Capped DME

Capped DME is DME that can be rented but at the tenth month the beneficiary must be given the option to purchase. If the purchase option is used TRICARE will pay rental fees not to exceed a continuous use of 13 months and ownership passes to the beneficiary. If the purchase option is not used, TRICARE will continue to pay rental fees until the 15th month cap is reached and no further payment is made on the equipment.

Capped DME claim filing for TRICARE

Items are identified as capped rental if they have a "CR" in the category field on DMEPOS.

Note: Complex/ Rehabilitative power wheelchairs are designated as DME using HCPC codes: (K0835-K0843 and K0848-K0864: group 2 wheelchairs with additional power options and group 3 higher power wheelchairs, options and accessories). The beneficiary must be given the option to purchase up front and then billed with the appropriate modifier.

DME claims submitted for “rental to purchase” items require the appropriate modifier in order to track and calculate the monthly rental rate. 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 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.


  • All DME claims require the appropriate supporting documentation, a Certificate of Medical Necessity (CMN) or equivalent unless it is considered inexpensive because the purchase price does not exceed $150.00.
  • 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.
  • Breaks in the rental cycle will cause issues with claims processing. If equipment is returned, submit documentation with the claim that states item was returned and date it was returned. Use RA modifier if the equipment is replacement equipment.
  • DME suppliers should confirm the beneficiary hasn’t received the same or similar DME prior to rendering services. If the beneficiary has received capped DME from another provider it may impact the approval of duplicate equipment.
  • Even if the claim has OHI, capped rentals require a K modifier or the claim will reject.
  • Non-capped rentals do not require the K modifier associated with capped rentals.