Reassignment (Medicare)
Reassignment is the arrangement under which Medicare pays someone other than the individual who furnished the service — an employer, a group, or a contracted entity. It is prohibited by default and permitted only through defined exceptions, and it carries oversight obligations that survive the outsourcing decision.
Updated
Medicare's default rule is that payment goes to the person or entity that furnished the service, and that the right to that payment cannot be handed to someone else. 42 CFR 424.80 states the prohibition for suppliers and 42 CFR 424.73 the parallel prohibition for providers: Medicare does not pay amounts due under a reassignment, a power of attorney, or any other direct payment arrangement, except as the regulation specifically allows.
The exceptions are what make ordinary practice arrangements possible. Payment may be made to an employer where the service was furnished under an employment relationship, to an entity under a contractual arrangement, to a government agency, under a court order, and to an agent furnishing billing and collection services on conditions the regulation sets out.
In practice
The reason a billing team encounters the term is that the reassignment relationship, not the vendor contract, is where several federal obligations attach. Where an entity receives payment under a contractual reassignment, that entity and the supplier who furnished the service are jointly and severally responsible for any Medicare overpayment — so the liability does not move with the work. The supplier also has unrestricted access to claims submitted on its behalf, and an entity that refuses to provide billing information on request risks having its right to receive reassigned benefits revoked.
Where the arrangement is agency rather than reassignment — a billing company that receives payment on the practice's behalf — the regulation sets conditions on the agent's compensation and on the practice's ability to change payment instructions, and requires that payment always be issued in the name of the provider or supplier. Which of these frames a particular arrangement falls into is a question about the actual agreement, and it is worth answering before it matters.
Commonly confused with
- Assignment (Medicare): Assignment is an agreement to accept the Medicare-approved amount as payment in full — a question about how much. Reassignment is about who may be paid. A claim can be assigned without being reassigned, and the two words are routinely swapped in conversation.
- Assignment of benefits: An assignment of benefits is a patient's authorization directing an insurer to pay the provider rather than the patient. Reassignment concerns payment moving from the provider to a third party, which is the opposite direction and a different rule.
- Outsourcing the billing function: Engaging a billing company is a service arrangement and does not by itself create a reassignment. Whether payment is routed to that company — and on what terms — is a separate decision with its own regulatory conditions.