New Capped Rental Period

View two major reasons a new rental period will begin for a similar (same code) or related (different code) item in the Capped Rental payment category. These statements reflect current national policy and are provided as a clarification in response to inquiries from suppliers.

Situation 1

For an item described by the same code, a new capped rental period would begin if there has been an interruption in the medical necessity for the item and that interruption lasted for 60-plus consecutive days.

If there is an interruption in the billing of a capped rental DME item to the DME MAC because the patient is in a hospital and/or nursing facility or enrolls in an HMO or hospice program, a new capped rental period does not automatically begin if/when billing to the DME MAC resumes. If billing is for the same or similar item using the same code, a new capped rental period will begin when there has been an interruption in the medical necessity and that interruption lasted for 60-plus consecutive days.

CMS defines a 60-plus consecutive day interruption as a period including two full rental months plus whatever days are remaining in the rental month during which the need ends. An interruption in medical necessity is defined as a resolution of the condition that created the first period of medical necessity and the subsequent development of a second event that creates a new period of medical necessity.

  • Example: A beneficiary gets a wheelchair following a major injury to his/her legs. Rental starts on January 15 and they are billed on the 15th of the subsequent months (e.g., February and March). The beneficiary recovers and does not need the wheelchair anymore. He/she returns the wheelchair on March 25. The beneficiary experiences another injury and again requires a similar wheelchair (same code). A new capped rental period will begin if the wheelchair is provided in the home on/after June 15. This is an interruption of two full rental months, April and May, plus the remainder of the month of discontinuation, March 25 through April 14. Note: In this case, if a similar wheelchair (same code) is necessary and is provided in the home prior to June 15, a new capped rental period does not start because there is not a 60-plus consecutive day interruption of medical necessity.

A new capped rental period does not start just because there is an interruption in billing to the DME MAC.

  • Example: A beneficiary is in the middle of a capped rental period for a wheelchair that was needed due to a permanent hemiplegia from a stroke. He/she is admitted to a hospital and/or nursing facility for 60-plus days, or enrolls in a hospice program for 60-plus days. When the beneficiary returns home or unenrolls from the hospice program, even if it is from a different supplier, the capped rental period for the wheelchair resumes where it left off. Although billing to the DME MAC was interrupted, there was no interruption in the medical necessity for the wheelchair. For purposes of this instruction, CMS has interpreted an end to medical necessity to include enrollment in an HMO for 60 or more days.

Situation 2

For an item described by a different code, a new capped rental period would begin if there is a substantive change in the patient's condition that necessitates a significantly different item.

  • Example: A beneficiary has a wheelchair (HCPCS K0001) for short-term use following an injury. He/she has a stroke, which results in a dense hemiplegia and after a one month stay in a hospital and skilled nursing facility, it is determined that a wheelchair (HCPCS K0004) is necessary. A new capped rental period will begin for the wheelchair (HCPCS K0004) as there had been a substantive change in the beneficiary's condition and a significantly different item was provided.
  • Example: A beneficiary who meets the criteria for a group II support surface is provided a powered mattress overlay (HCPCS E0372). After three months, the pressure ulcers heal and he/she is switched to a group I mattress (e.g., HCPCS E0186). A new capped rental period will begin for the group I mattress as there has been a substantive change in the beneficiary's condition and a significantly different item is provided.

Note: The following groups of support surfaces will be considered "significantly different" for purposes of starting a new capped rental period: group 1 overlays, group 1 mattresses, group 2 overlays, group 2 mattresses and beds, group 3 beds.

If a beneficiary again develops a Stage IV pressure ulcer, restarts the powered mattress overlay (HCPCS E0372), and meets the criteria for a group II support surface, the capped rental period will restart at the month it had been discontinued. If a significantly different item (e.g., HCPCS E0277) in group II is started, a new capped rental period will begin.

For support surfaces, a new capped rental period does not start just because an item with another code was provided if that new item is not significantly different from the prior item (see groupings above).

  • Example: A beneficiary has a Stage IV pressure ulcer, meets coverage criteria for a group II support surface, and is furnished with a powered mattress overlay (HCPCS E0372). If his/her ulcer worsens and switches to a non-powered group II overlay (HCPCS E0371), a new capped rental period doesnot start, even if it is a different supplier. Although the beneficiary's condition did change, the new item is not significantly different from the previous one; however, if the he/she switches to a group II mattress (e.g., HCPCS E0277), a new capped rental period will start because there is substantive change in the patient's condition and is provided with a significantly different item.

Claim Submission Guidelines for Situations

If a supplier is billing for a new capped rental period, append the KH modifier to the code and, if a CMN is required, an initial CMN or DIF must accompany the claim. When the DME MAC receives a claim for a capped rental code that has been previously approved and there has been an interruption in billing to the DME MAC, the presumption is that there has been no interruption in medical necessity for the item, unless it is clearly documented. Therefore, if there is a 60-plus day interruption of billing for a code and the supplier believes starting a new capped rental period is justified, narrative documentation must accompany the claim. The documentation must include, but is not limited to:

  • Description of beneficiary's prior medical condition that necessitated previous item,
  • Statement explaining when and why medical necessity for previous item ended, and
  • Statement explaining beneficiary's new or changed medical condition and when new need began. This information must be entered in NTE segment of an electronic claim or attached to a paper claim

Although suppliers should always try to determine whether a beneficiary has had the same or related equipment before, there are times when a supplier may submit an initial claim for a capped rental item not knowing that another supplier had previously been approved for the same or related code. In this situation, additional narrative documentation justifying the start of a new capped rental period would not have been sent with the claim. The DME MAC will not presume that there has been no substantial change in the medical necessity for the item. Claims containing modifier KH, KI or KJ without reason for starting a new capped rental period will be denied. If the new supplier disagrees with this determination, they can obtain the information described in the previous paragraph and submit an appeal request.

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Last Updated Feb 05, 2020