Information on the current status of Medicare payment for oxygen equipment and supplies after the 36-month rental cap.
by Lisa K. Smith, Esq.
Friday, May 1, 2009

Shortly after CMS issued its post-cap oxygen payment rules, Lisa Smith, an attorney with the Health Care Group at Brown & Fortunato, authored a special series for HomeCare responding to many of home medical equipment providers' most common questions about the new rules. Since, CMS has issued additional guidance regarding billing for oxygen contents and replacement of oxygen equipment after the expiration of the five-year useful lifetime. But the guidance has been piecemeal, and some things remain unclear, so we asked Smith for a comprehensive review. If you still have questions about payment or what is and isn't allowed under the post-cap rules, this in-depth report has the answers.

The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) passed in July 2008 repealed the requirement that providers transfer title to oxygen equipment to the patient after 36 months' rental, and instead, essentially changed oxygen equipment into capped rental equipment with a 36-month cap.

On Nov. 19, 2008, CMS published a final rule with information concerning payments that would — and would not — be made to providers after the 36-month cap was reached. CMS has continued to add specifics about billing for routine maintenance and service through transmittals (change requests) and related MLNMatters articles, all of which are available on the CMS Web site.

The DME MACs also have published additional detail concerning billing for oxygen contents and billing for replacement equipment that is available on their individual sites. Information follows on the current status of Medicare payment for oxygen equipment and supplies after the 36-month rental cap.

Continued Provision of Equipment

After the 36-month cap, a provider of stationary or portable oxygen equipment must continue providing the oxygen equipment to the beneficiary without any rental charge during any period of medical need for the remainder of the reasonable useful lifetime of the equipment. The 36-month rental cap is calculated on the number of paid Medicare rental payments for a period of continuous use beginning Jan. 1, 2006. The “reasonable useful lifetime” for oxygen equipment is five years' continuous use.

Note that the 36-month cap period and five-year useful life period for a portable unit will be different from that of the stationary oxygen system if the portable equipment is added at a later date.

A period of continuous use does allow for temporary interruptions in use of the equipment. For breaks in need (the beneficiary no longer needs or uses oxygen equipment) of less than 60 days plus the days remaining in the last paid rental month, the period of continuous use does not start over; the count of continuous months picks up where it left off before the break.

For example, if the last paid rental month is month No. 31 and there is a 50-day break in need, the next paid rental month would be month No. 32. If, however, there is a break in need of more than 60 days plus the days remaining in the last paid rental month, and the need for the equipment resumes at a later date, then a new period of continuous use, a new 36-month payment period and a new reasonable useful lifetime period would begin.

You do need to submit new medical necessity documentation (i.e., a new CMN and retesting) for oxygen and oxygen equipment and/or portable oxygen equipment, along with a narrative explanation describing the reason for the interruption that shows medical necessity in the prior episode ended.

If medical necessity for the equipment continues during a break in billing/Part B payment (e.g., the beneficiary is hospitalized for 70 days but continues to use oxygen equipment during the hospital stay), this does not constitute a break in need. So, a new period of continuous use does not begin. In these situations, the count of continuous months picks up where it left off before the break.

Beneficiary protections against provider replacement of oxygen equipment continue in effect after the 36-month cap until the expiration of the equipment's useful lifetime unless one of the following stated exceptions apply:

  • You replace an item with the same or equivalent make and model of equipment because the item initially furnished is lost, stolen, irreparably damaged, is being repaired or no longer functions.

  • A physician orders different equipment for the beneficiary. If the order is based on medical necessity, the order must indicate why the equipment originally furnished is no longer medically necessary, and you must retain this order in the beneficiary's medical record.

  • The beneficiary chooses to obtain a new technology item or upgraded item and signs an ABN.

  • CMS or the carrier determines that a change in equipment is warranted.

Your obligation to continue providing oxygen ends at the expiration of the five-year useful life of the equipment. The useful life period is measured from the date the oxygen equipment was originally delivered to the beneficiary, not the actual age of the equipment. The five-year useful life period does not re-start if there has been a change in oxygen modality, change out of equipment or change in provider.

After the 36-month cap, you must continue to furnish, or arrange for furnishing the oxygen equipment with another provider, if the beneficiary moves outside your service area before the end of the useful lifetime of the equipment. This obligation does not exist if the beneficiary moves before the 36-month cap.

Provision of Oxygen Contents

After the 36-month cap, a provider of liquid or gas stationary or portable oxygen equipment must continue providing oxygen contents to the beneficiary during any period of medical need for the remainder of the useful lifetime of the equipment.

You cannot bill for stationary oxygen contents if the patient uses a stationary concentrator. You cannot bill for portable oxygen contents if the patient uses a portable concentrator or transfilling equipment.

Payment for oxygen contents used with both stationary oxygen equipment and portable oxygen equipment is included in the 36 monthly rental payments for the stationary oxygen equipment. Therefore, you can start billing for portable oxygen contents once the stationary oxygen equipment has capped. You don't need to wait for the portable equipment to cap.

Following the stationary oxygen equipment payment cap, you may bill for oxygen contents on the anniversary date of the oxygen equipment billing. For subsequent months, you are not required to deliver the oxygen contents every month in order to continue billing for the contents on a monthly basis. A maximum of three months of oxygen contents can be delivered at one time.

However, in order to bill for contents for a specific month, you must have previously delivered quantities of oxygen that are sufficient to last for one month following the date of service on the claim. You are required to have proof-of-delivery for each actual delivery of oxygen, but as noted, this may be less often than monthly.

Providers are prohibited from charging for delivery of oxygen contents and cannot require the beneficiary to pick up contents from their location. Additionally, a provider cannot restrict the amount of oxygen contents it provides to a beneficiary to only that amount for use “in the home.”

Unless you are a participating provider, you are not required to accept assignment on oxygen contents. If you decide not to accept assignment for oxygen contents, you should provide the beneficiary at least 30 days' advance written notice, and you can charge the beneficiary and collect up front for oxygen contents.

However, if you accept assignment for contents for a given month, you are prohibited from going non-assigned and charging the patient for any additional contents he or she requires for that month.

After the 36-month cap, if you arrange for another provider to provide oxygen contents for a beneficiary who has moved, the new provider can bill for the oxygen contents and you not required to pay the new provider for the contents.

Maintenance and Servicing

For 2009 only, Medicare will pay for routine maintenance and servicing of oxygen concentrators or transfilling equipment performed at the beneficiary's residence. As the provider, you are responsible for replacement of parts.

You will submit a claim with the oxygen equipment code and with the MS modifier, and the allowed payment amount would be equal to the lesser of your actual charge or 30 minutes of the allowed payment amount for labor. If you visit the beneficiary's home to provide the periodic maintenance and servicing for a stationary concentrator (E1390 or E1391) and a transfilling unit (K0738), payment can be made for maintenance and servicing of both units (E1390MS or E1391MS, and K0738MS).

If you visit the beneficiary's home to provide the periodic maintenance and servicing for a portable concentrator (E1392), payment can only be made for maintenance and servicing of the one unit/HCPCS code (E1392MS). Payment is available once every six months, beginning six months after the 36-month cap.

Medicare will not pay for routine maintenance and servicing of liquid or gaseous stationary or portable equipment. CMS believes the provider should ensure tanks and cylinders are working properly when delivering oxygen contents.

The provider is responsible for, and will not be paid for, non-routine maintenance, service and repair of oxygen equipment.

Supplies and Accessories

After the 36-month cap, the provider is required to continue to provide oxygen supplies and accessories, such as tubing or masks, at no charge for the remainder of the equipment's useful lifetime. CMS states that no additional payment will be made, as Medicare's payments during the 36-month cap period cover all of these costs.

Replacement of Equipment

The patient may elect to obtain replacement oxygen equipment if his or her equipment has been in continuous use for the equipment's five-year useful lifetime or is lost, stolen or irreparably damaged. “Irreparable damage” refers to a specific incident of damage, such as equipment falling down a flight of stairs as opposed to equipment that is worn out over time.

In these situations, a new 36-month rental period and new reasonable useful lifetime is started on the date that the replacement equipment is furnished.

Claims for replacement oxygen equipment, for the first month of use only, must have the RA modifier for dates of service Jan. 1, 2009, or after. If equipment is being replaced due to expiration of its useful life, you must also include a narrative explanation on the first month's claim stating that the five-year useful life of the prior equipment has expired. Include the date that the beneficiary received the original equipment that is being replaced.

A new initial CMN is required in situations where oxygen equipment is replaced because the equipment has been in continuous use by the patient for its reasonable useful lifetime or is lost, stolen or irreparably damaged. The initial date on the CMN should be the date that replacement oxygen equipment is delivered. New oxygen testing is not required, and there is no requirement for a physician visit.

The oxygen test results reported on the initial CMN should be the most recent qualifying value and test date. This test does not have to be within 30 days prior to the initial date, and it could be the test result reported on the most recent prior CMN.

The recertification CMN date should be 12 months following the initial date when the value on the initial CMN (for the replacement equipment) meets Group I criteria, or three months following the initial date when the qualifying blood gas value on the initial CMN meets the Group II criteria. The initial date for the replacement equipment should be entered on the recertification CMN for the replacement equipment.

When providing replacement oxygen equipment, you must also have proof-of-delivery documentation that demonstrates the oxygen equipment being replaced has been in use for at least five years.

If the patient changes oxygen providers during the five-year period, CMS has said if a provider cannot obtain proof-of-delivery documentation from the original provider, then it cannot prove that the item has been used on a continuous basis for more than five years. So, the provider will have to go based on when it first began furnishing the equipment.

However, CMS' position seems unduly harsh, and efforts are being made to try to persuade CMS to allow some other type of proof (such as a statement from the beneficiary) that he or she has had the equipment for five years or more.

Lisa Smith, Esq., is an attorney with the Health Care Group at Brown & Fortunato, P.C., a law firm based in Amarillo, Texas. She represents pharmacies, home medical equipment companies and other health care providers throughout the United States. Smith is Board Certified in Health Law by the Texas Board of Legal Specialization. She can be reached at 830/896-0018 or lsmith@bf-law.com.

FYI

For CMS' instructions related to the post-cap rules, check these MLN Matters articles:

For additional guidance, see these materials from the DME MACs: