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.

Say you have a beneficiary with a power wheelchair. He or she uses the PWC every day and after three years, the motor no longer operates. This would be considered irreparable wear, since there is no specific event that caused the motor to break. If the PWC is still under a manufacturer warranty, then the manufacturer would be responsible for the repair. If the PWC is no longer under warranty, then Medicare would cover the cost of repair up to, but not to exceed, the cost of replacement.

If this PWC were six years old, then you would most likely want to obtain a new CMN and get the beneficiary a new PWC since it had passed the five-year “reasonable useful lifetime” of the product. If you end up doing a repair, make sure the equipment was initially paid for by Medicare. If the item was denied during billing, then you will not be reimbursed for the repair from Medicare.

Bill code E1340 for the labor you perform. Labor is divided into 15-minute increments. For example, if you do two hours of work, you would bill eight units of labor. You will also need to add an HAO (narrative) record along with the E1340 labor code (stating that this is for repair of beneficiary-owned equipment), a description of the equipment, the HCPC code and the date of purchase.

Remember, you have only 80 spaces to get all of this information into the HAO record, so you must abbreviate. Here’s an example of an HAO record for an E1340 labor line (you will need to insert the manufacturer information): “RPR’S to PT owned Mfr Make Model# K0011 PWC PUR 041603.” This information only needs to be referenced once per claim, so if you were billing for repair parts, the information would already be present in the E1340 description and would not need to be included in the K0108 HAO record.

If you have to replace parts on the PWC, you would use the HCPC code K0108. You will use a separate K0108 for each repair part you provide, and each should be billed on a separate claim line. You will have to use an HAO record to describe what repair part was used for each K0108. The HAO record should contain a description of the item, the brand name, make/model and part number. You should abbreviate everything but the part number. An example would be: “toggle switch mfg pride md#frbxar986 replacement”.

Or a shorter version: “RPL toggle mfr pride md frbxar986”.

Either way will work, and it lets Medicare know all of the information they require for the claim.

As long as you use the above methodology, you should not have any difficulty getting paid for the repair or replacement that you have to do. Remember to get as much documentation as you can so in an audit situation you will end up on top.

Jane Bunch is vice president, HME consulting, for Atlanta-based CareCentric. A reimbursement specialist, Bunch delivers educational seminars worldwide, helps develop corporate compliance plans and serves as a consultant for fraud and abuse cases. She can be reached at 678/264-4495 or via e-mail at [email protected].