The definition of replacement is found in CMS Internet Only Manual (IOM), Publication 100-02, Benefit Policy Manual, Chapter 15, Section 110.2.C. Replacement refers to the provision of an identical or nearly identical item.

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, e.g., fire, flood.

• A physician’s order is needed to reaffirm the medical necessity of the item.
• There should be documentation in the supplier’s records detailing the incident, e.g., police report, insurance claim report, or beneficiary statement.

Irreparable Wear

Irreparable wear refers to deterioration sustained from day-to-day usage over time and a specific event cannot be identified. Replacement of equipment due to irreparable wear takes into consideration the reasonable useful lifetime of the equipment. If the item of equipment has been in continuous use by the beneficiary on either a rental or purchase basis for the equipment’s useful lifetime, the beneficiary may elect to obtain a new piece of equipment.

• Replacement may be reimbursed when a new physician order is needed to reaffirm the medical necessity of the item.

Reasonable Useful Lifetime (RUL)

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

Not Covered

The items listed below are not covered for replacement.

• Charges for the replacement of oxygen equipment
• Items that require frequent and substantial servicing
• Inexpensive or routinely purchased items which are being rented

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.
  • Change in patient's physiological condition
    • Examples include, but are not limited to, changes in beneficiary weight, changes in the residual limb, beneficiary functional need changes
  • An irreparable change in device condition, or in a part of the device resulting in need for a replacement
  • Device condition, or part of device that requires repairs when the cost of such repairs will be more than 60 percent of the cost of a replacement device, or the cost 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.

When a Narrative is Required

Add the narrative to each claim line, item 19 of the 1500 claim form, or the 2400/NTE segment of an electronic claim when required.

• Billing for minor parts without specific HCPCS codes
• Not otherwise classified (NOC) codes
• When appending RA modifier due to loss, stolen, or irreparable damage
• When appending the RB modifier

Replacement Modifiers

• RA - Replacement of a DME item, due to loss, irreparable damage or when item has been stolen
  • Capped Rental - Append to first month rental claim for a replacement item
    • Add narrative explaining the reason for replacement, if prior to end of RUL of the 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, etc.
  • Exception - Oxygen: Append to oxygen claims when replacement of that equipment is necessary due to end of RUL or loss, 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).
    • Add narrative to provide a detailed explanation as to why the accessory is being replaced.