directly. In other words, the insurance company can pay claims without the direct involvement of the patient in the process. There are other situations where AOBs can be helpful, but we’ll focus on their use in relation to medical benefits.

If there isn’t an assignment of benefits agreement in place, the patient would be responsible for paying the other party directly from their own pocket, then filing a claim with their insurance provider to receive reimbursement. This could be time-consuming and costly, especially if the patient has no idea how to file a claim.

The document is typically signed by patients when they undergo medical procedures. The purpose of this form is to assign the responsibility of payment for any future medical bills that may arise after the procedure. It’s important to note that not all procedures require an AOB.

An assignment of benefits agreement might be utilized to pay a medical practitioner the patient didn’t choose, like an anesthesiologist. The patient may have picked a surgeon, but an anesthesiologist assigned on the day of the procedure might issue a separate bill. They’re, in essence, signing that anyone involved in their treatment can receive direct payment from the insurance carrier. It doesn’t have to go through the patient.

This document can also eliminate service fees surrounding processing. As a result, the patient can focus on medical treatment and recovery without being bogged down with the complexities of paying medical bills. The overall intent of an assignment of benefits agreement is to make the process more manageable for the patient, as they don’t need to haggle directly with their insurer.

List of Providers and Services

When the patient signs an AOB agreement, they give a third party right to obtain payment for services the provider performed, and medical billing services are a prime example of where they may sign an AOB agreement.

• Ambulance services
• Medical insurance claims
• Drugs and pharmaceuticals
• Diagnostic and clinical lab services
• Emergency surgical center services
• Dialysis supplies and equipment used in the home
• Physician services for Medicare and Medicaid patients

Services of professionals other than a primary care physician, which includes:

• Physician assistants
• Clinical nurse specialists
• Clinical social workers
• Clinical psychologists
• Certified registered nurse anesthetists

Information Commonly Requested on Assignment of Benefits Form:

• Signature of patient or person legally responsible
• Signature of parent or legal guardian

How AOBs Affect the Medical Practitioner

A medical provider or their administrative staff may feel overwhelmed by the sheer number of forms patients must fill out prior to treatment. Demanding more paperwork from patients may be seen as an added burden on the managerial staff, as well as the patient. However, getting a signed AOB is vital in preserving the interests of everyone involved.

In addition to receiving direct payment from the insurance company without needing to go through the patient, a signed assignment of benefits form will help medical providers appeal denied and underpaid claims. They can ask that payments be made directly to them rather than through the patient. This makes the process more manageable for both the doctors and the patient.

Things to Bear in Mind

The patient gives their rights and benefits to third parties under their current health plan. Depending on the wording in the AOB, their insurer may not be allowed to contact them directly about their claims. In addition, the patient may be unable to negotiate settlements or approve payments on their behalf and enable third parties to endorse checks on behalf of the patient. Finally, when the patient signs an AOB, the insurer may sue the third parties involved in the dispute.

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Assignment of benefits

Assignment of benefits is a legal agreement where a patient authorizes their healthcare provider to receive direct payment from the insurance company for services rendered.

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What is Assignment of Benefits?

Assignment of benefits (AOB) is a crucial concept in the healthcare revenue cycle management (RCM) process. It refers to the legal transfer of the patient's rights to receive insurance benefits directly to the healthcare provider. In simpler terms, it allows healthcare providers to receive payment directly from the insurance company, rather than the patient being responsible for paying the provider and then seeking reimbursement from their insurance company.

Understanding Assignment of Benefits

When a patient seeks medical services, they typically have health insurance coverage that helps them pay for the cost of their healthcare. In most cases, the patient is responsible for paying a portion of the bill, known as the copayment or deductible, while the insurance company covers the remaining amount. However, in situations where the patient has assigned their benefits to the healthcare provider, the provider can directly bill the insurance company for the services rendered.

The assignment of benefits is a legal agreement between the patient and the healthcare provider. By signing this agreement, the patient authorizes the healthcare provider to receive payment directly from the insurance company on their behalf. This ensures that the provider receives timely payment for the services provided, reducing the financial burden on the patient.

Difference between Assignment of Benefits and Power of Attorney

While the assignment of benefits may seem similar to a power of attorney (POA) in some respects, they are distinct legal concepts. A power of attorney grants someone the authority to make decisions and act on behalf of another person, including financial matters. On the other hand, an assignment of benefits only transfers the right to receive insurance benefits directly to the healthcare provider.

In healthcare, a power of attorney is typically used in situations where a patient is unable to make decisions about their medical care. It allows a designated individual, known as the healthcare proxy, to make decisions on behalf of the patient. In contrast, an assignment of benefits is used to streamline the payment process between the healthcare provider and the insurance company.

Examples of Assignment of Benefits

To better understand how assignment of benefits works, let's consider a few examples:

Sarah visits her primary care physician for a routine check-up. She has health insurance coverage through her employer. Before the appointment, Sarah signs an assignment of benefits form, authorizing her physician to receive payment directly from her insurance company. After the visit, the physician submits the claim to the insurance company, and they reimburse the physician directly for the covered services.

John undergoes a surgical procedure at a hospital. He has health insurance coverage through a private insurer. Prior to the surgery, John signs an assignment of benefits form, allowing the hospital to receive payment directly from his insurance company. The hospital submits the claim to the insurance company, and they reimburse the hospital for the covered services. John is responsible for paying any copayments or deductibles directly to the hospital.

Mary visits a specialist for a specific medical condition. She has health insurance coverage through a government program. Mary signs an assignment of benefits form, granting the specialist the right to receive payment directly from the government program. The specialist submits the claim to the program, and they reimburse the specialist for the covered services. Mary is responsible for any applicable copayments or deductibles.

In each of these examples, the assignment of benefits allows the healthcare provider to receive payment directly from the insurance company, simplifying the billing and reimbursement process for both the provider and the patient.

Assignment of benefits is a fundamental concept in healthcare revenue cycle management. It enables healthcare providers to receive payment directly from the insurance company, reducing the financial burden on patients and streamlining the billing process. By understanding the assignment of benefits, patients can make informed decisions about their healthcare and ensure that their providers receive timely payment for the services rendered.

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Related terms, national correct coding initiative (ncci).

National Correct Coding Initiative (NCCI) is a Medicare program that promotes correct coding methodologies to prevent improper payment for healthcare services.

Severity of illness (SOI)

Severity of illness (SOI) is a measure that quantifies the extent of a patient's medical condition, indicating the seriousness and complexity of their illness.

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Medicare’s reassignment of payment rules

By Michael R. Burke, Esq.

The Centers for Medicare & Medicaid Services (CMS) has numerous rules and regulations that govern the manner in which physicians and other health care providers are paid for their services by Medicare. This article will focus on what are commonly known as Medicare’s “reassignment rules,” which govern the right of an individual or entity to receive payment for services rendered by a health care provider on behalf of the individual and/or entity. Please note that Medicare’s reassignment rules do not apply to private third party payors such as Independence Blue Cross or Aetna; while these payors may follow Medicare’s rules on this topic, they are not bound to do so and may have their own unique policies for dealing with these issues.

A Medicare beneficiary has the right to assign the payment to be made by Medicare for services provided to him or her to the health care provider that provides such services. However, the Social Security Act also provides that Medicare does not pay any amounts that are due to a health care provider under an assignment from a beneficiary to any other person under reassignment, power of attorney or any other direct arrangement unless it meets one of the exceptions permitted by statute or regulation or included in one of the manuals published by CMS; this is commonly referred to as Medicare’s prohibition against reassignment of payment. The most extensive discussion of Medicare’s rules on the reassignment of payment from a physician to another individual or entity are found in the CMS Medicare Claims Processing Manual (Manual), Chapter 1, Sections 30.2 to Sections 30.2.16.

The most common exception to the basic prohibition on reassignment that is utilized by physicians is the exception that permits Medicare to pay the employer of a physician if the physician is required as a condition of his or her employment to turn over to his or her employer the fees for his or her services. There must be an employer-employee relationship between the physician and the individual or entity hiring the physician to perform services, and the terms of employment must provide that the employer has the right to receive the payment for the employee’s services within the scope of employment.

A Medicare carrier may also make payment under the reassignment rule exception that permits an individual or entity to submit a claim for services provided by a physician under a contractual arrangement with the entity, such as an independent contractor. These services may be furnished on or off the premises of the individual or entity submitting the bill and receiving the payment; this provision was changed several years ago as prior Medicare rules on this subject allowed an individual or entity to bill for the services of an independent contractor only when they provided services on the premises of the billing entity. The individual or entity receiving payment and the physician independent contractor that furnished the service are also subject to the following CMS program integrity safeguard requirements: (i) the individual or entity receiving payment and the person that furnished the service are jointly and severally responsible for any Medicare overpayment to that entity; and (ii) the independent contractor physician furnishing the service must have unrestricted access to claims submitted by the individual or entity for services provided by that person. While the initial iteration of this Manual provision required the preceding two provisions to be included in any physician independent contractor agreement, those provisions were changed and these provisions do not have to be expressly set forth in an agreement between the billing entity and the independent contractor.

The Manual also includes reassignment rule exceptions related to reciprocal billing arrangements and locum tenens arrangements. The requirements for these exceptions are almost identical, with the “reciprocal billing” arrangements exception being intended for a longer running arrangement and the locum tenens arrangements exception being designed for a short term absence (such as vacation, absence due to illness, etc.). The reassignment exceptions for these arrangements allow a patient’s regular physician to submit a claim and receive payment from Medicare in the physician’s name for covered visit services which the regular physician arranges to be provided by a substitute physician if: the regular physician is unavailable to provide the visit services; the Medicare patient has arranged or seeks to receive the visit services from the regular physician; the substitute physician does not provide the visit services to Medicare patients over a continuous period of longer than 60 days; and the regular physician identifies the services by using the proper modifier after the procedure code when billing the claim. An additional requirement applicable to locum tenens arrangements is that the regular physician pays the substitute physician on a per diem or similar fee-for-time basis. CMS notes that for locum tenens arrangements, the term “regular physician” includes a physician who has left a physician group and for whom the group has engaged the locum tenens physician as a replacement.

CMS also allows Medicare carriers to make payments in the name of a provider directly to an agent who furnishes billing or collection services under certain limited circumstances. However, two of the key requirements in this regard are that the agent’s compensation is not related in any way to the dollar amount billed or collected and the agent’s compensation is not dependent upon the actual collection of payments. Since most physicians who use billing companies pay them a fee based on a percentage of collections or the amount collected, this reassignment exception is not often utilized. In most billing arrangements, then, claims to Medicare are submitted in the name of the physician or group providing the service and payments received are paid directly to the group or physician in question.

There are other exceptions to the reassignment rule that are used less often, including payment by Medicare to a governmental agency where payment to the governmental agency or entity is permissible under one of the other listed reassignment exceptions above (e.g., employment); payments made directly to a bank; payment pursuant to court order; payments to university-affiliated medical faculty practice plans; and payments to health care pre-payment plans, cost-contracting HMOs, competitive medical plans and Medicare+Choice organizations.

CMS also allows payments to be made under exceptions to the reassignment rule for purchased diagnostic tests and for purchased diagnostic test interpretations. When an individual or entity wants to purchase the technical component of a diagnostic test, the following requirements apply: the purchasing physician or group may be the same physician or group as ordered the test or may be a different physician or group; the purchasing physician or group may not markup the charge for a test from the purchase price and it must accept the lowest of the fee schedule amount for such service, the physician’s actual charge or the supplier’s net charge to the purchasing physician or group. The purchaser must perform the interpretation on the diagnostic test; and the physician or supplier that furnished the technical component must be enrolled in the Medicare program.

In addition, the person or supplier that provides the technical component of diagnostic tests may submit the claim and receive payment for the professional component of diagnostic tests which that person or entity purchases from an independent physician or medical group if: the tests are initiated by a physician or medical group which is independent of the person or entity providing the tests and the physician or group providing the interpretation; the physician or medical group providing the interpretation does not see the patient; the interpreting physician must be enrolled in the Medicare program; and the purchaser must perform the technical component of the test. Many physicians and physician groups do not utilize this exception because they are unable to meet the requirements set forth above, and then simply instead satisfy the reassignment exception for independent contractor relationships.

Regulations implemented in the final 2008 Medicare Physician Fee Schedule (for the most part scheduled to be effective on January 1, 2009, but already effective for clinical laboratory tests) and proposed revisions to such regulations included in the recently issued proposed 2009 Medicare Physician Fee Schedule have proposed special payment rules which limit the amount of payment to a physician or group for the purchase of either the technical and professional components of diagnostic tests and which would, among other things, create limitations on where diagnostic tests may be performed, implement limitations on the calculation of the “net charge” of the supplier for purposes of purchased technical components, and restrict the amounts that may be billed for the professional component of diagnostic tests in certain circumstances. While an analysis of these rules is beyond the scope of this article (and they are likely to be substantially revised before they are finalized towards the end of 2009), physicians must be aware of the existing and proposed rules related to the prohibition on marking up the costs of diagnostic tests.

The penalties for failure to follow the reassignment rules set forth in the Manual include termination of a provider’s Medicare participation agreement or revoking the right of a provider to receive assigned payment from Medicare for physician services. In addition, Medicare law provides that any person who accepts assignment of benefits under Medicare and who “knowingly, willfully, and repeatedly” violates its Medicare assignment agreement shall be guilty of a misdemeanor and subject to a fine of not more than $2,000, imprisonment of not more than six months, or both.

Medicare’s rules on reassignment of payment are another set of hurdles that must be overcome by physicians and physician groups in attempting to ensure that they are paid correctly in the Medicare program. While many of these rules have changed little over time, the 2009 Medicare Physician Fee Schedule solicited comments as to whether, in lieu of the anti-markup provisions discussed above, CMS should prohibit reassignment in certain situations and require physicians supervising the technical component of diagnostic tests or performing the professional component of a diagnostic test to bill Medicare directly. As such, the reassignment rules related to diagnostic tests may be the subject of further important changes in the near future.

Michael R. Burke, Esq., is a shareholder with the health care law firm of Kalogredis, Sansweet, Dearden and Burke, Ltd. located in Wayne, Pa.

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Michael, Thank you for this article, This was very informative it helped me to understand some key aspects. As I deal with a web site of medical laboratory billing services and DNA billing, pathology billing, toxicology billing, and molecular testing lab billing services. We handle a website regarding this aspect in which we keep a track record of our content dating back to the previous year and make strategies to improve them. However, this article was much needed for our team and it will be something that I will be keen to review.

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