Payments for Capped Rental Items During a Period of Continuous Use - Change in suppliers

When no purchase options have been exercised, rental payments may not exceed a period of continuous use of longer than 15 months. For the month of death or discontinuance of use, contractors pay the full month rental. After 15 months of rental have been paid, the supplier must continue to provide the item without any charge, other than for the maintenance and servicing fees (see §40.2) until medical necessity ends or Medicare coverage ceases (e.g., the patient enrolls in an M+C organization). For this purpose, unless there is a break in need for at least 60 days, medical necessity is presumed to continue. If a supplier makes any additional rental charges, contractors should report questionable situations to the RO of the Inspector General.

A period of continuous use allows for temporary interruptions in the use of equipment. Interruptions may last up to 60 consecutive days plus the days remaining in the rental month (this does not mean calendar month, but the 30-day rental period) in which use ceases, regardless of the reason the interruption occurs. Thus, if the interruption is less than 60 consecutive days plus the days remaining in the rental month in which use ceases, contractors will not begin a new 15-month rental period. Also, when an interruption continues beyond the end of the rental month in which the use ceases, contractors will not make payment for additional rental until use of the item resumes. Contractors will establish a new date of service when use resumes. Unpaid months of interruption do not count toward the 15-month limit.

EXAMPLE: A patient rents an item of equipment for 12 months and is then institutionalized for 45 days. Upon his discharge from the institution, the patient resumes use of the equipment and is considered to be in his 13th month of rental (since the period of institutionalization is not counted) for purposes of calculating the 15-month rental period. Moreover, for the period he was institutionalized, no payment is made for the item of equipment. If the supplier desires, it may pick up the item of equipment during the patient's hospitalization but is required to return the item upon the patient's return home.


If, however, the interruption is greater than 60 consecutive days (plus the days remaining in the rental month in which need ceases) and the supplier submits a new prescription, new medical necessity documentation and a statement describing the reason for the interruption which shows that medical necessity in the prior episode ended, a new 15-month period begins. If the supplier does not submit this documentation, a new 15-month period does not begin.

As a general rule, contractors accept written documentation from suppliers without further development. However, although it is expected that such circumstances are limited in number, they do represent an opportunity for abuse. Therefore, if a pattern of frequent interruptions in excess of 60 days occurs, contractors will institute a thorough  medical review of the supplier's claims. Contractors should report questionable situations to the RO of the Inspector General.

If a 15-month rental period has already ended and a greater than 60 consecutive day interruption occurs, contractors will subject any claims purporting to be a new period of medical necessity after the interruption to a thorough medical review to ensure that medical necessity did in fact end after the prior episode.

Additional issues relating to the term "continuous" follow.

Change of Address
If the beneficiary moves during or after the 15-month period, either permanently or temporarily, it does not result in a new rental episode.

Modifications or Substitutions of Equipment
If the beneficiary changes equipment to different but similar equipment, contractors may refer the claim to their medical review unit. If, after thorough review, they conclude that the beneficiary's medical needs have substantially changed and the new equipment is necessary, contractors will begin a new 15-month period. The supplier providing equipment during the 10th month must also provide the purchase option. Otherwise, they will continue to count against the current 15-month limit and base payment on the least expensive medically appropriate configuration of equipment (if the 15-month period had already expired, they will make no additional rental payments). The principles are described in the Medicare Benefit Policy Manual, Chapter 15.

If the new configuration is a modification of existing equipment through the addition of medically necessary features (e.g., a special purpose back is added to a wheelchair), contractors will continue the 15-month rental period for the original equipment and begin a new 15-month rental period for the added equipment.

Change in Suppliers

If the beneficiary changes suppliers during or after the 15-month rental period, this does not result in a new rental episode. For example, if the beneficiary changes suppliers after his 8th rental month, the new supplier is entitled to the monthly rental fee for seven additional months (15 - 8). The supplier that provides the item in the 15th month of the rental period is responsible for supplying the equipment and for maintenance and servicing after the 15-month period (see §40.2).