Home Health & Hospice Week

Many warranties won't help new beneficiary owners.

Home medical equipment suppliers may be about to take another costly hit: maintenance for equipment issued by competing suppliers.

Background: Under the Deficit Reduction Act of 2005, Medicare will make payments for capped rental durable medical equipment for 13 months. After the rental period, the beneficiary assumes ownership of the item if he still needs the equipment. Along with ownership comes a pledge from Medicare to pay for "reasonable and necessary maintenance and servicing."

That includes parts and labor not covered by a supplier's or manufacturer's warranty, according to the Centers for Medicare & Medicaid Services.

Not true: Though the feds may be counting on manufacturers' warranties to cover a number of needed repairs, everyone including CMS, beneficiaries and suppliers may be in for a surprise: Items that are relatively new may not be covered under the manufacturer's warranty after all.

"Once ownership transfers, there is no warranty," reported Eric Taylor of Market Centre Medical Equipment and Supplies of Fort Collins, CO, at the March 14 home health/DME Open Door Forum.

Taylor, who called in to the forum, referred specifically to Elyria, OH-based Invacare and Sunrise Medical of Longmont, CO, as companies that have stated product warranties would not apply once ownership transferred from the supplier to beneficiary at the end of the capped rental period.

Surprise: Was CMS aware of such policies, asked Taylor. "No," responded CMS' Joel Kaiser.

Invacare and Sunrise did not return Eli's calls requesting information about the validity of product warranties upon the transfer of ownership from supplier to beneficiary.

New Refrain May Be R-E-P-A-I-R

CMS has repeatedly referenced manufacturers' warranties as a resource for keeping home medical equipment in good working order once ownership transfers to beneficiaries. They've done so in missives to Medicare contractors and suppliers as well as final rules implementing capped rental provisions of the DRA, for example.

If fewer repairs than expected are covered under manufacturers' warranties, Medicare may be paying out more than expected--and suppliers may find that they're making more repairs than expected, for little money.

Obstacle: Some stakeholders charge that existing codes are inadequate to cover the kinds of repairs that will soon be necessary in the new post-DRA world for HME suppliers. The American Association for Homecare and others are working with CMS to promote code revisions that provide more specific codes for replacement parts for CPAP oxygen equipment, oxygen concentrators, and power wheelchairs.

Medicare now caps rental of oxygen equipment at 36 months, but President Bush floated a 13- month cap in his recent budget proposal (see Eli's HCW, Vol. XVI, No. 9). A shorter cap would definitely make repairs a hotter issue, says Taylor.

Another hitch: The supplier who originally rented the equipment to the beneficiary has no obligation under Medicare law to repair the item once ownership is transferred, said Kaiser, speaking at the forum.

That could leave unsuspecting suppliers burdened with repair requests from needy beneficiaries with little promise of adequate reimbursement.

"We're concerned," Taylor tells Eli. "This is likely to become a problem, especially for the little guys."

Resources: For information about maintenance and servicing for capped rental DME, see the MLN Matters article at www.cms.hhs.gov/MLNMattersArticles/downloads/MM5461.pdf. For information about oxygen equipment and maintenance, see the MLN Matters article at www.cms.hhs.gov/MLNMattersArticles/downloads/MM5370.pdf.