TN 5 (02-23)

HI 00610.240 Miscellaneous Issues Included in the Coverage of Equipment

Payment can be made for the purchase of durable medical equipment even though rental payments may have been made for prior months. This could occur where, because of a change in the beneficiary's condition, the beneficiary feels that it would be to the beneficiary's advantage to purchase the equipment rather than to continue to rent it.

A beneficiary may sell or otherwise dispose of equipment for which the beneficiary has no further use. If after such disposal there is again medical need for similar equipment, payment can be made for the rental or purchase of that equipment. If an arrangement is motivated solely by a desire to create artificial expenses to be met by the program and to realize a profit thereby, the expenses would not be covered by the program.

In assignment cases, the beneficiary is responsible for paying the unpaid balance of the reasonable charge when payments stop because the beneficiary's condition has changed and the equipment is no longer medically necessary. Similarly, when payments stop because the beneficiary dies, the beneficiary's estate is responsible for the unpaid balance.

A. Evidence of medical necessity (whether equipment is rented or purchased)

A claim by a beneficiary or supplier/assignee must be accompanied by the attending physician's prescription or documentation from the attending physician supporting the need for the equipment. The physician's prescription or other documentation should include the patient's diagnosis and prognosis, the reason the equipment is required, and the physician's estimate in months of the duration of the equipment's need. When prescribing oxygen, written documentation from the physician must be included, specifying the oxygen flow rate and concentration level and an estimate of the frequency and duration of oxygen use by the patient. Where any of the above information is lacking, the carrier will make reasonable inferences from the other information on the prescription or other documentation. For example, where the attending physician has prescribed an IPPB machine but has failed to indicate the physician's estimate of the period of medical necessity, the carrier could readily infer from a diagnosis of severe pulmonary emphysema that the equipment will be needed long enough to warrant purchase when the condition is stable, chronic, and non-life threatening. If the information cannot be inferred and is not obtainable from the carrier's files or from other readily available sources, the carrier will request the required information from the physician through written, personal or telephone contact.

Where the information cannot be obtained from the above sources, the carrier will request the beneficiary or supplier/assignee to obtain from the attending physician a written statement containing this information.

If, after obtaining the information, a question of medical necessity remains, the issue is resolved by the carrier's medical staff or other professional consultation. Where the evidence is insufficient to determine medical necessity, the carrier may extend or limit development on the individual case by asking the attending physician to submit the attending physician's objective findings establishing the severity of the patient's condition and the patient's immediate and/or long term therapeutic need for the equipment. The carrier may ask the attending physician for a statement of the therapeutic benefits the attending physician expects the patient to realize from the use of this equipment.

Carriers establish safeguards to assure that payments are not made beyond the last month of medical necessity or, in the case of purchase, beyond the month which would complete reimbursement for the item if this comes first. For example, if medical necessity for an item is estimated by the physician at 2 months but it would require 4 payments to complete reimbursement, the carrier takes appropriate steps to assure that the periodic payments will be stopped at the end of the 2-month period.

B. Payment for inexpensive equipment

Purchased inexpensive equipment, i.e., equipment costing less than $120, is reimbursed in one payment. If a beneficiary chooses to rent inexpensive equipment, payment is made on the basis of reasonable rental allowances until the reasonable purchase price is reached.

C. Payment for expensive equipment

For equipment costing more than $120, carriers may determine that purchase is more economical than rental as soon as the claim is filed, or where the item is rented, no later than the fifth rental month. If it is more economical for the beneficiary to purchase the item, and the beneficiary continues to rent, the carrier will continue to pay the rental allowance until the medical necessity for the item ends or the total rental amounts reach the reasonable purchase price, whichever comes first.


In July 1985, a patient rents a wheelchair which has a reasonable purchase price of $400 and a reasonable rental allowance of $50 a month. When the rental claim is received, the carrier reviews the physician's prescription and the anticipated period of time the equipment will be needed. It determines that purchase will be more economical. The carrier informs the beneficiary in August 1985 that reimbursement for rentals after September will be terminated when the reasonable purchase price is reached. (This will allow rental payments to be recognized through May 1986.)

D. Financial hardship

If a beneficiary is renting equipment and is notified that purchase is more economical, Medicare will continue reimbursement for rental charges if buying the equipment would cause the beneficiary a financial hardship. Financial hardship exists when: (1) a beneficiary is unable to pay the 20 percent coinsurance and does not have insurance that could help pay this amount; (2) a beneficiary cannot arrange with the supplier to pay these amounts in installments, and (3) a beneficiary is unable to obtain the equipment with the aid of a local or State program, such as Medicaid. If the beneficiary believes that the beneficiary meets these requirements, the beneficiary should advise the Medicare carrier of the circumstances. A beneficiary will be given 3 months to try to resolve the beneficiary's financial problem. During this period the beneficiary should:

  1. 1. 

    Find out if the supplier or another supplier in the area will accept installment payments for the coinsurance amounts.

  2. 2. 

    Find out if a supplier or catalog house in the supplier or catalog house's area is willing to accept an assignment, can furnish the item needed at a lower price, would let the beneficiary charge the item, or otherwise arrange for monthly installment payments that the beneficiary can afford.

  3. 3. 

    Try to secure financial assistance from any State or local program, such as Medicaid, that could make or help make the payment.

  4. 4. 

    Find out whether any service organizations in the beneficiary's community could lend the equipment.

If after the three additional months the beneficiary is unable to resolve the hardship, the Medicare carrier will continue to make payments on a rental basis. However, beneficiaries are urged to try to find some way to buy the equipment when it is needed for a long period of time since the beneficiary, as well as the Medicare program, will save money in the long run.

E. When expenses for durable medical equipment are incurred

The first month's expense for rental of durable medical equipment is incurred as of the date of delivery of the equipment for purposes of crediting the deductible and for reimbursement. Expenses for a subsequent months are incurred on the same date in such month. Where equipment is purchased the periodic monthly benefits will be payable on the same basis.

In determining whether a purchased item is covered, the entire expense of the item is considered to have been incurred on the date the equipment was delivered to an individual. The entire expense of the item (whether paid for in its entirety at the time of purchase of on a deferred or installment basis) is excluded from coverage when a purchased item of durable medical equipment is delivered to an individual before the individual's coverage period began since payment cannot be made for any expense incurred before an individual's coverage period began.

F. Equipment delivered or used outside the United States

Periods payments may not be made for an purchased durable medical equipment delivered to the beneficiary outside the U.S. even if the beneficiary contracted for the purchase while inside the U.S. and even, if the beneficiary later returns to the U.S. and uses the equipment inside the U.S.

Where a rented item if durable medical equipment is delivered to the beneficiary outside the U.S., payment can be made for periods of use inside the U.S. in accordance with the paragraph below.

If an individual is within the United States when the individual receives an item of purchased durable medical equipment, or is within or outside the United States when the individual receives an item of rented durable medical during all of which the beneficiary used the equipment outside the U.S.

If an individual is at home for part of a month and for part of the same month is outside the U.S., payment may be made for the entire month.

If an individual uses durable medical equipment outside the U.S. for more than 30 days and then return to the United States, the carrier determine medical need, as in an initial case, before resuming payments.

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HI 00610.240 - Miscellaneous Issues Included in the Coverage of Equipment - 02/01/2023
Batch run: 02/01/2023