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 contractor shall calculate the allowed
amount using what was in effect in
the specific geographic location at the time covered services and
supplies were provided to a beneficiary.
For DMEPOS delivered to the beneficiary’s home, the contractor
shall use the home address as
the controlling factor in pricing and the contractor
shall use the home address to determine
the DMEPOS allowed amount.
4.2 The contractor
may take into account the following for DE/Durable
Medical Equipment (DME)
item payment:
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.
• Inexpensive or other routinely
purchased DE/DME;
• Items requiring frequent and
substantial servicing;
• Customized items;
• Other prosthetic and orthotic
devices;
• Capped rental items; or
• 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 contractor
shall ensure the total payment does 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. The
contractor shall base payment on
the monthly DMEPOS fee schedule amounts until the medical necessity
ends. The contractor shall not make payment 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. The
contractor shall pay for items in this category 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, the contractor shall continue
to pay rental fees but not exceed
a period of continuous use of 13 months and ownership of the equipment
passes to the beneficiary. Ownership of the equipment shall pass
to the beneficiaries after 13 continuous months of rental.
4.8.2 If
the purchase option is not exercised, the contractor shall continue
to pay rental fees until the 15 month cap is reached and the
contractor shall not make further payment other
than for maintenance and servicing fees, until medical necessity
ends.
4.8.3 In the
case of electric wheelchairs only, the
contractor
shall give the beneficiary
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 contractor
may apply 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, the beneficiary has sole responsibility upgraded
DE/DME charges. The contractor
shall apply beneficiary’s cost-shares and deductible
will apply to the basic DE/DME.
4.9.2 The
DE/DME provider
shall 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 contractor shall deny claim
line with GA modifier 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
the provider or supplier issuing
the equipment
shall calculate the charge.
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 The
contractor shall not count upgraded items of DE/DME toward
the beneficiary’s catastrophic cap. However, the contractor
shall count the beneficiary’s responsibility for
the standard DE/DME equipment towards
the catastrophic cap. The beneficiary is responsible deluxe
or upgraded item charges even after
the beneficiary meets the out-of-pocket
maximum 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, the contractor
shall not make further payment 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 The contractor
shall use a two-step sequential process
adjudication
of DE/DME claims. The contractor shall determine:
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 shall 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
shall 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,”
the contractor shall evaluate medical necessity
after
the first three months and every six months thereafter.
The
contractor shall take special care
to
avoid payment after termination of TRICARE eligibility or in excess
of the total allowable benefit. In making monthly payments, the
contractor
shall report on the TRICARE
Encounter Data (TED) only
the 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
a total
charge
of $770. The contractor determines
that payments will be made over a 10-month period. The allowed charge
is $600.
In this example, the contractor
shall 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
contractor shall notify the beneficiary
of
that determination. The beneficiary is not required to follow the
contractor’s determination.
The beneficiary 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
contractor shall carefully word the notice
to
the beneficiary to avoid giving any impression that
compliance is mandatory, but
the contractor shall 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
The
contractor 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.
The
contractor shall reimburse oxygen and oxygen equipment
in
accordance with
Section 12.
4.13 Parenteral
and enteral
nutrition
(PEN) therapy.
PEN pumps
can be either rented or purchased.
The contractor
shall base reimbursement rates for these items on pricing set forth
in paragraphs 4.17 through 4.18.4.
4.14 Splints
and
casts. The
contractor
shall base reimbursement rates for these items of
DMEPOS
on
pricing
set
forth in paragraphs 4.17 through 4.18.4.
4.15 Refer to Addendum D for breastfeeding supply payment.
4.16
Replacement And
Repair 4.16.1 The contractor
shall cover extensive maintenance that
is based on manufacturer recommendations and
is performed by authorized technicians as
medically necessary. This may include breaking down sealed components
and performing tests that require specialized testing equipment
not available to the beneficiary. The contractor shall
cover maintenance for
patient owned-DME when such maintenance is performed
by an authorized technician.
4.16.2 Replacement and Repair of DMEPOS.
The following modifiers are to be used to identify repair and replacement
of an item.
4.16.2.1 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.
4.16.2.2 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.
4.17 For service dates
on or before June 30, 2021, the contractor shall base reimbursement
rates on Medicare’s DMEPOS and PEN fee schedule amount. If there
is no Medicare rate, the contractor shall reimburse the DE or DMEPOS
item or service using state prevailing rates. For more information regarding
the reimbursement of items and supplies under the state prevailing
rate, refer to Chapter 3, Section 1, and Chapter 5, Sections 1 and 3.
4.18 For
service dates on or after July 1, 2021, the requirements in paragraphs 1.0 through 4.16.2.2 shall
continue to apply and the contractor shall base reimbursement rates
using the following methodology:
4.18.2 If
there is no Medicare rate, the contractor shall reimburse the DE
or DMEPOS item or service using TRICARE’s DMEPOS fee schedule rates.
4.18.2.2 When
billing DE, DMEPOS, or PEN items, the provider shall report the
number of units based on the description of the Health Common Procedure
Coding System (HCPCS) code.
4.18.2.3 The
provider shall always include the modifier code RR on
rental items and modifier code UE on used items. Any HCPCS codes
billed with the UE modifier will result in a 25% reduction
in the purchase rate listed in the TRICARE DMEPOS fee schedule.
The contractor shall apply the 25% reduction to the purchase rate,
as the TRICARE fee schedule does not have purchase rates listed
for used items.
4.18.2.4 The
contractor shall download and implement these pricing files within
10 days of publication on DHA’s website (see
paragraph 4.18.2.1).
Note: The TRICARE fee
schedule includes wigs and breastfeeding supplies assigned to a
specific procedure code (i.e., a code not classified as unlisted,
miscellaneous, not otherwise classified, or custom). DHA calculated
the base-year rates using the amounts established in Addendum D,
and the TRICARE Policy Manual (TPM), Chapter 8, Section 12.1.
4.18.3 If
there is no Medicare or TRICARE DMEPOS fee schedule rate, the contractor
shall reimburse the DE or DMEPOS item or service using state prevailing
rates. Refer to Chapter 3, Section 1, and Chapter 5, Sections 1 and 3.
4.18.4 See the TRICARE
Operations Manual (TOM), Chapter 1, Section 4 regarding updating and maintaining
TRICARE reimbursement systems.
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. The
contractor shall not make payment for
repair, maintenance, and replacement of equipment that requires
frequent substantial servicing, oxygen equipment, and capped rental
items that the beneficiary has not
elected to purchase.
6.0 EFFECTIVE
DATES
6.1 September
1, 2005, for the DMEPOS system.
6.2 April 1, 2011, for reimbursement
of splints and casts.
6.3 July 1, 2021,
for the TRICARE-specific DMEPOS fee schedule.