Certain Customized Items (Rev. 2687, 07-19-13)

by  Jared Staheli
June 17th, 2015

Customized items are rarely necessary and are rarely furnished. In accordance with 42 CFR Section 414.224, in order to be considered a customized item, a covered item (including a wheelchair) must be uniquely constructed or substantially modified for a specific beneficiary according to the description and orders of a physician and be so different from another item used for the same purpose that the two items cannot be grouped together for pricing purposes. For example, a wheelchair that is custom fabricated or substantially modified so that it can meet the needs of wheelchair-confined, conjoined twins facing each other is unique and cannot be grouped with any other wheelchair used for the same purpose. It is a one-of-a-kind item fabricated to meet specific needs. Items that are measured, assembled, fitted, or adapted in consideration of a patient’s body size, weight, disability, period of need, or intended use (i.e., custom fitted items) or have been assembled by a supplier or ordered from a manufacturer who makes available customized features, modification or components for wheelchairs that are intended for an individual patient’s use in accordance with instructions from the patient’s physician do not meet the definition of customized items. These items are not uniquely constructed or substantially modified and can be grouped with other items for pricing purposes. The use of customized options or accessories or custom fitting of certain parts does not result in a wheelchair or other equipment being considered as customized. The item must be uniquely constructed using raw materials or there must be a necessary, substantial modification to the base equipment (e.g., wheelchair frame) for the item to be considered a customized item.

Section 414.224 (b) provides that payment is made for the lump sum purchase of the item based on the contractor’s individual consideration and judgment of a reasonable payment amount for each customized item. The contractor’s individual consideration takes into account written documentation on the costs (including design, fabrication, and assembly costs) of the item including at least the cost of labor, to the extent that they are reasonable, of those actually performing the customization. The contractor’s individual consideration also takes into account the cost of the types of materials, to the extent that they are reasonable, used in custom fabricating or substantially modifying an item. The contractor may need to require a detailed description of each phase of the construction process and labor skills needed to fabricate or modify the item in order to determine a reasonable amount.

Contractors shall submit quarterly reports to CMS on the items they have determined meet the definition of customized items and how they reached the conclusion for each item. Contractors shall include in these reports the reasonable payment amount determinations and factors they considered in determining the reasonable payment amount for each item.

The definition of customized DME set forth in regulations at 42 CFR Section 414.224 is based on the longstanding definition of customized DME used in making decisions regarding when to make individual payment determinations outside the normal process for calculating customary and prevailing charges under the reasonable charge payment methodology used for DME prior to 1989. Public Law 101-508, Omnibus Budget Reconciliation Act (OBRA), November 5, 1990 (104 Stat. 1388-79) amended the criteria for treatment of wheelchair as a customized item at section 1834 (a) (4) of the Social Security Act by adding a clause that in case of a wheelchair furnished on or after January 1, 1992, the wheelchair shall be treated as a customized item if the wheelchair has been measured, fitted, or adapted in consideration of the patient’s body size, disability period of need, or intended use, and has been assembled by a supplier or ordered from a manufacturer who makes available customized features, modification or components for wheelchairs that are intended for an individual patient’s use in accordance with instructions from the patient’s physician. The amendment further noted that this clause applied only to items furnished on or after January 1, 1992, unless the Secretary developed specific criteria before that date for the treatment of wheelchairs as customized items for purposes of section 1834(a) (4) of the Social Security Act (in which case the amendment made by such clause would not become effective. CMS issued an interim final rule on December 20, 1991 (56 FR 65995) to announce the decision not to use the optional definition of customized wheelchairs in section 1834 (a) (4) of the Act and add a new section 414.224 to 42 CFR to provide in regulation criteria that must be met for a covered item to be considered a customized item for payment purposes. The final rule (58 FR 34919) was published on June 30, 1993.

NOTE: Contractors must observe that the alternative definition of customized wheelchairs found in section 1834(a)(4) of the Act was never adopted for Medicare payment purposes and should not be confused with the definition of customized items at 42 CFR 414.224.

References:

Certain Customized Items (Rev. 2687, 07-19-13). (2015, June 17). Find-A-Code Articles. Retrieved from https://www.findacode.com/articles/certain-customized-items-26683.html

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