Durable Medical Equipment, Prosthetics, Orthotics and Supplies

by  Christine Woolstenhulme, QCC, QMCS, CPC, CMRS
August 7th, 2014

Reimbursement for most Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) is established by fee schedules. Payment is limited to the lower of the actual charge or the fee schedule amount.   We have given you some basic information to get you started including modifiers and how CMS views DMEPOS, please check with your local carrier to verify current and local billing procedures.

The fee schedule classifies most DMEPOS into one of six categories explained below:

• Inexpensive or other routinely purchased DME
• Items requiring frequent and substantial servicing
• Customized items
• Other prosthetic and orthotic devices
• Capped rental items
• Oxygen and oxygen equipment

Inexpensive and Routinely Purchased DME

• Inexpensive DME
  This category is defined as equipment whose purchase price does not exceed $150.
• Other Routinely Purchased DME
  This category consists of equipment that is purchased at least 75 percent of the time.

Payment for this type of equipment is for rental or lump sum purchase. The total payment amount may not exceed the actual charge or the fee for a purchase.

• RR Rental
• NU Purchase of new equipment. Only use if new equipment was delivered.
• UE Purchase of used equipment.

Items Requiring Frequent and Substantial Servicing

Equipment in this category is paid on a rental basis only. Payment is based on the monthly fee schedule amounts until medical necessity ends. No payment is made for the purchase of equipment, maintenance and servicing, or for replacement of items in this category.

Supplies and accessories are not allowed separately.

Customized Items

Coverage and allowable amounts for custom equipment will be decided by individual evaluation based on medical indication. Payment with respect to a covered item that is uniquely constructed or substantially modified to meet the specific needs of an individual beneficiary should be made in a lump-sum amount.

Billing TIP: The beneficiary’s physician must prescribe the customized equipment and provide information regarding the beneficiary’s physical and medical status to warrant the need for the equipment. Be sure to use the correct modifier stating. , the supplier should have maintained documentation in the files supporting the HCPCS modifier entered on the claim.

The following items are needed for coverage to be considered:

• Detailed description of the item
• Description of feature(s) that make this item unique
• Acquisition or production cost of the item, i.e., line item cost of materials and/or labor

Billing TIP: The date of service for custom-made equipment is the actual date the beneficiary receives the item. Do not use the date the item was ordered when billing Medicare.

Other Prosthetic and Orthotic Devices

These items consist of all prosthetic and orthotic devices excluding:

• Items requiring frequent and substantial servicing;
• Certain customized items;
• Transcutaneous electrical nerve stimulators (TENS);
• Parenteral/enteral nutritional supplies and equipment; and,
• Intraocular lenses.

Other than these exceptions, prosthetic and orthotic devices will be paid on a lump-sum purchase basis.

Capped Rental Items

Modifiers used for the rent/purchase option:

• BR Beneficiary has elected to rent
• BP Beneficiary has elected to purchase
• BU Beneficiary has not informed supplier of decision after 30 days

Suppliers were required to use one of these modifiers to notify the contractor of the beneficiary’s decision. Since modifiers were used, it was not necessary for a supplier to submit documentation signed by the beneficiary that he/she had been offered the rent/purchase option. However, the supplier should have maintained documentation in the files supporting the HCPCS modifier entered on the claim.

Rental Fee Schedule

For the first three rental months, the monthly rental fee schedule is limited to 10 percent of the average allowed purchase price on assigned claims for new equipment during a base period, updated to account for inflation. For each of the remaining months, the monthly rental is limited to 7.5 percent of the average allowed purchase price.

Effective for claims with dates of service on or after January 1, 2011, payment for power-driven wheelchairs furnished on or after January 1, 2011, is revised to pay 15 percent (instead of 10 percent) of the purchase price for the first three months under the monthly rental method and 6 percent (instead of 7.5 percent) for each of the remaining rental months 4 through 13.

Modifiers used in this category are as follows:

• RR Rental
• KH First rental month
• KI Second and third rental months
• KJ Fourth to the thirteenth months

Change in Suppliers

If the beneficiary changes suppliers during the 13-month rental period, a new rental period will not begin.

Complex Rehabilitative Power Wheelchairs. Suppliers must give beneficiaries entitled to complex power wheelchairs the option of purchasing at the time the supplier first furnishes the item. No rental payment will be made for the first month until the supplier notifies the DME MAC that the beneficiary has been given the option to either purchase or rent.

The modifiers used in this category are as follows:

• BR Beneficiary has elected to rent
• BP Beneficiary has elected to purchase

Oxygen and Oxygen Equipment

The monthly payment amount for stationary oxygen is subject to adjustment depending on the amount of oxygen prescribed (liters per minute or LPM) and whether or not portable oxygen is also prescribed.

Modifiers

• QE Use if the prescribed amount of oxygen is less than 1 LPM
• QF Use if the prescribed amount of oxygen exceeds 4 LPM and portable oxygen is prescribed
• QG Use if the prescribed amount of oxygen is greater than 4 LPM
• QH Use if an oxygen conserving device is being used with an oxygen delivery system

The monthly payment amount for stationary oxygen is subject to adjustment depending on the amount of oxygen prescribed (liters per minute or LPM) and whether or not portable oxygen is also prescribed.

• QE Use if the prescribed amount of oxygen is less than 1 LPM
• QF Use if the prescribed amount of oxygen exceeds 4 LPM and portable oxygen is prescribed
• QG Use if the prescribed amount of oxygen is greater than 4 LPM
• QH Use if an oxygen conserving device is being used with an oxygen delivery system
•  

Repair Modifiers

MS Six month maintenance and servicing fee for reasonable and necessary parts and labor which are not covered under any manufacturer or supplier warranty

Repair HCPCS Codes

K0739 Repair or nonroutine service for DME other than oxygen requiring the skill of a technician, labor component, per 15 minutes
K0740 Repair or nonroutine service for oxygen equipment requiring the skill of a technician, labor component, per 15 minutes

Place of Service

Coverage for any DMEPOS item will be considered if the place of service is:
01 – Pharmacy
04 – Homeless Shelter
09 – Prison/Correctional Facility
12 – Home
13 – Assisted Living Facility
14 – Group Home
33 – Custodial Care Facility
54 – Intermediate Care Facility/Mentally Retarded
55 – Residential Substance Abuse Treatment Facility
56 – Psychiatric Residential Treatment Center
65 – End Stage Renal Disease (ESRD) Treatment Facility (valid POS for Parenteral Nutritional Therapy)

For a complete list of place of service codes  CLICK HERE  

Coverage consideration for DMEPOS items in a Skilled Nursing Facility (31) or Nursing Facility (32) is limited to the following:

• Prosthetics, orthotics and related supplies
• Urinary incontinence supplies
• Ostomy supplies
• Surgical dressings
• Oral anticancer drugs
• Oral antiemetic drugs
• Therapeutic shoes for diabetics
• Parenteral/enteral nutrition (including E0776BA, the IV pole used to administer parenteral/enteral nutrition)
• ESRD – dialysis supplies only
• Immunosuppressive drugs  

For more detailed information on the following CLICK HERE

• Inexpensive or Other Routinely Purchased DME
• Items Requiring Frequent and Substantial Servicing
• Customized Items
• Capped Rental Items
• Oxygen and Oxygen Equipment
• Repairs, Maintenance, and Replacement
• Parenteral/Enteral Nutrition Therapy
• Place of Service
• Consolidated Billing
• DMEPOS and Inpatient Stays

Social Security Act (SSA), Section 1834 (a) (1), (2), (4), (5), (7); 42 U.S.C. Section 1395m (a) (1), (2), (4), (5), (7) (A) (iv), (v) and (vi), (1999); SSA Section 1834 (C) (IV) (4); CMS Manual System, Pub. 100-02, Medicare Benefit Policy, Chapter 15, Sections 110, 110.1, 110.2, 110.3; CMS Manual System, Pub. 100-04, Medicare Claims Processing, Chapter 20, Sections 30, 40.1, 40.2, 130, 130.6

For more detailed information: https://www.noridianmedicare.com/dme/news/manual/chapter5.html#3

References:

• Chapter 5 – Durable Medical Equipment, Prosthetics, Orthotics and Supplies - Noridian