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.