Page 121 - Medicare Benefit Policy Manual

B3-2100, A3-3113, HO-235, HHA-220

Expenses incurred by a beneficiary for the rental or purchases of durable medical
equipment (DME) are reimbursable if the following three requirements are met:

• The equipment meets the definition of DME (§110.1);

• The equipment is necessary and reasonable for the treatment of the patient’s
illness or injury or to improve the functioning of his or her malformed body
member (§110.1); and

• The equipment is used in the patient’s home.

The decision whether to rent or purchase an item of equipment generally resides with the
beneficiary, but the decision on how to pay rests with CMS. For some DME, program
payment policy calls for lump sum payments and in others for periodic payment. Where
covered DME is furnished to a beneficiary by a supplier of services other than a provider
of services, the DME MAC makes the reimbursement. If a provider of services furnishes
the equipment, the A/B MAC (A) or (HHH) makes the reimbursement. The payment
method is identified in the annual fee schedule update furnished by CMS.

The CMS issues quarterly updates to a fee schedule file that contains rates by HCPCS
code and also identifies the classification of the HCPCS code within the following
categories.

Category Code Definition

IN Inexpensive and Other Routinely Purchased Items

FS Frequently Serviced Items

CR Capped Rental Items

OX Oxygen and Oxygen Equipment

OS Ostomy, Tracheostomy & Urological Items

SD Surgical Dressings

PO Prosthetics & Orthotics

SU Supplies

TE Transcutaneous Electrical Nerve Stimulators

The A/B MACs (A), (B), and (HHH), and DME MACs, where appropriate, use the CMS
files to determine payment rules. See the Medicare Claims Processing Manual, Chapter