Moving the HME Industry Forward

Respiratory/Sleep

Oxygen – When Can You Restart the 36-Month Cap?

January 19, 2015

AMARILLO, TX – The 36-month oxygen rental period can restart in the following situations:
• the supplier “abandons” its oxygen patients;
• the supplier files a Chapter 7 bankruptcy or a liquidating Chapter 11;
• if the beneficiary elects to obtain new oxygen equipment after the five-year reasonable useful lifetime of the oxygen equipment has expired;
• there is a specific incident of damage beyond repair (dropped and broken, fire, flood, etc.) or the item is stolen or lost.
• during the 36-month rental payment period, if there is a break-in-need for at least 60 days plus the days remaining in the month of discontinuation and new medical necessity is established.

This article will focus on the latter three bullets.

After the Five-Year Reasonable Useful Lifetime Period Has Expired
The reasonable useful lifetime (“RUL”) for oxygen equipment is five years. At any time after the end of the RUL, 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 five years from that date. It is not based on the actual age of the equipment. The five-year period 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. 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 RUL is started for both the replacement stationary oxygen equipment and the replacement portable oxygen equipment.

A Medicare 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 RUL 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 RUL 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 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 any documentation that supports the narrative account of the incident.

The requirements for the initial CMN and claim for replacement equipment are:
• 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 reasonable useful lifetime or replacement due to damage, theft, or loss; and
• 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.

With reference to the 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 could 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.

During The 36-Month Cap Period…After 60-Plus Day Break In Medical Need
If the beneficiary enters a hospital or SNF or joins a Medicare HMO and continues to need/use oxygen, then when the beneficiary returns home or rejoins Medicare FFS, the payment resumes where it left off. If the need/use of oxygen ends for less than 60 days plus the remainder of the rental month of discontinuation and then resumes, then payment resumes where it left off.

During the 36-month rental period, if the need/use of oxygen ends for more than 60 days plus the remainder of the rental month of discontinuation and new medical necessity is established, a new 36-month rental period will begin. For a new Initial CMN, the blood gas study must be the most recent study obtained within 30 days prior to the Initial Date. The beneficiary must be seen and evaluated by the treating physician within 30 days prior to the date of Initial Certification.

If there is an interruption in medical necessity of greater than 60 days plus the days remaining in the last paid rental month, once the need resumes, the supplier will collect supporting documentation (made available upon request) of the new medical need including, but not limited to: (i) new prescription (detailed written order, WOPD if required); (ii) new Initial CMN (with new qualifying oxygen test results performed within 30 days of new initial date); (iii) documentation supporting new medical need; (iv) documentation explaining interruption of need; and (v) documentation supporting the length of interruption (e.g., pick up date, new delivery date). The claim for the first month of the new rentals meeting the above documentation should include: (i) new Initial CMN; and (ii) the following narrative statement: “Break in medical need greater than 60 days.”

During months 37-60, if need/use of oxygen ends for more than 60 days plus the remainder of the rental month of discontinuation and new medical necessity is established, a new rental period does not begin. The supplier that provided the oxygen equipment during the 36th rental month must provide all necessary items and services for the duration of the reasonable useful lifetime.

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, 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. He can be reached at (806) 345-6320 or jbaird@bf-law.com.