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A QUICK SCREEN TO AID IN IDENTIFYING COVERABLE CASES

Medicare claims for DME (Items that have a medical purpose and repeated use) are suitable for coverage, and appeal if they have been denied, if they meet the following criteria:

  1. The equipment has been prescribed as medically necessary by your physician. Most items require a Certificate of Medical Necessity (CMN) filled out by a physician; and
  2. It must be able to withstand repeated use. Medicare expects a piece of equipment to last 5 years and will not usually pay for like or similar equipment within that time frame; and
  3. It must be primarily and customarily used for a medical purpose; and
  4. It must generally not be useful to a person in the absence of illness or injury; and
  5. It must be appropriate for use at home. Under a provision of federal law, a skilled nursing facility is not considered home; and
  6. The durable medical equipment supplier must be a Medicare-certified provider. 

ADDITIONAL HINTS:

  1. The attending physician is ALWAYS the key to obtaining Medicare benefits; obtain a statement from the beneficiary's physician stating that the durable medical equipment prescribed is medically necessary, is part of his course of treatment, and explaining its therapeutic value to the beneficiary. 
  2. The equipment must not only be medically necessary for the beneficiary, it must also generally be used for medical purposes. Thus, an air conditioner, while perhaps medically necessary for the individual patient, is not generally considered to be for medical purposes and is, therefore, not covered. (Water mattresses, now used for non-medical purposes but originally created for patients, will be coverable if medically necessary.) 
  3. Iron lungs, oxygen tents, hospital beds, and wheelchairs are included in Medicare's definition of durable medical equipment.
  4.  Some prosthetic devices, braces, artificial limbs and eyes are covered by Medicare Part B as "medical and other health services," not as durable medical equipment.
  5. A seat lift chair mechanism will be covered by Medicare as durable medical equipment if:
    1. It is prescribed by a physician; and
    2. it is included in the physician's course of treatment; and
    3. it is likely to effect improvement OR arrest or retard deterioration of the patient's condition; and
    4. the alternative would be chair or bed confinement; and
    5. the seat lift is the type which can be controlled by the patient and effectively assist him in standing up and sitting down without other assistance. (Seat lifts which operate by a spring release mechanism with a sudden, catapult-like motion will NOT be covered.
  6. Durable medical equipment costs are payable under Medicare Part B. You must therefore be enrolled in Part B and Medicare payment is subject to the Part B deductible and co-insurance requirements.

To find if your test, item, or service is covered under Medicare visit https://www.medicare.gov/coverage/durable-medical-equipment-coverage.html (site visited September 16, 2015)

For more information, see Medicare Coverage of Power Mobility Devices: Tips and Reminders (site visited September 16, 2015)


Payment Policy

For a comprehensive list of items/equipment paid for by Medicare, see https://www.medicare.gov/coverage/durable-medical-equipment-coverage.html.

Some of the more common items paid for by Medicare include:

  • Inexpensive items (not to exceed $150);
  • Wheelchairs, hospital beds, some walkers;
  • Certain customized items;
  • Prosthetic and orthotic devices
  • Capped rental items;
  • Oxygen and oxygen equipment.

DME, when furnished in the Medicare home under the home health benefit and under the Medicare Part B DME benefit, is paid on the basis of a fee schedule. Based on an individual consideration of each item, DME requiring custom fabrication may be paid for in a lump-sum amount and are not subject to prevailing charges or fee schedules.

Prosthetic and orthotic devices– excluding items requiring frequent and substantial servicing; customized items; parenteral/enteral nutritional supplies and equipment; and intraocular lenses – are paid for on the basis of a fee schedule and on a lump-sum basis.

Capped rental items (such as oxygen, nebulizers, and manual wheelchairs) that exceed $150 in costs are paid for on a rental fee schedule that is calculated to limit the monthly rental to 10% of the average allowed purchase price on an assigned claim for new equipment during a base period. For each remaining month, the monthly rental is limited to 7.5% of the average allowed purchase price. After paying the rental fee schedule amount for 15 months, no further payment is made except for a six-month maintenance and servicing fee.

Purchase of capped rental items: starting in the 10th month, with respect to an item that is a capped rental, the supplier must give the beneficiary the option to purchase the equipment. Medicare contractors will make no further rental payments to the supplier after the 11th rental month for capped rental items until the supplier notifies the contractor that it has contacted the beneficiary and given the beneficiary the option to purchase or to continue renting the capped rental. If the beneficiary declines or fails to respond to the option to purchase, the contractor continues to make rental payments until the 15th month rental cap has been reached. If the beneficiary decides to purchase the item, the contractor continues to make rental payments until a total of 13 continuous rental months have been paid. Where the beneficiary has elected the purchase option, on the first day after the 13th continuous month of the rental payments, the supplier must transfer title to the capped rental item to the beneficiary. If the beneficiary decides to continue renting the item, after the 15th rental month, the title to the equipment remains with the medical equipment supplier and the supplier can not charge the beneficiary any additional rental payments other than maintenance and service fees.

Beneficiary payment for capped rental items: if a beneficiary purchases a capped rental item, he or she is responsible for servicing the equipment. And, with respect to the purchase, you are responsible for the 20% coinsurance amount, and on unassigned claims, the beneficiary is responsible for the balance between the Medicare allowed amount and the supplier’s charge. If the beneficiary decides to rent the item, his or her responsibility is limited to a 20% coinsurance amount on a maintenance and servicing fee payable twice per year even if the equipment is not actually serviced.

Electric Wheelchairs: beneficiaries have the option to rent or purchase physician-prescribed electric wheelchairs. If the beneficiary decides to purchase the chair, Medicare will pay 80% of the allowable purchase price in a lump-sum amount. The beneficiary is responsible for the 20% coinsurance amount and, for unassigned claims, the balance between the Medicare allowed amount and the supplier’s charge. If the beneficiary decides to rent the electric wheelchair, after the 10th month of the rental, the beneficiary has the option to convert the rental agreement to a purchase agreement. If the purchase option is elected after the 10th month of rental, the Medicare contractor will make 3 more monthly payments to the supplier. At that point, the beneficiary is responsible for a 20% coinsurance amount, and for unassigned claims, the balance between the Medicare allowed amount ant the supplier’s charge. After these additional rental payments are made, title to the equipment is transferred to the beneficiary.

If the beneficiary decides to continue renting the item, after the 15th rental month, the title to the equipment remains with the medical equipment supplier and the supplier can not charge the beneficiary any additional rental payments. If the beneficiary decides to rent the item, his or her responsibility is limited to a 20% coinsurance amount on a maintenance and servicing fee payable twice per year even if the equipment is not actually serviced.

For power operated vehicles (POV) used as wheelchairs, the allowed payment amount, including all medically necessary accessories, is the lowest of the actual charge for the POV or the fee schedule amount for the POV.

Oxygen and oxygen equipment: Medicare contractors pay a monthly fee schedule amount per beneficiary. Generally, the fee covers the equipment, its contents and supplies. Purchase is not made for equipment of this type. When portable oxygen is prescribed, the fee schedule amount for portable equipment is added to the fee amount for stationary oxygen rental.

Purchase of oxygen equipment: on or after June 1, 1989, June 1, 1989, Medicare no longer pays for oxygen equipment that is purchased. If the beneficiary owns stationary liquid or gaseous oxygen equipment, the Medicare contractor pays the monthly oxygen contents fee. For owned oxygen concentrators, Medicare contractors do not pay a contents fee. Whether the beneficiary owns or rents an oxygen concentrator or a stationary gaseous or liquid oxygen system and has either rented or purchased a portable system, Medicare contractors pay the portable oxygen contents fee.


Competitive Bidding Program for Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS)

October 1, 2010 marked the kick-off of CMS's beneficiary education efforts to explain its DMEPOS program. CMS began to phase in the program on January 1, 2011. If you live in the geographic areas listed below, you will need to obtain your DMEPOS items and services from certified DMEPOS suppliers, including the repair and replacement. CMS has on its website detailed information explaining the program.

According to CMS, "[I]f you have Original Medicare and travel to (or live in) certain ZIP codes in the areas listed below, you will almost always need to use a supplier that contracts with Medicare when you buy or rent certain equipment or supplies for Medicare to help pay.” In addition, consult CMS' information page here (site visited September 16, 2015).

 Round 1 geographic areas for Competitive Bidding:

  • Charlotte-Gastonia-Concord (North Carolina and South Carolina)
  • Cincinnati-Middletown (Ohio, Kentucky, and Indiana)
  • Cleveland-Elyria-Mentor (Ohio)
  • Dallas-Fort Worth-Arlington (Texas)
  • Kansas City (Missouri and Kansas)
  • Miami-Fort Lauderdale-Pompano Beach (Florida)
  • Orlando – Kissimmee (Florida)
  • Pittsburgh (Pennsylvania)
  • Riverside-San Bernardino-Ontario (California)

Round 2 of the Competitive Bidding Program was expanded in July 2013 to certain ZIP codes in 91 metropolitan statistical areas (MSA), in the regions below. (The full Round 2 DEMPOS information is available at: https://www.cms.gov/Outreach-and-Education/Outreach/Partnerships/Downloads/DMEPOSBeneFactSheetMarch2013.pdf) (site visited September 16, 2015).

To find a Medicare contract suppliers in your area, follow the steps below:

  1. Visit www.medicare.gov (site visited September 16
  2. Select "Find Suppliers of Medical Equipment” at the bottom of the page.
  3. Enter your ZIP code and select “Go”.
  4. Under "Competitive Bid Categories,” select the item you need and select “Search,” at the bottom of the page to view or print a list of Medicare contract suppliers.

OR, call 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048. A customer service representative can help you find a supplier.

If beneficiaries have questions, they may call 1-800-MEDICARE (1-800-633-4227). Information about the DMEPOS competitive bidding program is also available at: http://www.dmecompetitivebid.com/palmetto/cbicrd12017.nsf/DocsCat/Home and http://www.dmecompetitivebid.com/palmetto/cbicrd2recompete.nsf/DocsCat/About%20Us?OpenDocument (both sites visited September 16, 2015).

FURTHER DETAILS

CMS has published regulations (72 Fed. Reg. 17,992 et seq [April 10, 2007], amending 42 C.F.R., parts 411 and 414; available here (site visited September 16, 2015) establishing the requirements of the initial competitive bidding program for certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS). 

New Terms

The competitive acquisition program for DMEPOS introduced new terms, including:

Contract Supplier – An entity that is awarded a contract by CMS to furnish items under a competitive bidding program

Non-Contract Supplier – A supplier that is not awarded a contract by CMS to furnish items included in a competitive bidding program

Grandfathered Supplier – A non-contract supplier that chooses to continue to furnish grandfathered items to a beneficiary in a CBA

Referral Agents – Physicians, practitioners, or providers who prescribe DMEPOS (in essence, "order” or "refer”) for their patients

Grandfathered Item – Any one of the items for which payment is made on a rental basis prior to the implementation of a competitive bidding program and for which payment is made after implementation of a competitive bidding program to a grandfathered supplier that continues to furnish the items in accordance with the rules of the competitive bidding process

Single Payment Amount – The allowed payment for an item furnished under competitive bidding program

Competitive Bidding Implementation Contractor

CMS contracted with Palmetto GBA as its Competitive Bidding Implementation Contractor (site visited September 16, 2015) (CBIC). The functions of the CBIC are to prepare the request for bids (RFB), perform bid evaluations, and ensure that suppliers meet all applicable financial and quality standards. In addition, the contractor is to conduct an education program for beneficiaries, suppliers, and referral agents.

Grandfathering Certain Contractors

The competitive bidding rules provide for "grandfathering” the provision of certain rental items for which payment is made on a rental basis prior to the implementation of a competitive bidding program and for which payment is made after implementation of a competitive bidding program to a grandfathered supplier that continues to furnish the items as provided under the payment regulations. Items that may be grandfathered include:

  • Certain inexpensive or routinely purchased brand-name items
  • An item requiring frequent and substantial servicing
  • Oxygen and oxygen equipment and other DME described in the regulations

The competitive bidding process also allows for the grandfathering of certain special physicians/practitioners – nurses, physician assistants, clinical nurse specialists, and physical

therapists and occupational therapists in private practice – to receive payment for certain competitively bid items furnished to their own patients as part of the professional service even though they have not submitted a bid and have not been selected as a contract supplier.

Beneficiaries who are renting an item of DME, or oxygen and oxygen equipment, that meets the definition of a grandfathered item may elect to obtain the item from a grandfathered supplier. The rules also contain special provisions for small suppliers, including forming networks of small suppliers.

Grandfathered Suppliers information is available at: https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/downloads/DME_Grandfathering_Factsheet_ICN900923.pdf (site visited September 16, 2015). It includes information on:

  • Eligible Grandfathered Suppliers
  • Beneficiary Election to Use or not to Use a Grandfathered Supplier

Additional Information on Referral Agent and Physicians’ and Other Treating Practioners can be found on: https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/downloads/DME_Ref_Agt_Factsheet_ICN900927.pdf and https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/downloads/DME_Physicians_Other_Pract_Factsheet_ICN900926.pdf (site visited September 16, 2015).

Repair and Replacement of Beneficiary-Owned Items

Repair Only – A beneficiary who owns a competitively bid item that needs to be repaired may have the repairs performed by either a contract supplier or a non-contract supplier. Medicare will pay for reasonable and necessary labor that is not otherwise covered under a manufacturer's or supplier's warranty.

Repair and Replacement – If a part needs to be replaced to make the beneficiary-owned equipment serviceable and the replacement part is also a competitively bid item for the CBA in which the beneficiary maintains a permanent residence, the part may be obtained from either a contract supplier or a non-contract supplier. In these situations, Medicare pays the single payment amount provided under the competitive bidding program for the replacement part.

Replacement Only – Beneficiaries who are permanent residents within a CBA are required to obtain replacement of all items subject to competitive bidding from a contract supplier – including replacement of base equipment and replacement of parts or accessories for base equipment that are being replaced for reasons other than servicing of the base equipment. Beneficiaries who are not permanent residents of a CBA, but require a replacement of a competitively bid item while visiting in a different CBA, must obtain the replacement item from a contract supplier. The supplier will be paid the fee schedule amount for the state in which the beneficiary is a permanent resident.

Mail Order Diabetic Supplies under the Program

Medicare beneficiaries who are permanent residents in a CBA may purchase their diabetic testing supplies from a mail order contract supplier for the area in which the beneficiary is a permanent resident or from a non-contract supplier in cases where the supplies are not furnished on a mail order basis. These supplies will be reimbursed at the single payment amount for the CBA where the beneficiary maintains a permanent residence. For diabetic supplies that are not furnished through mail order, suppliers will be paid the fee schedule amount.

Competitive Bidding and Advance Beneficiary Notice (ABN) Information

In general, if a non-contract supplier in a CBA furnishes a competitively bid item to any Medicare beneficiary, Medicare will not make payment unless there is an applicable exception, regardless of whether the beneficiary maintains a permanent residence in the CBA or another area. In these circumstances, the beneficiary is not liable for payment unless the non-contract supplier in a CBA obtains an ABN signed by the beneficiary.

A signed ABN indicates that the beneficiary was informed in writing prior to receiving the item that there would be no Medicare coverage due to the supplier's contract status and that the beneficiary

understands that he or she will be liable for all costs that the non-contract supplier may charge for the item. CMS has stated on some of its training phone calls that waiver of liability provisions apply when beneficiaries are not provided an ABN.

No Administrative and Judicial Review of Process

There is no administrative or judicial review under the DMEPOS competitive bidding process for the following: establishment of payment amounts; awarding of contracts; designation of CBAs; phase-in of the competitive bidding program; selection of items for competitive bidding; or the bidding structure and number of contract suppliers selected for a competitive bidding program. In addition, a denied claim is not appealable if the denial is based on a determination by CMS that a competitively bid item was furnished in a CBA in a manner not authorized under the competitive bidding program.

Conclusion

It is important for beneficiaries to use suppliers who meet the competitive bidding process requirements. They should be reminded of the requirement to use contract suppliers who are approved for the CBA in which they reside. Likewise, advocates and beneficiaries should read carefully each ABN issued for these beneficiaries to assure that they are using only contract suppliers.

Advocates and beneficiaries should check the DMEPOS website frequently for developments. Similarly, the "supplier-locator tool” on the Medicare beneficiary website,  www.medicare.gov (site visited September 16, 2015), will be an important source of contract-supplier information.

(All information current as of July 2015)

Additional Resources on the competitive bidding program (all sites visited September 16, 2015):

Replacement of Items Not Under Competitive Bidding

A capped rental item, which has been in continuous use, on either a rental or purchased basis, may be replaced if it is lost or irreparably damaged within 5 years, which is considered the "useful lifetime." The useful lifetime is based upon when the equipment is delivered to the patient, not the age of the equipment. If the patient elects to obtain a new piece of equipment, payment is made on a rental or purchase basis or a lump-sum purchase basis if a purchase agreement has been entered into. Expenses for replacement equipment required because of loss or irreparable damage will be reimbursed without a physician's order, if the equipment as originally ordered still fills the patient's needs. However, claims involving replacement equipment necessitated because of wear or a change in the patient's condition must have a new physician's order.

Payment will not be made for the replacement of rental equipment except capped rental items. However, replacement of purchased equipment can be made for:

  • Inexpensive or routinely purchased items
  • Customized items
  • Items available under the capped rental policy (some examples include wheelchairs, hospital beds and some walkers.)
  • Certain prosthetic devices (which replace all or part of an internal body organ, or replace all or part of the function of a permanently inoperative or malfunctioning internal body organ. Some examples include Parenteral and Enteral Nutrition (PEN), insertion trays, catheters, drainage bags, skin barriers, lumbar-sacral orthosis (LSO), prostheses (leg, foot, breast, knee, ankle), cardiac pacemakers, prosthetic lenses, maxillofacial devices, and devices which replace all or part of the ear or nose.)
  • Limited orthotic devices (items used for the correction or prevention of skeletal deformities. Some examples include a shoe that is an integral part of a leg brace or special shoe and inserts used for the prevention or management of foot ulcers in diabetics.)

Payment will not be made for the purchase and replacement of:

  • Frequently serviced items
  • Oxygen equipment

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