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Reassignment of Medicare Benefits: How It Works

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Medicare reassignment is the mechanism that allows a group practice or organization to receive Medicare payment for services provided by an individually enrolled provider. Without a valid reassignment in place, a group cannot bill Medicare for a provider’s services — even if both the provider and the group are separately enrolled.

This page explains the concept, the process, and the compliance rules around reassignment.

The reassignment concept

By default, Medicare pays the individual provider who performed the service. Reassignment allows that payment right to be transferred (“reassigned”) to another entity — typically the provider’s employer or contracting group practice.

After reassignment:

  • The group submits claims under the group’s NPI
  • Medicare pays the group
  • The group pays the provider per their employment or contractor agreement

The individual provider’s enrollment (CMS-855I) remains active — it’s the source of the billing privileges. The reassignment links those privileges to the organization’s billing account.

The authority to reassign Medicare benefits comes from 42 CFR 424.80, which specifies:

  • Who may accept assignment on behalf of a provider
  • How reassignment must be documented
  • What constitutes valid reassignment
  • When reassignment terminates

Reassignment is only valid if:

  1. The individual provider is enrolled in Medicare
  2. The organization (receiving entity) is enrolled in Medicare
  3. A valid CMS-855R has been filed and approved
  4. The employment or contractor relationship creating the basis for reassignment is legitimate

Exceptions to the reassignment rule

CMS’s reassignment rules recognize certain exceptions where reassignment is automatically valid:

  • Employees and independent contractors who have a valid employment or contractor relationship
  • Members of a group practice
  • Providers in a teaching hospital serving in a residency/teaching capacity
  • Locum tenens arrangements (with specific rules)
  • Certain public health/government employee arrangements

Most standard group practice employment arrangements qualify.

The CMS-855R: the mechanics

Full CMS-855R filing guide →

The CMS-855R is filed when:

  • A provider joins a group practice and wants the group to bill for their services
  • An existing solo practitioner converts to billing through a group entity
  • A provider joins a second group in addition to their current reassignment

Key information in the CMS-855R:

  • The individual provider’s NPI and PTAN
  • The receiving organization’s NPI and PTAN
  • The nature of the relationship (employment, independent contractor)
  • The effective date

Simultaneous reassignments

A provider can have active reassignments to more than one organization simultaneously:

  • A physician who practices at two group practices and wants to bill through each
  • A locum tenens physician working multiple agencies
  • A specialist who works at a hospital’s employed practice and has their own independent clinic

Each reassignment requires a separate CMS-855R filing. Claims submitted under each group’s NPI are paid to that group based on which group billed the service.

Reassignment and locum tenens

Locum tenens arrangements (where a substitute provider fills in temporarily) have specific Medicare reassignment rules:

  • The “reciprocal billing” rule allows the regular provider to bill for services provided by a locum tenens under certain conditions
  • The locum tenens arrangement can last up to 60 continuous days
  • Specific requirements for billing locum tenens services differ between individual billing and group billing

Verify locum tenens billing rules with your MAC before billing.

Terminating a reassignment

When reassignment terminates:

  • Provider leaves the organization
  • Employment or contractor relationship ends
  • Provider chooses to bill independently
  • Organization’s enrollment is terminated

How to terminate:

  • File a CMS-855R termination in PECOS or paper
  • Specify the termination effective date
  • The termination is not retroactive

⚠️ File the termination when the provider leaves, not weeks or months later. Continued claims under the group NPI for a provider who has left is a compliance problem. Billing for services by a non-employee/non-contractor is fraud risk territory.

Reassignment and independent contractors

The line between “independent contractor with valid reassignment” and “improper employee/contractor classification” is a compliance consideration that goes beyond Medicare enrollment. For Medicare reassignment purposes, an independent contractor who has a legitimate contractual arrangement with a group practice can validly reassign benefits to that group.

However:

  • The contractor arrangement must be legitimate (not a sham to avoid employment taxes or benefits)
  • The contractor must maintain their own liability insurance
  • The contractor must not be performing services that are controlled in ways that look like employment rather than contracting

If your group uses independent contractor arrangements: confirm with legal counsel that the arrangements are structured appropriately before filing reassignments.

Reassignment and provider-based billing

Hospital-owned outpatient practices that bill as “provider-based” have a different relationship with reassignment. In provider-based billing:

  • The hospital bills the facility component (using the hospital’s NPI)
  • The physician bills the professional component (using their own or a group NPI)
  • This isn’t standard reassignment — it’s a specific billing structure that requires provider-based designation

Provider-based billing is beyond the scope of this page; consult your MAC or a healthcare billing specialist.

Questions about reassignment in your specific situation? Ask Mae →