BALTIMORE — It's the classic good news-bad news situation: CMS says that effective Oct. 1, it will pay for replacement oxygen equipment, that is, when a supplier files for Chapter 7 or 11 bankruptcy.
With the implementation of a 36-month rental cap on oxygen in January 2009, providers and beneficiaries alike have been in a quandary about Medicare coverage for new equipment when the original provider has gone bankrupt.
Now, according to CMS, "When a supplier files for Chapter 7 or 11 bankruptcy under Title 11 of the United States Code and cannot continue to furnish oxygen to its Medicare beneficiaries, the oxygen equipment is considered lost in these situations and payment may be made for replacement equipment. For replacement oxygen equipment, a new reasonable useful lifetime period and a new 36-month rental payment period begin on the date of delivery of the replacement oxygen equipment."
CMS added that "under no circumstances may payment be made for replacement equipment when the original supplier divests business and equipment outside of the court bankruptcy process."
Under the new payment rules, CMS contractors must, in advance of payment, verify that the supplier declared bankruptcy by reviewing supporting documentation such as court records and documents confirming that the equipment was sold or is scheduled to be sold.
As well, CMS said, the contractor must "verify that the following information is included and valid with the claim: blood gas testing results, Oxygen Certificate of Medical Necessity, the [HCPCS] code for the replacement oxygen equipment, the HCPCS modifier RA Replacement of a [durable medical equipment] item, and a narrative note on why the equipment was replaced."
CMS said that proof-of-delivery documentation from the previous supplier is not required for the claim to be paid.