General Provider Education for Changes in the Payment for Oxygen Equipment and Capped Rentals for Durable Medical Equipment (DME) Based on the Deficit Reduction Act of 2005.
I. SUMMARY OF CHANGES: This instruction provides DME suppliers with an explanation of how changes in the Deficit Reduction Act of 2005 will impact them.
SUBJECT: General Provider Education for Changes in the Payment for Oxygen Equipment and Capped Rentals for Durable Medical Equipment (DME) Based on the Deficit Reduction Act of 2005
I. GENERAL INFORMATION
A. Background:
Recent legislative changes mandated by sections 5101(a) and 5101(b) of the Deficit Reduction Act (DRA) of 2005 mandate changes in the way Medicare makes payment for certain items of DME. Section 5101(a) revises the payment rules for capped rental DME. After 13 months, the beneficiary owns the capped rental DME item, and after that time, Medicare pays for reasonable and necessary maintenance and servicing (i.e., parts and labor not covered by a supplier’s or manufacturer’s warranty) of the item. The provision applies to beneficiaries renting an item for which the first rental month occurs on or after January 1, 2006.
Capped rental items furnished to beneficiaries prior to January 1, 2006 will continue to be paid under the payment rules in effect prior to the DRA changes.
Section 5101(b) limits the total number of continuous rental months for which Medicare will pay for oxygen equipment to 36 months. After the 36th month, the beneficiary will own the oxygen equipment. For beneficiary owned gaseous or liquid oxygen systems, Medicare will continue to pay for the oxygen contents. In addition, Medicare will pay for reasonable and necessary maintenance and servicing (i.e., parts and labor not covered by a supplier’s or manufacturer’s warranty) of beneficiary owned equipment (including oxygen concentrators). This provision is effective January 1, 2006. For beneficiaries receiving oxygen equipment on December 31, 2005, the 36-month rental period begins on January 1, 2006. The purpose of this document is to provide DME suppliers with an explanation of how these changes of Deficit Reduction Act of 2005 will impact them.
This instruction is for provider education purposes only. Implementation instructions will be issued at a later date.
B. Policy:
Payment for Capped Rental DME
Section 5101(a) of the DRA of 2005 is effective for capped rental items for which the first rental month occurs on or after January 1, 2006.
- For capped rental items for which the first rental month occurs on or after January 1, 2006, the Durable Medical Equipment Medicare Administrative Contractors (DME MACs) shall limit the
total number of continuous months of use for which it makes payment for capped rental DME to 13 months.
- After the DME MAC has paid for 13 months of continuous use of the capped rental DME, the supplier shall transfer title to the equipment to the beneficiary.
- This policy applies only to a new DME capped rental period for dates of service on or after January 1, 2006.
For claims with an initial date of service for capped rental DME before January 1, 2006, current rules apply.
Payment for Oxygen and Oxygen Equipment
Section 5101(b) of the DRA of 2005 establishes a 36 month (3 year) limit, or “cap”, on monthly payments for stationary and portable oxygen equipment. This cap applies to monthly payments made for oxygen equipment on or after January 1, 2006.
- The cap applies to all claims for the following HCPCS codes:
- E0424 - Stationary gaseous oxygen system
- E0431 - Portable gaseous oxygen system
- E0434 - Portable liquid oxygen system
- E0439 - Stationary liquid oxygen system
- E1390 - Oxygen concentrator, single delivery port
- E1391 - Oxygen concentrator, dual delivery port
- E1392 - Portable oxygen concentrator
- E1405 - Oxygen and water vapor enriching system with heated delivery
- E1406 - Oxygen and water vapor enriching system without heated delivery
- Payments for an item described above shall terminate after a period of continuous use of 36 months beginning on or after January 1, 2006. On the first day after the month for which the 36th monthly payment amount is made, the supplier must transfer title for the stationary and/or portable oxygen equipment to the beneficiary. On that same day that title for the equipment is transferred to the patient, monthly payments can begin to be made for oxygen contents used with patient-owned gaseous and liquid oxygen equipment.
The HCPCS codes for oxygen contents are:
- E0441 - Stationary gaseous contents used with patient owned gaseous stationary system
- E0442 - Stationary liquid contents used with patient owned liquid stationary system
- E0443 - Portable gaseous contents used with patient owned gaseous portable system
- E0444 - Portable liquid contents used with patient owned liquid portable system
- Contractors shall begin the 36-month count for beneficiaries that were already receiving oxygen therapy on January 1, 2006. Months prior to January 2006 shall not be included in the 36-month count.
- Updates to the Medicare Claims Processing Manual, Publication 100-04 and the Benefit Policy Manual, Publication 100-02, will follow at a later date.
HCPCS Modifiers
Additional program billing and claims processing instructions will be issued later this year. For now, suppliers should continue to use the KH, KI, and KJ modifiers in the manner as previously instructed for capped rental DME. These modifiers do not need to be submitted on claims for oxygen and oxygen equipment. Similarly, suppliers should continue to use the BP, BR, and BU modifiers as previously instructed with respect to capped rental periods that began prior to January 1, 2006.
FOR ADDITIONAL INFORMATION, CLICK HERE: http://www.vgm.com/files/manual/R918CP.pdf
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