Repair or Replace?

Once equipment has become damaged or inoperable, you must determine whether you should repair the item or replace it. Medicare has specific guidelines on this for you to follow.

The first question to ask is whether you are still receiving rental payments from Medicare on the item. If you are, you cannot charge for any maintenance since it is considered to be included in the monthly rental price. If you are no longer receiving rental payments on the item (past month 13 for capped rental items where the first rental occurred on or after Jan. 1, 2006, and 36 months for oxygen), then you will have to determine whether to repair or replace the item based on the guidelines.

Medicare covers replacement of a beneficiary-owned piece of equipment when the equipment has been lost or irreparably damaged. A good example of irreparable damage would be what happened on the Gulf Coast after Hurricane Katrina. Thousands of beneficiaries were trapped by rising floodwaters and abandoned their HME equipment in order to save their lives. When they returned, their equipment was either damaged beyond repair or was simply gone with the wind.

In this case, a claim of irreparable damage would be justified, and replacement equipment would be authorized. A “CR” (catastrophe/disaster related) modifier would be used on the claim to tell Medicare that it is a disaster-related claim. A new physician order and/or CMN would also be required to reaffirm medical necessity for replacement due to irreparable damage.

When filing a claim for equipment replacement prior to the reasonable useful lifetime of five years, you would use the “RP” (repair and replacement) modifier. If you use the RP modifier you must maintain, at a minimum, the following documentation in your files:

• Reason for replacement;
• New CMN when required;
• Applicable medical record;
• Police reports; and
• Written explanation from the beneficiary.

If there is any other supporting documentation, such as pictures, collect it as well. Get as much documentation as you can regarding why the item had to be replaced.

If the item has become inoperable due to deterioration from day-to-day use over time, and a specific event cannot be identified that caused the deterioration, then that is considered “irreparable wear.” This is a very important distinction. Basically, when an item breaks from normal wear and tear, that is considered irreparable wear.