Durable Medical Equipment (DME) suppliers often confuse between repair and replacement, making errors while submitting claims to Medicare. For the purposes of Medicare reimbursement, repairs and replacements are not the same. To avoid claim denials and to receive an accurate Medicare reimbursement it’s important to differentiate between Medicare repair and replacement in DME. The Durable Medical Equipment Medicare Administrative Contracts (DME MACs) have created guidance to assist Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) suppliers in understanding the information necessary to justify the payment. We have taken excerpts of this information to differentiate between Medicare repair and replacement in DME.
Repair and Replacement in DME
Repairs (parts and labor) of DMEPOS items are performed on the base item. The replacement of parts or components that make up the base item is considered to be a repair. On the other hand, the supplying of new separately payable accessories that were not part of the initial base item is considered to be a replacement. Replacement of a beneficiary-owned DMEPOS item typically involves providing an identical or nearly identical item. Let’s define both terms in detail.
Medicare Repair in DME
The Medicare Benefit Policy Manual (CMS Pub. 100-02), Chapter 15, Section 110.2. A section defines repair as to fixing or mending and putting the equipment back in good condition after damage or wear. Repairs to items that a beneficiary owns are covered when necessary to make the items serviceable. However, ‘routine periodic maintenance’, such as testing, cleaning, regulating, and checking is not covered. Medicare does not separately reimburse for repairs of:
- Items in the frequent and substantial servicing payment category; or,
- Oxygen equipment; or,
- Items in the capped rental payment category during the capped rental period; or,
- Items covered under a manufacturer’s or supplier’s warranty; or,
- Previously denied items.
Note that a new Certificate of Medical Necessity (CMN) and/or physician’s order is not needed for repairs. The DME supplier must maintain detailed records describing the need for and nature of all repairs including a detailed explanation of the justification for any component or part replaced as well as the labor time to restore the item to its functionality. If the expense for repairs exceeds the estimated expense of purchasing or renting another item of equipment for the remaining period of medical need, no payment can be made for the amount of the excess.
Medicare Replacement in DME
The Medicare Benefit Policy Manual (CMS Pub. 100-02), Chapter 15, Section 110.2.C section defines a replacement as the provision of an entirely identical or nearly identical item when it is lost, stolen, or irreparably damaged. Beneficiary-owned items or a capped rental item may be replaced in cases of loss or irreparable damage. Irreparable damage may be due to a specific accident or to a natural disaster (e.g., fire, flood). Replacement of items due to irreparable wear takes into consideration the Reasonable Useful Lifetime (RUL) of the item. The RUL of DME is determined through program instructions. In the absence of program instructions, carriers may determine the RUL, but in no case can it be less than 5 years. If the item has been in continuous use by the beneficiary on either a rental or purchase basis for its RUL, the beneficiary may elect to obtain a replacement.
Medicare does not cover replacement for items in the frequent and substantial servicing payment category, oxygen equipment, or inexpensive or routinely purchased rental items. A treating practitioner’s order and/or new CMN (prior to DOS 01/01/2023), when required, is needed to reaffirm the medical necessity for the replacement of an item. There are special rules for the replacement of artificial arms, legs, and eyes. Adjustments and repairs of prostheses and prosthetic components are covered under the original order for the prosthetic device.
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 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 practitioner’s order and documentation supporting the reason for the replacement.
The prosthetist must retain documentation of the prosthesis or prosthetic component replaced, the reason for replacement, and a description of the labor involved irrespective of the time since the prosthesis was provided to the beneficiary. 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.
Legion Healthcare Solutions is a leading medical billing company providing DME billing and coding services. We shared this article with the intension to avoid this confusion between Medicare repair and replacement in DME. In case of any assistance needed for DME billing contact us at 727-475-1834 or email us at firstname.lastname@example.org