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.