4.0 REIMBURSEMENT
4.1 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 Items
4.8.1 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 DMEPOS
Contractors 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
https://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 Refer
to Chapter 1, Addendum D for payment of breastfeeding
supplies that are not listed in the DMEPOS fee schedule.
4.15.4 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.