4.0 REIMBURSEMENT4.1 Prior to January 1, 2016, the
DMEPOS fee schedule was categorized
by state. Beginning January 1, 2016, Medicare fee
schedule amounts for certain items were adjusted based on information
from the DMEPOS competitive bidding program, and for some items,
the adjusted DMEPOS fee schedule amounts for items furnished in
rural areas within the state will be different than the adjusted
DMEPOS fee schedule amounts in other areas of the state. The zip
codes for areas defined as rural areas are based on current zip
code boundaries. The allowed amount shall be that
which is in effect in the specific geographic location at the time
covered services and supplies are provided to a beneficiary. For DMEPOS
delivered to the beneficiary’s home, the home address is the controlling
factor in pricing and the home address shall be used to determine
the DMEPOS allowed amount.
4.2 Payment for an item of DE/Durable Medical Equipment
(DME) may also take into consideration:
4.2.1 The lower of the total rental cost for the
period of medical necessity or the reasonable purchase cost; and
4.2.2 Delivery charge, pick-up charge, shipping and
handling charges, and taxes.
4.3 The
DMEPOS fee
schedule classifies most items into one of six categories.
4.3.1 Inexpensive or other routinely purchased DE/DME;
4.3.2 Items requiring frequent and substantial servicing;
4.3.3 Customized items;
4.3.4 Other prosthetic and orthotic devices;
4.3.5 Capped rental items; or
4.3.6 Oxygen and oxygen equipment.
4.4 Inexpensive or routinely purchased DE/DME.
4.4.1 Payment for this type of equipment is for rental
or lump sum purchase. The total payment may not exceed the actual
charge of the fee for a purchase.
4.4.2 Inexpensive DE/DME. This category is defined
as equipment whose purchase price does not exceed $150.
4.4.3 Other routinely purchased DE/DME. This category
consists of equipment that is purchased at least 75% of the time and
includes equipment that is an accessory used in conjunction with
a nebulizer, aspirator, or ventilators that are either continuous
airway pressure devices or intermittent assist devices with continuous
airway pressure devices.
4.4.4 Modifiers used in this category are as follows
(not an all-inclusive list):
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RR
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Rental
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NU
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Purchase
of new equipment. Only used if new equipment was delivered.
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UE
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Purchase
of used equipment. Used equipment that has been purchased or rented
by someone before the current purchase transaction. Used equipment
also includes equipment that has been used under circumstances where
there has been no commercial transaction (e.g., equipment used for
trial periods or as a demonstrator).
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4.5 Items requiring frequent and substantial servicing.
4.5.1 Equipment in this category is paid on a rental
basis only. Payment is based on the monthly DMEPOS fee
schedule amounts until the medical necessity ends. No payment is
made for the purchase of equipment, maintenance and servicing, or
for replacement of items in this category.
4.5.2 Supplies and accessories are not allowed separately.
4.6 Certain customized items.
4.6.1 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. See the TPM, Chapter 8, Section 2.1, paragraph 3.6.2.
4.6.2 The beneficiary’s physician must prescribe
the customized equipment and provide information regarding the patient’s
physical and medical status to warrant the equipment medically necessary,
reasonable, and appropriate for the beneficiary’s condition.
4.7 Capped rental items. Items in this category
are paid on a monthly rental basis not to exceed a period of continuous
use of 15 months or on a purchase option basis not to exceed a period
of continuous use of 13 months.
4.8 The Purchase Option for Capped
Rental Items4.8.1 In
the tenth month of a rental, the beneficiary is given a purchase
option. If the purchase option is exercised by the beneficiary,
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.
Ownership of the equipment will pass to the beneficiaries after
13 continuous months of rental.
4.8.2 If the purchase option is not
exercised, contractors continue to pay rental fees until the 15 month
cap is reached and no further payment shall be made other than for
maintenance and servicing fees, until medical necessity ends.
4.8.3 In the case of electric wheelchairs
only, the beneficiary must be given a purchase option at the time
the equipment is first provided. The modifiers used with these items
are:
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BR
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Beneficiary
has elected to rent
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BP
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Beneficiary
has elected to purchase
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BU
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Beneficiary
has not informed the supplier of his/her decision
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4.8.4 Modifiers
used for capped rental items are:
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KH
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First
rental month
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KI
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Second
and third rental months
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KJ
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Fourth
to fifteenth rental months
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4.9 Upgrade DE/DME (Deluxe, Luxury, or Immaterial
Features).
4.9.1 The allowable
charge for standard equipment or item of DE/DME may be applied toward any
upgraded item, when the beneficiary chooses to upgrade a covered
DE/DME, to include additional features that are intended primarily
for comfort or convenience, or features beyond those required by the
beneficiary’s medical condition. Under this arrangement, charges
for an upgraded DE/DME are the sole responsibility of the beneficiary.
Beneficiary’s cost-shares and deductible will apply to the basic DE/DME.
4.9.2 The DE/DME provider is to identify non-payable
upgrades to DE/DME using the appropriate Healthcare Common Procedure
Coding System (HCPCS)/Current Procedural Terminology (CPT) modifiers.
Example: A
beneficiary requests an upgrade DE/DME - the DE/DME provider bills
beneficiary for non-payable upgrade, modifier GA on
first line for item that is provided and modifier GK on
second line for item that is covered. TRICARE cost-shares medically
necessary item only (GK line item). The claim line
with GA modifier will be denied as not medically necessary
with the beneficiary responsibility (PR) message on
the Explanation of Benefits (EOB). The claim line with the GK modifier
will continue through the usual claims processing.
4.9.3 When the beneficiary upgrades an item of DE/DME,
the upgrade charge is not managed by TRICARE, but calculated by
the provider or supplier issuing the equipment. As a result, upgraded charges,
clerical or calculation errors in connection with the upgraded equipment
are not subject to appeal but are subject to administrative review
by the contractor upon request from the beneficiary.
Note: The upgrade charge is the difference between the
provider’s or supplier’s charge for the deluxe or upgraded item,
and the allowable charge amount for the “covered” (standard) item.
4.9.4 Upgraded items of DE/DME do not count toward
the beneficiary’s catastrophic cap. However, the beneficiary’s responsibility
for the standard DE/DME equipment will count towards the catastrophic
cap. Charges for deluxe or upgraded items are the beneficiary’s
responsibility even after the out-of-pocket maximum has been met
for covered services.
4.10 Rental fee schedule.
4.10.1 For the first three rental months, the rental DMEPOS fee
schedule is calculated so as to limit the monthly rental of 10%
of the average of allowed purchase prices on 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% of the average
allowed purchase price.
4.10.2 After paying the rental DMEPOS fee
schedule amount for 15 months, no further payment may be made except
for reasonable and necessary maintenance
and servicing. Reasonable and necessary charges for
maintenance and servicing are those made for parts and labor not
otherwise covered under a manufacturer’s or supplier’s warranty
4.10.3 Modifiers used in this category are as follows:
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RR
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Rental
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KH
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First
month rental
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KI
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Second
and third month rental
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KJ
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Fourth
to fifteenth months
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BR
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Beneficiary
elected to rent
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BP
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Beneficiary
elected to purchase
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BU
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Beneficiary
has not informed supplier of decision after 30 days
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MS
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Maintenance
and Servicing
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NU
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New
equipment
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UE
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Used
equipment
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NR
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New
when rented
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4.10.4 Claims Adjudication Determinations.
4.10.4.1 Adjudication
of DE/DME claims involves a two-step sequential process involving
the following determinations by the contractor:
Step 1: Whether
the equipment meets the definition of DE/DME, is medically necessary,
and is otherwise covered; and
Step 2: Whether
the equipment should be rented or obtained through purchase (including lease/purchase).
To arrive at a determination, the following information is required:
• A
statement of the patient’s prognosis and the estimated length of
medical necessity for the equipment.
• The reasonable monthly
rental charge.
• The
reasonable purchase cost of the equipment.
• The contractor must
determine whether, given the estimated period of medical necessity,
it would be more economical and appropriate for the equipment to
be rented or purchased.
4.10.4.2 If the
beneficiary opts to rent/purchase, the contractor must establish
a mechanism for making regular monthly payments without requiring
the claimant to submit a claim each month. (It is not required or
expected that the contractor will automate the automatic payment;
the volume of this type claim will be quite low.) In cases of “indefinite
needs,” medical necessity must be evaluated after the first three
months and every six months thereafter. Special care should be taken
to avoid payment after termination of TRICARE eligibility or in
excess of the total allowable benefit. In making monthly payments,
the contractor will report on the TRICARE Encounter Data (TED) only
that portion of the billed charge which is applicable to that monthly
payment. (See the TRICARE Systems Manual (TSM),
Chapter 2.)
For example, a wheelchair is being purchased for which the total
charge is $770. The contractor determines that payments will be
made over a 10-month period. The allowed charge is $600. The contractor
will show the monthly billed charge as $77 and $60 as the allowed.
4.10.5 Notice To Beneficiary. When the contractor
makes a determination to rent or purchase, the beneficiary shall
be notified of that determination. The beneficiary is not required
to follow the contractor’s determination. He or she may purchase
the equipment even though the contractor has determined that rental
is more cost effective. However, payment for the equipment will
be based on the contractor’s determination. Because of this, the
notice should be carefully worded to avoid giving any impression
that compliance is mandatory, but should caution the beneficiary
concerning the expenses in excess of the allowed amount. Suggested
wording is included in
Addendum B.
4.11 Automatic Mailing/Delivery of
DMEPOSContractors
shall ensure that all DMEPOS services are medically necessary and
appropriate, to include refills of repetitive services and/or supplies,
and any automatically dispensed quantities of supplies on a predetermined
regular basis.
4.12 Oxygen and oxygen equipment. Oxygen and oxygen
equipment is to be reimbursed in accordance with
Section 12.
4.13 Parenteral/enteral nutrition therapy. Parenteral/enteral
pumps can be either rented or purchased.
4.14 Splints and Casts. The reimbursement rates
for these items of DMEPOS shall be based on Medicare’s pricing.
4.15 Reimbursement Rates.
4.15.1 The DMEPOS pricing information is available
at
http://www.health.mil/rates and
the
contractors are required to replace
the existing pricing with the updated pricing information within
10 calendar days of publication on the Internet.
4.15.3 See the TRICARE Operations Manual (TOM),
Chapter 1, Section 4 regarding updating and maintaining
TRICARE reimbursement systems.
4.16 Inclusion or exclusion of a DMEPOS fee
schedule amount for an item or service does not imply any TRICARE
coverage.
4.17 Extensive
maintenance which, based on manufacturer recommendations, must be
performed by authorized technicians is covered as medically necessary.
This may include breaking down sealed components and performing
tests that require specialized testing equipment not available to
the beneficiary. Maintenance may be covered for patient owned-DME
when such maintenance must be performed by an authorized technician.
4.18 Replacement and Repair of DMEPOS. The following
modifiers are to be used to identify repair and replacement of an
item.
4.18.1 RA -
Replacement of an item. The RA modifier on claims denotes
instances where an item is furnished as a replacement for the same
item which has been lost, stolen, or irreparable damaged.
4.18.2 RB - Replacement of a part of
DME furnished as part of a repair. The RB modifier
indicates replacement parts of an item furnished as part of the
service of repairing the item.
5.0 EXCLUSIONS
AND LIMITATIONS
5.1 A cost
that is non-advantageous to the Government shall not be allowed
even when the equipment cannot be rented or purchased within a “reasonable
distance” of the beneficiary’s current address. The charge for delivery
and pick up is an allowable part of the cost of an item; consequently, distance
does not limit access to equipment.
5.2 Line-item interest and carrying charges for
equipment purchase shall not be allowed. A lump-sum payment for
purchase of an item of equipment is the limit of the Government
cost-share liability. Interest and carrying charges result from
an arrangement between the beneficiary and the equipment vendor
for prorated payments of the beneficiary’s cost-share liability
over time.
5.3 Routine
periodic servicing such as testing, cleaning, regulating, and checking
that is generally expected to be done by the owner. Normally, the
purchasers are given operating manuals that describe the type of
service an owner may perform. Payment is not made for repair, maintenance,
and replacement of equipment that requires frequent substantial
servicing, oxygen equipment, and capped rental items that the patient
has not elected to purchase.