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):
|
RR
|
Rental
|
|
NU
|
Purchase of new equipment.
Only used if new equipment was delivered.
|
|
UE
|
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).
|
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.
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.
4.8.2 The contractor shall 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
if the purchase option is exercised by the beneficiary. Ownership
of the equipment will pass to the beneficiaries after 13 continuous
months of rental.
4.8.3 The contractor
shall continue to pay rental fees if the purchase option is not
exercised, 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.
4.8.4 In the
case of electric wheelchairs only, the beneficiary must be given
a purchase option at the time the equipment is first provided.
4.8.4.1 The modifiers used with these
items are:
|
BR
|
Beneficiary has elected to
rent
|
|
BP
|
Beneficiary has elected to
purchase
|
|
BU
|
Beneficiary has not informed
the supplier of his or her decision
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4.8.4.2 Modifiers used for capped rental
items are:
|
KH
|
First rental month
|
|
KI
|
Second and third rental months
|
|
KJ
|
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:
|
RR
|
Rental
|
|
KH
|
First month rental
|
|
KI
|
Second and third month rental
|
|
KJ
|
Fourth to fifteenth months
|
|
BR
|
Beneficiary elected to rent
|
|
BP
|
Beneficiary elected to purchase
|
|
BU
|
Beneficiary has not informed
supplier of decision after 30 calendar days
|
|
MS
|
Maintenance and Servicing
|
|
NU
|
New equipment
|
|
UE
|
Used equipment
|
|
NR
|
New when rented
|
4.10.4 Claims Adjudication Determinations.
4.10.4.1 The contractor shall adjudicate
DE/DME claims using the following two-step sequential process and 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 The contractor shall establish
a mechanism for making regular monthly payments without requiring the
claimant to submit a claim each month, if the beneficiary opts to
rent/purchase. (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.
4.10.4.3 The contractor shall, in making
monthly payments, report on the TRICARE Encounter Data (TED) record
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. The
contractor shall notify the beneficiary when the contractor makes
a determination to rent or purchase. 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
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. 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 contractor shall replace
the existing pricing with the updated pricing information within
10 calendar days of publication on the Internet. The DMEPOS pricing
information is available at
https://www.health.mil/rates.
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.