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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

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