Durable Medical Equipment Purchase and Rental Limitations - Medicare Advantage

Policy No: 131
Originally Created: 02/01/2017
Section: Administrative
Last Reviewed: 01/01/2021
Last Revised: 01/01/2021
Approved: 01/14/2021
Effective: 05/01/2021

This policy does not apply to facilities (hospitals, surgery centers, kidney centers, etc....)

Durable Medical Equipment (DME)

DME is equipment that:

• Can withstand repeated use;
• Is primarily and customarily used to serve a medical purpose;
• Generally is not useful to a person in the absence of an illness or injury; and
• List item

• Is appropriate for use in the home

All requirements of the definition must be met before an item can be considered to be durable medical equipment.

Note: This policy has been revised and renamed. The revised policy will be effective 5/1/2022. To view the revised policy, click here.

DME claims must indicate whether the item(s) is rented or purchased. Purchased equipment must specify whether it is new or used. If the claim does not indicated whether the item is new or used, the item may be denied for the appropriate modifier. The following table indicates the Healthcare Common Procedure Coding System (HCPCS) modifiers used to indicate status. Other modifiers may be used in addition to those listed below to increase specificity.

Modifer and status

LL - Lease/rental (use when DME equipment rental is to be applied against the purchase price)

NR - New when rented (use when an item that was new at the time of rental is subsequently purchased)

NU - New equipment

RR - Rental (use when DME is to be rented)

UE - Used durable medical equipment

In addition to this policy, claims payments are subject to other plan requirements, including, but not limited to, requirements of medical necessity and reasonableness.

A DME item that has been purchased, may not be purchased or rented again within a 60-month period. Back-up, upgrade and replacement may be allowable as indicated on Centers for Medicare & Medicaid Services (CMS) Guidelines – Durable Medical Equipment Upgrades, Replacements and Duplicates.

A DME item that has been categorized by CMS on the Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Fee Schedule as a capped rental (CR) item will be considered purchased and owned by the member after 13 continuous rental months have been paid for the item. Rental charges received for the item after the 13th continuous month will be denied.

A DME item that has been categorized by CMS on the DMEPOS Fee Schedule as a Transcutaneous Electrical Nerve Stimulation (TE) item will be considered purchased and owned by the member after three (3) continuous months have been paid for the item. Charges received for the item after the 3rd continuous month will be denied.

A DME item that has been categorized by CMS on the DMEPOS Fee Schedule as an Oxygen Equipment (OX) item reimbursement will be limited to 36 monthly rental payments. This allowance applies to both stationary and portable items. Only charges submitted with modifier MS to indicate maintenance and servicing may be considered for additional payment beyond the 36-month rental period for parts and labor which are not covered under any manufacturer or supplier warranty.

Centers for Medicare & Medicaid Services (CMS), Medicare Claims Processing Manual, Chapter 20, Sections 30.1.2, 30.5.2, 130.9

Centers for Medicare & Medicaid Services (CMS), Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Fee Schedule

Electronic Code of Federal Regulations, Title 42, Public Health, Part 414, Payment for Part B Medical and Other Health Services, Subpart B, Physicians and Other Practitioners, 414.202, 414.210, 414.229, 414.232

Useful Life of DME

Payment for OX and CR ITEMS

None