AMARILLO, TX – Providing oxygen will always be an important part of the DME industry. The reason is simple: DME suppliers furnish products and services to people who need them to function on a daily basis. Normally, the people who need such products and services are the elderly. And as we age, the incidences of COPD increase.

Gone are the days when DME suppliers would place an oxygen concentrator on a patient and would receive rental payments from Medicare for the duration of the patient’s life. Now, the supplier is required to furnish the concentrator for five years…but will receive rental payments only for the first three years.

A common question arises: Are there scenarios in which the DME supplier can start the initial 36 months over? The answer is “yes.” This three part series of articles will discuss when the 36 months can start over:

• Part 1 – After the Five Year Reasonable Useful Lifetime (“RUL”) Has Expired, Specific Incident of Damage Beyond Repair, or the Item is Stolen or Lost
• Part 2 – During the 36 Month Cap Period After a 60 Day (Plus) Break in Medical Need
• Part 3 – Abandonment of Oxygen Patients, Oxygen Patients of a Closed DME Supplier, and Oxygen Patients of a Bankrupt Supplier

After the 5 Year Reasonable Useful Lifetime (“RUL”) Period Has Expired

The reasonable useful lifetime for oxygen equipment is five years. At any time after the end of the five year reasonable useful lifetime for oxygen equipment, the beneficiary may elect to receive new equipment, thus beginning a new 36-month rental period. The five year period begins on the initial date of service and runs for fiv years from that date.  It is not based on the actual age of the equipment. It does not re-start if there has been a change in oxygen modality, change out of equipment, or change in supplier.

When the RUL of a beneficiary’s portable oxygen equipment differs from the RUL of the beneficiary’s stationary oxygen equipment, the RUL of the stationary oxygen equipment will govern for both types of oxygen equipment…stationary and portable. If the RUL end date of the portable oxygen equipment is before the RUL end date of the stationary oxygen equipment, the RUL end date of the portable oxygen equipment is extended to coincide with the RUL end date of the stationary oxygen equipment. If the RUL end date of the portable oxygen equipment is after the RUL end date of the stationary oxygen equipment, the end date of the RUL of the portable oxygen equipment is shortened to coincide with the RUL end date of the stationary oxygen equipment.

When the end date of the RUL of the stationary oxygen equipment occurs, the beneficiary may elect to obtain replacement of both the stationary and the portable oxygen equipment. If the beneficiary elects to obtain replacement of the stationary and the portable oxygen equipment, both types of oxygen equipment must be replaced at the same time, and a new 36-month rental period and new a RUL is started for both the replacement stationary oxygen equipment and the replacement portable oxygen equipment.

A beneficiary who resides in a DMEPOS competitive bidding area (“CBA”) may obtain replacement of both the stationary and portable oxygen systems only from a contract supplier having a competitive bidding contract for the CBA in which the beneficiary permanently resides.

If the beneficiary elects not to receive new equipment after the end of the five year reasonable useful lifetime and if the supplier retains title to the equipment, all elements of the payment policy for months 37-60 remain in effect. There is no separate payment for accessories or repairs. If the beneficiary was using gaseous or liquid oxygen equipment during the 36th rental month, payment can continue to be made for oxygen contents. If the beneficiary elects not to receive new equipment after the end of the five year reasonable useful lifetime and if the supplier transfers title of the equipment to the beneficiary, accessories, maintenance, and repairs are statutorily non-covered by Medicare. Contents are separately payable for beneficiary-owned gaseous or liquid systems.

Specific Incident of Damage Beyond Repair (e.g., Dropped and Broken, Fire, Flood, Etc.) or the Item is Stolen or Lost

A specific incident of damage to equipment is required such as equipment falling down a flight of stairs, as opposed to equipment that is worn out over time. A new 36-month cap rental period cannot be started if equipment is replaced due to malfunction, wear and tear, routine maintenance or repair.

A new 36-month rental period and new reasonable useful lifetime is started on the date that the replacement equipment is furnished to the beneficiary. Claims for the replacement of oxygen equipment for the first month of use only are billed using the HCPCS code for the new equipment and the RA modifier. The supplier must include on the claim for the first month of use a narrative explanation of the reason why the equipment was replaced and supporting documentation must be maintained in the supplier’s files. For example, if equipment was stolen, the supplier should keep a copy of the police report in its files. For lost or irreparably damaged equipment, the supplier should maintain documentation that supports the narrative account of the incident. After expiration of the 36-month cap rental period, the supplier of oxygen equipment must continue providing oxygen contents to the beneficiary during any period of medical need for the remainder of the five year reasonable useful lifetime of the equipment.

Initial CMN and claim for replacement equipment

The Initial Date should be the date of delivery of the replacement oxygen equipment. Claims for the initial rental month (and only the initial rental month) must have the RA modifier (Replacement of DME Item) added to the HCPCS code for the equipment when there is replacement due to (i) expiration of the reasonable useful lifetime or (ii) damage, theft, or loss. Claims for the initial rental month must include a narrative explanation of the reason why the equipment was replaced and supporting documentation must be maintained in the supplier’s files.

Recert CMN for replacement equipment

Repeat testing is not required. The supplier should enter the most recent qualifying value and test date. This test does not have to be within 30 days prior to the Initial Date. It can be the test result reported on the most recent prior CMN. There is no requirement for a physician visit that is specifically related to the completion of the CMN for replacement equipment.

AAHomecare’s Retail Work Group

The Retail Work Group is a vibrant network of DME industry stakeholders (suppliers, manufacturers, consultants) that meets once a month via video conference during which (i) an expert guest will present a topic on an aspect of selling products at retail, and (ii) a question and answer period will follow. The next Retail Work Group video conference is scheduled for November 8, 2018, at 11:00 a.m. Central. Staci Langel, VGM, will present “Motivating Staff Through Incentive Programs.” Participation in the Retail Work Group is free to AAHomecare members. For more information, contact Ashley Plauché Manager of Government Affairs, AAHomecare ([email protected]).

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, PC, a law firm based in Amarillo, Tex. He represents pharmacies, infusion companies, HME companies and other health care providers throughout the United States. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization, and can be reached at (806) 345-6320 or [email protected].