TRICARE provider

Capped DME rental to purchase guidelines

Capped DME is the final claim payment where the monthly rental rate has reached the purchase price, meaning the beneficiary now owns the DME item.

Alert to Providers regarding “capped DME” claim filing for TRICARE

TRM Ch. 1, Sect 11 paragraph 3.8.  Items are identified as capped rental if they have a "CR" in the category field on DMEPOS.  The change is to reject capped rental items when billed as a purchase unless the beneficiary has OHI primary to TRICARE.

3.8 Capped rental items. Items in this category are paid on a monthly rental basis not to exceed a period of continuous use of 15 months or on a purchase option basis not to exceed a period of continuous use of 13 months.

If the beneficiary accepts the purchase option, the DME claims processor continues making rental payments until a total of 13 continuous rental months have been paid. On the first day after 13 continuous rental months have been paid, the supplier must transfer title of the equipment to the beneficiary.

Note: Complex/ Rehabilitative Power Wheelchairs  are designated as durable medical equipment using HCPC codes: (K0835-K0843 and K0848-K0864: group 2 wheelchairs with additional power options and group 3 higher power wheelchairs, options and accessories) and can be purchased outright versus rental to purchase.

DME claims submitted for “rental to purchase” items require the appropriate modifier in order to track and calculate the monthly rental rate. “Capped DME” is the final claim payment where the monthly rental rate has reached the purchase price, meaning the patient now owns the DME item. Many DME claims have been identified that were processed and paid without the appropriate modifier. Without the necessary modifier to capture the monthly counter for rental to purchase, providers may have received erroneous/over payments on “capped DME”.

A process change implemented in June 2016 now allows better monitoring of DME claims that do not agree with the rental to purchase policy. These claims are now rejecting/denying for missing modifiers or exceeding the capped rental to purchase. “Capped DME” rental to purchase guidelines are not new. Providers who have been compliant all along should not have been affected by the process change. Learn more

Reminders:

  • All DME claims require the appropriate supporting documentation, a Certificate of Medical Necessity (CMN) or equivalent.
  • Please be sure to refer to the current HCPC guidelines for assignment of the DME HCPC code and modifier.
  • Please be sure to accurately assign the most appropriate modifier for the DME rental/purchase.
  • Providers can submit Corrected Claims through their normal process.  Please include the supporting documentation, a CMN or equivalent.
  • The message below should appear on denials where the DME provider may have filed incorrectly. “This DMEPOS procedure must be billed with a modifier (NU, RR, and UE). Capped rental items require rental modifiers (RR,KH, KI or KJ). Please resubmit corrected claim with appropriate modifiers."
  • Corrected claims can be resubmitted according to this specific denial message. 
  • Over payments of any kind, including DME, could generate a recoupment notice from TRICARE finance.