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 Codes for
areas defined as rural areas are based on current ZIP code Code boundaries.
The contractor shall calculate the allowed
amount shall be that which is using
what was in effect in the specific geographic location
at the time covered services and supplies are were provided
to a beneficiary. For DMEPOS delivered to the beneficiary’s home, the
contractor shall use the home address is as the
controlling factor in pricing and the contractor shall
use the home address shall be used to
determine the DMEPOS allowed amount.
4.2 Payment for an
item ofThe contractor may take into account
the following for DE/Durable Medical Equipment (DME)
may
also take into consideration 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 may 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):
|
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 The contractor shall base payment on
the monthly DMEPOS fee schedule amounts until the medical necessity
ends. No The contractor
shall not make 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 The
contractor shall pay for 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 purchased 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 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. 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 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. 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: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
|
4.8.4 Modifiers used for capped rental
items are:
|
KH
|
First rental month
|
|
KI
|
Second and third rental months
|
|
KJ
|
Fourth to fifteenth rental
months
|
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, charges for an the
beneficiary has sole responsibility for upgraded DE/DME are
the sole responsibility of the beneficiary. Beneficiary’s The
contractor shall apply beneficiary’s cost-shares and
deductible will apply to the basic DE/DME.
4.9.2 The DE/DME provider
is
to 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 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
shall
calculate the change. 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 UpgradedThe
contractor shall not count upgraded items of DE/DME do
not count toward the beneficiary’s catastrophic cap.
However, the contractor shall count the beneficiary’s
responsibility for the standard DE/DME equipment will
count towards the catastrophic cap. Charges
for The beneficiary is responsible for deluxe or
upgraded items are the beneficiary’s responsibility charges even
after the beneficiary meets 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 the
contractor shall not make 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 use
a two-step sequential process
adjudication
of DE/DME claims. and 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 TheIf
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, 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,”
the
contractor shall evaluate medical necessity
must
be evaluated after the first three months and every
six months thereafter.
Special The
contractor shall take 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 shall 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 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.
4.10.4.3 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 When
the contractor makes a determination to rent or purchase, the contractor
shall notify the beneficiary
when the contractor makes
a of that determination
to
rent or purchase. The beneficiary is not required
to follow the contractor’s determination.
He or she 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
should
be carefully worded to the beneficiary to
avoid giving any impression that compliance is mandatory, but
should 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.
Oxygen The
contractor shall reimburse oxygen and oxygen equipment
is
to be reimbursed in accordance with
Section 12.
4.13 Parenteral
/ and enteral
nutrition
(PEN) therapy.
Parenteral/enteral PEN pumps
can be either rented or purchased.
The contractor shall
base reimbursement rates for these items on for pricing set forth
in paragraphs 4.17 through 4.18.4.
4.14 Splints and
Casts casts.
The
contractor shall base reimbursement rates
for these items of DMEPOS
shall be based on
Medicare’s pricing
set
forth in paragraphs 4.17 through 4.18.4.
4.15 Reimbursement Rates Refer
to Addendum D for breastfeeding supply payment.
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.Replacement
and Repair4.16.1 ExtensiveThe
contractor shall cover extensive maintenance which, that
is based on manufacturer recommendations, must
be and is 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 The
contractor shall cover maintenance for patient owned-DME
when such maintenance must be 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/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 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 and 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 UD modifier will result in a 25% reduction to 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 listed 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. Payment is not made 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 patient 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.