Capped Rental Items

Items in this category are paid on a monthly rental basis not to exceed a period of continuous use of 13 months.

Based on Supplier Standard 5, suppliers are required to advise beneficiaries of the rental/purchase option for capped rentals and inexpensive or routinely purchased items. The National Supplier Clearinghouse (NSC) has a suggested form on their website for this purpose.

Rental Fee Schedule

For the first three rental months, the monthly rental fee schedule is limited to 10 percent of the average allowed purchase price on assigned 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 percent of the average allowed purchase price.

For power wheelchair rentals beginning on or after January 1, 2011, monthly rental payment amounts under the DMEPOS fee schedule are calculated using a different percentage of the purchase price than the percentage used for regular capped rental items. Payment for the first three months of rental is 15 percent (instead of 10 percent) of the purchase price of the power wheelchair, and payment for months 4 through 13 is 6 percent (instead of 7.5 percent).

Modifiers used in this category are as follows:

  • RR Rental
  • KH First rental month
  • KI Second and third rental months
  • KJ Fourth to the thirteenth months

Payments During a Period of Continuous Use

CMS Internet Only Manual (IOM), Publication 100-04, Medicare Claims Processing, Chapter 20, Section 30.5.4

Payment for items in which the first rental month occurred on/after January 1, 2006, may not exceed a period of continuous use longer than 13 months. After 13 months of rental have been paid, the beneficiary owns the DME item, and after that time Medicare pays for reasonable and necessary maintenance and servicing of the item, i.e., parts and labor not covered by a supplier's or manufacturer's warranty.

A period of continuous use allows for temporary interruptions in the use of equipment. Interruptions must exceed 60 consecutive days, plus the days remaining in the rental month in which the use ceases (not calendar month, but the 30-day rental period) in order for a new 13-month rental to begin. The following scenarios are examples of interruptions in use of equipment.

When there is a break in billing for the equipment during the rental period, such as when the patient is in a hospital, skilled nursing facility (SNF), hospice, or HMO, but medical need continues within the facility, if that interruption continues beyond the end of the rental month in which home use ceases, no additional payment will be made until the use of the item resumes in the home. A new date of service will be established when use resumes. Unreimbursed months of interruption will not apply toward the rental month limit. Add a claim narrative for break in billing (BIB) to indicate the type of break.

When there is a break in service due to medical need, such as equipment returned due to no longer being medically necessary, medical necessity will need to be reestablished if the equipment is ordered again after the interruption. In these situations, suppliers must obtain from the ordering physician a new prescription, a new Certificate of Medical Necessity (CMN), a new face-to-face exam and a statement describing the reasons for the interruption. If this information is not submitted, a new 13-month period does not begin. Please be thorough as the documentation will be carefully reviewed. Add a claim narrative for break in service (BIS) to indicate the type of break.

Conditions Affecting Rental Periods

Modification or Substitutions of Equipment - If equipment is exchanged for different but similar equipment and the beneficiary's condition has substantially changed to support the medical necessity for the new item, a new 13-month period will begin. Otherwise, the rental will continue to count against the current 13-month period. If the 13-month period has already expired, no additional rental payment will be made for modified or substituted equipment in the absence of substantial change in medical need. Please refer to the Supplier Manual Chapter 3 for more information on same and similar equipment.

If modifications are made to existing equipment and there is a substantial change in medical need, the 13-month rental period for the original equipment continues and a new 13-month rental period begins for the added equipment.

Change of Address - If the beneficiary moves during or after the 13-month period, either permanently or temporarily, it does not result in a new rental episode.

Change in Suppliers - If the beneficiary changes suppliers during the 13-month rental period, a new rental period will not begin.

Purchase Options of Capped Rental Items

CMS Manual System, Pub. 100-04, Medicare Claims Processing Manual, Chapter 20, §§30.5.2-3

Standard Power Wheelchairs (HCPCS codes K0813-K0831 and K0898)

Prior to January 1, 2011, beneficiaries had the option to either rent or purchase standard power wheelchairs; however, Section 3136 of the Affordable Care Act of 2010 eliminated the lump sum purchase option for standard power wheelchairs. Standard power wheelchairs with dates of service on or after January 1, 2011 must be rented.

For power wheelchair rentals beginning on or after January 1, 2011, monthly rental payment amounts under the DMEPOS fee schedule are calculated using a different percentage of the purchase price than the percentage used for regular capped rental items. Payment for the first three months of rental is 15 percent (instead of 10 percent) of the purchase price of the power wheelchair, and payment for months 4 through 13 is 6 percent (instead of 7.5 percent).

Complex Rehabilitative Power Wheelchairs (HCPCS codes K0835-K0843 and K0848-K0864) and Wheelchair Options/Accessories Furnished for Use with a Complex Rehabilitative Power Wheelchair

Complex rehabilitative power wheelchairs (HCPCS codes K0835-K0843 and K0848-K0864) and options/accessories furnished for use with a complex rehabilitative power wheelchair can be either rented or purchased. You must give beneficiaries entitled to these power wheelchairs and options/accessories the option of purchasing at the time you first furnish the item. No rental payment will be made for the first month until you notify the DME MAC that the beneficiary has been given the option to either purchase or rent. If the beneficiary chooses to purchase, payment will be made on a lump sum purchase basis. In this case, the modifiers billed on the claim for purchase must be NU (or UE, if used), KH, and BP (in addition to any modifiers required by the Local Coverage Determination). If the beneficiary declines the purchase in the first month, payment will be made on a rental basis. Effective for dates of service on and after October 1, 2018, the KH modifier is no longer required for purchased (NU or UE) wheelchairs and accessories.

For power wheelchair rentals beginning on or after January 1, 2011, monthly rental payment amounts under the DMEPOS fee schedule are calculated using a different percentage of the purchase price than the percentage used for regular capped rental items. Payment for the first three months of rental is 15 percent (instead of 10 percent) of the purchase price of the power wheelchair, and payment for months 4 through 13 is 6 percent (instead of 7.5 percent). The purchase fee schedule amount for complex rehabilitative power wheelchairs is equal to the monthly rental fee schedule amount divided by 0.15 following standard capped rental rules. For power wheelchair rentals beginning on or after January 1, 2011, monthly rental payment amounts under the DMEPOS fee schedule are calculated using a different percentage of the purchase price than the percentage used for regular capped rental items. Payment for the first three months of rental is 15 percent (instead of 10 percent) of the purchase price of the power wheelchair, and payment for months 4 through 13 is 6 percent (instead of 7.5 percent).

Parenteral/Enteral Pumps

CMS Manual System, Pub. 100-04, Medicare Claims Processing Manual, Chapter 20, §30.7.1
Parenteral/enteral pumps can be either rented or purchased. When rented, they are processed similarly to capped rental items, with a few notable exceptions. First, they are not subject to the 25% reduction payment for the fourth rental month and after. Second, a beneficiary may elect to purchase a parenteral/enteral pump at any time but must be offered the opportunity to do so by the tenth month if they have not already done so. If the beneficiary decides to purchase the pump once rentals have been paid, the purchase allowance will consist of the used purchase allowance less the amount allowed to date for rentals. If the beneficiary elects to continue to rent the pump, rental payments will continue up to 15 months.

A change in suppliers during the 15-month rental period does not begin a new 15-month rental period. The new supplier is entitled to the balance remaining on the 15-month rental period. The supplier that collects the last month of rental (i.e., the 15th month) is responsible for ensuring that the beneficiary has a pump for as long as it is medically necessary and for maintenance and servicing of the pump during the period of medical necessity.

The modifiers used in this category are as follows:

  • BR Beneficiary has elected to rent
  • BP Beneficiary has elected to purchase

 

Last Updated Mon, 22 Nov 2021 19:44:32 +0000