Warranty, Reasonable Useful Lifetime (RUL), and the Minimum Lifetime Requirement (MLR) for Durable Medical Equipment - Correct Coding - Revised - JD DME

Joint DME MAC and PDAC Publication

Coding applications submitted to the Pricing, Data Analysis, and Coding (PDAC) contractor may require information regarding durability of an item. Minimum Lifetime Requirement, Reasonable Useful Lifetime, and Warranty are often cited interchangeably in response. However, these terms are not the same. This article will review the applicable Medicare definitions and payment rules related to these terms.

For an item to be eligible for coverage under the Medicare Durable Medical Equipment (DME) Benefit, specific criteria must be met. The Code of Federal Regulations (CFR) 42 CFR §414.202 states:

Durable medical equipment means equipment, furnished by a supplier or a home health agency that meets the following conditions:

1. Can withstand repeated use.
2. Effective with respect to items classified as DME after January 1, 2012, has an expected life of at least 3 years.
3. Is primarily and customarily used to serve a medical purpose.
4. Generally, is not useful to an individual in the absence of an illness or injury.
5. Is appropriate for use in the home.

The Centers for Medicaid and Medicare Services (CMS) Benefit Policy Manual (Internet Only Manual 100-02) Chapter 15, §110.1 provides additional guidance for understanding durability under the DME Benefit. It states:

1. Durability
   
   An item is considered durable if it can withstand repeated use, i.e., the type of item that could normally be rented. Medical supplies of an expendable nature, such as incontinent pads, lamb's wool pads, catheters, ace bandages, elastic stockings, surgical facemasks, irrigating kits, sheets, and bags are not considered "durable" within the meaning of the definition. There are other items that, although durable in nature, may fall into other coverage categories such as supplies, braces, prosthetic devices, artificial arms, legs, and eyes.

Minimum Lifetime Requirement (MLR) refers to the specified 3-year duration for repeated use (durability). Repeated rental requires full functionality over the entire MLR. Items with an MLR of less than 3 years are not eligible to be classified as DME. MLR compliance is established with either objective usage data or simulated usage testing that demonstrates retention of full functionality after three years of regular use. Documentation that establishes the 3-year durability MLR must be available upon request and can include life-cycle assessment reports or equivalent testing and verification. Testing is preferred to be done by a third-party manufacturer but internal reports may be accepted.

Reasonable Useful Lifetime (RUL) is the period of time, after which Medicare payment can be made for replacement of DME that is lost, stolen, or irreparably damaged. In general, the RUL for DME, orthotics, and prosthetics (except artificial limbs) is established by the Secretary of Health and Human Services and is a minimum of five years (42 CFR §414.210(f)). Computation of the RUL is based on when the equipment is delivered to the beneficiary, not the age of the equipment. The RUL is used to determine how often it is reasonable to pay for the replacement of DME under the Medicare program and is not explicitly set forth as a minimum lifetime standard. When it comes to RUL, one must consider "irreparable damage" and "irreparable wear". Damage refers to unexpected events, such as loss or theft, and are covered under RUL. Wear is the deterioration sustained from day-to-day usage over time that cannot be traced to a specific event. Wear is not covered by Medicare and does not meet the requirement of RUL.

A warranty is commonly considered to be a guarantee by a manufacturer promising to repair or replace an item, if necessary, within a specified period. Warranty requirements are primarily regulated by each state. Under the CMS Supplier Standards, manufacturers must not charge the beneficiary or Medicare program for the repair or replacement of an item covered under warranty. Warranty coverage is not a substitute for MLR and is a separate requirement for certain items such as wheelchairs and their accessories.

A manufacturer can attest to the MLR in their application, but documentation may be requested by the PDAC during verification review. There should be additional support that the item can last for the minimum required period of time. Evidence that an item can be rented, and used by successive patients, can come from a manufacturer’s rental and refurbishment program, or historic knowledge of an items’ usage.

Finally, the PDAC would like to remind submitters that in addition to the completed application and required documentation, please provide any relevant information that can further validate the requested code in your submission. The PDAC’s review and code decision is based on the information provided by the applicant.

For questions about correct coding, contact the PDAC HCPCS Helpline at (877) 735-1326 during the hours of 9:30 am to 5:00 pm ET, Monday through Friday. You may also visit the PDAC website to chat with a representative, or select the Contact Us button at the top of the PDAC website for email, FAX, or postal mail information.

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