Oxygen Modifiers - Billing Reminder - JD DME

DME MAC Joint Publication

Posted November 30, 2023

Based on a recent analysis of oxygen claims data, the DME MACs have identified that many oxygen claims are inappropriately being billed with the N3 modifier. The DME MACs are issuing this billing reminder to clarify and reinforce the instructions for use of coverage-related modifiers associated with the Oxygen and Oxygen Equipment Local Coverage Determination (LCD) (L33797) and Policy Article (PA) (A52514).

Coverage-Related Modifiers

The following coverage-related modifiers are available for use in the Oxygen and Oxygen Equipment LCD and PA:

• KX (Requirements specified in the medical policy have been met) modifier:
  • Must be used on claims for ongoing oxygen rentals, contents, and maintenance and service that began during the public health emergency (prior to May 12, 2023) in situations where the beneficiary does not meet the current coverage criteria in the LCD or NCD and qualified for oxygen due to a PHE waiver. In this situation, the KX modifier is billed in addition to the CR (catastrophe/disaster related) modifier. These claims must not be billed with the N1, N2, or N3 modifier.
  • May be used on claims for ongoing oxygen rentals, contents, and maintenance and service that began prior to April 1, 2023, in situations where the beneficiary meets the current Oxygen and Oxygen Equipment LCD coverage criteria in lieu of the appropriate N1, N2, or N3 modifier.
  • Must not be used for any new oxygen rental periods beginning on or after April 1, 2023, where the beneficiary meets the current Oxygen and Oxygen Equipment LCD coverage criteria. (There is an exception for replacement oxygen for beneficiaries that received oxygen during the PHE and do not meet the current coverage criteria.)
• N1 (Group 1 oxygen coverage criteria met) modifier:
  • Must be used on claims for new oxygen rentals that began on or after April 1, 2023, where the beneficiary meets the current Group I coverage criteria within the Oxygen and Oxygen Equipment LCD.
  • May also be used for ongoing rental, contents, and maintenance and service claims that began prior to April 1, 2023, when the beneficiary meets the current Group I coverage criteria within the Oxygen and Oxygen equipment LCD.
• N2 (Group 2 oxygen coverage criteria met) modifier:
  • Must be used on claims for new oxygen rentals that began on or after April 1, 2023, where the beneficiary meets the current Group II coverage criteria within the Oxygen and Oxygen Equipment LCD.
  • May also be used for ongoing rental, contents, and maintenance and service claims that began prior to April 1, 2023, when the beneficiary meets the current Group II coverage criteria within the Oxygen and Oxygen equipment LCD.
• N3 (Group 3 oxygen coverage criteria met) modifier:
  • Must be used on claims for new oxygen rentals that began on or after April 1, 2023, where the beneficiary meets the current Group III coverage criteria within the Oxygen and Oxygen Equipment LCD.
  • May also be used for ongoing rental, contents, and maintenance and service claims that began prior to April 1, 2023, when the beneficiary meets the current Group III coverage criteria within the Oxygen and Oxygen equipment LCD.
  • Must not be used on claims for beneficiaries that need oxygen due to any hypoxemic condition (i.e., COPD, pneumonia, respiratory failure, etc.). Beneficiaries experiencing hypoxemia must meet the coverage criteria under Group I or II in order to qualify for Oxygen and Oxygen equipment.

Billing for Denial

In all other situations where the beneficiary does not meet the coverage criteria outlined in the Oxygen and Oxygen Equipment LCD or NCD, the claims must be billed for a denial with the appropriate GA, GY, or GZ modifier. This includes new oxygen set-ups for Medicare beneficiaries who are experiencing hypoxemia but do not have a qualifying blood gas study which meets the coverage criteria under Group I or Group II. The GA, GY, and GZ modifiers are used as follows:

• GA - Waiver of liability (expected to be denied as not reasonable and necessary, ABN on file).
• GY - Item or service statutorily excluded or does not meet the definition of any Medicare benefit.
• GZ - Item or service not reasonable and necessary (expected to be denied as not reasonable and necessary, no ABN on file).

Claim lines billed without an appropriate modifier (GA, GY, GZ, KX, N1, N2 or N3) will be rejected for missing information.

Overpayments and Ongoing Monitoring

Any supplier who received overpayments for claims submitted with the N3 modifier (which should have been billed with the GA, GY, or GZ modifier) should follow the voluntary overpayment process for the respective DME MAC.

The DME MACs plan to continue monitoring claims data for oxygen claims billed with the N3 modifier. These claims may be subject to audit if aberrant billing patterns continue.

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