The definition of replacement is found in CMS Internet Only Manual (IOM), Publication 100-02, Benefit Policy Manual, Chapter 15, Section 110.2.C. The Standard Documentation Requirements Policy Article (A55426) also defines replacement as the provision of an entirely identical or nearly identical item when it is lost, stolen or irreparably damaged.

Replacement Due to Loss or Irreparable Damage - Specific Incident or Natural Disaster

Equipment which the beneficiary owns or is a capped rental item may be replaced in cases of loss or irreparable damage. Irreparable damage refers to a specific accident or to a natural disaster, such as fire or flood. Contractors may request documentation confirming details of the incident (e.g., police report, insurance claim report or beneficiary statement).

• A treating practitioner's order is needed to reaffirm the medical necessity for replacement of an item.
• As a result of a declared disaster or emergency, when DMEPOS is lost, destroyed, irreparably damaged, or otherwise rendered unusable, the following replacement  requirements are waived:
  • The face-to-face requirement, a new physician’s order, and medical necessity documentation.

Suppliers must still include a narrative description on the claim explaining why the equipment must be replaced and are reminded to maintain documentation indicating that the DMEPOS was lost, destroyed, irreparably damaged, or otherwise rendered unusable or unavailable as a result of the emergency.

Replacement Due to Irreparable Wear

Irreparable wear refers to deterioration sustained from day-to-day usage over time where a specific event cannot be identified. Irreparable wear takes into consideration the Reasonable Useful Lifetime (RUL) of the item. The RUL for DME is determined through program instructions. In the absence of program instructions, carriers may determine the RUL, but in no case can it be less than 5 years. If the item has been in continuous use by the beneficiary on either a rental or purchase basis for its designated RUL, the beneficiary may elect to obtain a replacement.

• A treating practitioner's order is needed to reaffirm the medical necessity for replacement of an item.

Reasonable Useful Lifetime (RUL)

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 the RUL, one must consider "irreparable damage" and "irreparable wear." Damage refers to unexpected events, such as loss or theft, and are covered under the 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 RUL requirement.

RUL of durable medical equipment (DME) is determined through program instructions. In the absence of program instructions, Medicare Administrative Contractors (MACS) may determine the RUL of equipment, but in no case can it be less than five years.

• Computation of the RUL is based on when the item is delivered to the beneficiary, not the age of the item.
• Replacement due to wear is not covered during the RUL of the item.
• During the RUL, Medicare does cover repair up to the cost of replacement (but not actual replacement) for medically necessary items owned by the beneficiary.

Not Covered

Medicare does not cover replacement for the items below:

• Oxygen equipment
• Items in the frequent and substantial servicing payment category
• Inexpensive or routinely purchased rental items

Prosthetics

There are special rules for the replacement of artificial arms, lower limbs, and eyes.

• Medicare payment may be made for the replacement of prosthetic devices, which are artificial limbs, or for the replacement of any part of such devices, without regard to continuous use or useful lifetime restrictions, if a treating physician/practitioner determines that the replacement device, or replacement part of such a device is necessary.
• Claims involving the replacement of a prosthesis or major component (foot, ankle, knee, socket etc.) must be supported by a new treating physician/practitioner's order and documentation supporting the reason for the replacement. The reason for replacement must be documented by the treating physician/practitioner either on the order or in the medical record, and must fall under one of the following:
  • A change in the physiological condition of the patient resulting in the need for a replacement. Examples include but are not limited to, changes in beneficiary weight, changes in the residual limb, beneficiary functional need changes; or,
  • An irreparable change in the condition of the device, or in a part of the device, resulting in the need for a replacement; or,
  • The device, or part of the device requires repairs and the cost of such repairs would be more than 60 percent of the cost of a replacement device, or, as the case may be, of the part being replaced.

The prosthetist must retain documentation of the prosthesis or prosthetic component replaced, the reason for replacement, and a description of the labor involved. This information must be available upon request. It is recognized that there are situations where the reason for replacement includes but is not limited to changes in the residual limb; functional need changes; or irreparable damage or wear/tear due to excessive beneficiary weight or prosthetic demands of very active amputees.

Capped Rental Items

Federal regulations at 42 CFR 414.210(e)(4) specify that a supplier that transfers title of a capped rental item, such as a power wheelchair, to a beneficiary remains responsible for furnishing replacement equipment at no cost to the beneficiary or to the Medicare program for the 5-year reasonable useful lifetime of the equipment. In making this determination, the DME MACs may consider whether the accumulated costs of repair exceed 60 percent of the cost to replace the item.

When a Narrative is Required

Add a narrative to each claim line in the following circumstances under Item 19 of the 1500 claim form or the 2400/NTE segment of an electronic claim. Utilize the Common Abbreviations to Use as Narratives page as reference.

• Billing for minor parts without specific HCPCS codes
  • Description of what is being repaired
• Not otherwise classified (NOC) codes
  • Description of the item or service
  • Manufacturer name
  • Product name and number
  • Supplier Price List (PL) amount (this is the same amount billed on the claim line)
  • HCPCS code of related item (if applicable)
  • If repair part, HCPCS code of item being repaired
• When appending RA modifier due to loss, stolen, or irreparable damage
  • Add narrative explaining the reason for replacement, if prior to end of RUL of the item
• When appending the RB modifier
  • Add HCPCS code of base item of replacement accessory in the narrative, i.e., replacing on code K0001
• When appending the CR modifier
  • Add narrative description explaining why the equipment must be replaced as a result of the emergency

Replacement Modifiers

• RA - Replacement of a DME item only when due to loss, irreparable damage, or when item has been stolen
  • For a purchase item - append to claim line of item
  • Capped Rental item - append to first month rental claim for a replacement item
    • The reason for replacement should be documented in the supplier's records and may include a beneficiary statement, police report, fire or insurance report, or beneficiary statement, etc.
  • Exception for oxygen - append to oxygen claims when replacement of that equipment is necessary due to end of the RUL or for lost, stolen, or irreparable damage of the equipment. Do not append this modifier to any other DMEPOS item when replacing due to RUL.
• RB - Replacement of a part of DME as part of a repair
  • When billing a replacement accessory for the main piece of equipment, suppliers must bill the RB modifier (replacement of a part of DME, orthotic or prosthetic item furnished as part of a repair).