Billing Partial Month Stays For Capped Rental Equipment

A. General Rule

For capped rental DME items where the DME supplier submits a monthly bill, the date of delivery (the “from” date) on the first claim must be the “from”, or “anniversary date”, on all subsequent claims for the item. For example, if the first claim for a wheelchair is dated September 15, all subsequent bills must be dated on the 15th of the following months (October 15, November 15, etc.).
The following instructions discuss DME payment when the DME is furnished during a month in which the beneficiary spends part of the month in a SNF, and part of the month in his or her own home. In accordance with DME payment policy, Medicare will make separate payment for a full month for DME items in such situations, provided the beneficiary was in the home on the “from” date or “anniversary date” defined above.


B. Policy

If a beneficiary using DME is at home on the “from” or “anniversary date”, Medicare will make payment for DME for the entire month, even if the “from” date is the date of discharge from the SNF.

If a beneficiary using DME is in a covered Part A stay in a SNF for a full month, Medicare will not make payment for DME for that month.

For capped rental items, if the covered Part A SNF stay overlaps the “from” or “anniversary date” of the Certificate of Medical Necessity (CMN), and the beneficiary is not in the covered Part A SNF stay for the entire month, the date of discharge becomes the new “anniversary date” for subsequent claims. In this situation, the supplier must submit a new claim with the date of discharge as the new anniversary date upon the beneficiary’s release from the SNF. Suppliers should annotate claims, to indicate that the patient was in a SNF, resulting in the need to establish a new anniversary date.

NOTES: The DME MACs must continue to make payment for maintenance and servicing of capped rental items regardless of whether the beneficiary is in a covered Part A SNF stay on the date of service of the maintenance and servicing claim.
The DME MACs must make payment for DME on the date of discharge from a covered Part A SNF stay. Claims must edit based on the “from” date of the claim and not the “through” date of the claim.


EXAMPLE 1:

A beneficiary rents a wheelchair beginning on January 1. The DME MAC determines that the wheelchair is medically necessary and that the beneficiary meets all coverage criteria, and so begins to make payment on the wheelchair. The beneficiary enters a covered Part A stay in a SNF on February 15 and is discharged on April 5. In this example, Medicare will make payment for the entire month of February, because the patient was in the home for part of the month. However, the DME MAC will deny the  claim for March, because the patient was in a covered Part A stay in the SNF for the entire month.

Because the anniversary date (“from” date) of the monthly bill was April 1, and the patient was still in the covered Part A stay in a SNF on that date, the DME supplier must not submit another claim until April 5 (the date of discharge). April 5 becomes the new anniversary date (“from” date) for billing purposes, so the supplier would now bill on the 5th of the month rather than the 1st of the month for the remainder of the capped rental period. The supplier should annotate the claim to indicate that the patient was in a SNF on the first claim with the new anniversary date.

EXAMPLE 2:

A beneficiary receives oxygen on January 1. On February 28, the patient enters a covered Part A stay in a SNF and is discharged on March 15.

In this example, the DME MAC would deny a claim dated March 1. The supplier would submit a new claim dated March 15, which would then become the anniversary date for billing purposes. The supplier should annotate the claim to indicate that the patient was in a covered Part A stay in a SNF on the first claim with the new anniversary date.

EXAMPLE 3:

A beneficiary rents a hospital bed beginning on January 1. On March 15, the patient enters a covered Part A stay in a SNF and is discharged on March 25.

In this example, the DME MAC will make payment for the entire month of March.

NOTE: The changes in the general policy in this instruction apply to all items of DME paid by the DME MACs. However, changes in “anniversary date” billing requirements only apply to capped rental DME.

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).

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.

capped rental item and modifier need to use - KH, KI AND KJ

Capped Rental Items

Items in this category are provided on a rental basis; therefore, RR is one of the modifiers appropriate with these items.
There is an exception to the rental basis. For electric wheelchairs, suppliers must give beneficiaries the option of purchasing at the time the supplier first furnishes the item. The modifiers used with these items are:
•    BR Beneficiary has elected to rent
•    BP Beneficiary has elected to purchase

Modifiers used for capped rental items are:

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

For capped rental items provided prior to January 1, 2006, suppliers must give beneficiaries the option to purchase their rental equipment during the tenth continuous rental month. Beneficiaries have one month from the date the supplier makes the offer to accept the option. If the beneficiary declines, rental payments continue until the 15th month. If the beneficiary accepts the purchase option, rental will continue until 13 continuous rental months have been paid. On the first day after 13 continuous months have been paid, the supplier must transfer the title of the equipment to the beneficiary.

Modifiers used for capped rental items prior to January 1, 2006 are:

•    BR Beneficiary has elected to rent
•    BP Beneficiary has elected to purchase
•    BU Beneficiary has not informed supplier of decision after 30 days
Beginning January 1, 2006, payment for capped rental items may not exceed a period of continuous use longer than 13 months. After 13 months of rental have been paid, the supplier must transfer the title of the equipment to the beneficiary.

The BR, BP and BU modifiers are not required on most capped rental items where the first rental period began on/after January 1, 2006. They are still required, however, on PEN pumps and electric wheelchairs regardless of the date of the first rental period.