Capped Rental on DME equipment

Capped Rental Items


For these items of DME, contractors pay the fee schedule amounts on a monthly rental basis not to exceed a period of continuous use of 15 months. In the tenth month of rental, the beneficiary is given a purchase option (see §30.5.2). If the purchase option is exercised, contractors continue to pay rental fees not to exceed a period of continuous use of 13 months and ownership of the equipment passes to the beneficiary. If the purchase option is not exercised, contractors continue to pay rental fees until the 15 month cap is reached and ownership of the equipment remains with the supplier (see §30.5.4). In the case of electric wheelchairs only, the beneficiary must be given a purchase option at the time the equipment is first provided (see §30.5.3).


Capped Rental Fee Variation by Month of Rental

For the first three rental months, the capped rental fee schedule is calculated so as to limit the monthly rental to 10 percent of the average of allowed purchase prices 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. After paying the rental fee schedule amount for 15 months, no further payment may be made except for the 6-month maintenance and servicing fee (see §40.2).


Purchase Option for Capped Rental Items

Effective May 1, 1991, suppliers must give beneficiaries the option of converting their capped rental equipment to purchased equipment during their 10th continuous rental month. Contractors make no further rental payments after the 11th rental month for capped rental items until the supplier notifies the contractor that it has contacted the beneficiary and furnished him/her with the option of either purchase or continued rental. Information contained in Exhibit 1 may be furnished to beneficiaries by suppliers to help them make a rent/purchase decision. Contractors provide copies of Exhibit 1 to suppliers. Beneficiaries have one month from the date the supplier makes the offer to accept this option. If the beneficiary declines or fails to respond to the purchase option, the contractor continues to make rental payments until the 15-month rental cap is reached.

If the beneficiary accepts the purchase option, the contractor continues making rental payments until a total of 13 continuous rental months have been paid. The contractor will not make any additional rental payments beyond the 13th rental month. On the first day after 13 continuous rental months have been paid, the supplier must transfer title to the equipment to the beneficiary.