FAQ on O2

On Nov. 9, CMS issued its final rule implementing new payment rules in the Deficit Reduction Act, which capped oxygen reimbursement at 36 months and DME reimbursement at 13 months. While the payment caps were effective for rental periods that began on or after Jan. 1, 2006, there are additional and new requirements that took effect on Jan. 1 of this year. These rules impose new responsibilities on HME providers.

FIVE-YEAR RESPONSIBILITY

Q What does the “five-year” requirement mean in general for suppliers?

A. Suppliers are now responsible for ensuring that the equipment they provide to beneficiaries will be in good working order for five years from the date of initial issue. Under Medicare's definition, five years represents the “useful life” of equipment. If equipment fails during this time, suppliers could be responsible for replacing it at their own expense.

Q What items does this requirement apply to?

A. This requirement applies to capped rental equipment such as hospital beds, manual wheelchairs, CPAPs, nebulizers and oxygen equipment.

Q Will Medicare pay when an item is lost or irreparably damaged?

A. Medicare will continue its policy of paying for replacement items when the item is lost or irreparably damaged; suppliers will be compensated for providing a new rental item if the item is needed as a result of circumstances beyond the supplier's control.

Q Technically, when did the new rule go into effect?

A. Even though the 13-month DME cap and the 36-month cap for home oxygen reimbursement began Jan. 1, 2006, the new five-year requirement applies to all rental periods beginning Jan. 1, 2007. Therefore, items that began a rental period in 2006 are not affected by this requirement.

Q Who decides that an item did not last five years?

A. The carrier decides. If the carrier determines that an item will not last for five years, the supplier will be responsible for furnishing replacement equipment at no cost to the beneficiary or to the Medicare program.

The final rule gives the carriers discretion to determine whether replacement equipment is warranted and whether the supplier will be financially responsible for furnishing the replacement equipment. In making the determination, carriers may consider whether repair costs will exceed 60 percent of the replacement cost.

Q How will the carriers determine the replacement cost of an item?