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):
|
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. 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.
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 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 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:
|
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, the beneficiary has sole responsibility for upgraded DE/DME.
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
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 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 for deluxe or upgraded items
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:
|
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 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,
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 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) 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.
4.10.5 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 for 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 is 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/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 UDUE 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. 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.