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11-01    COVERAGE OF SERVICES    230.5

230.4     Medical Social Services to Meet the Patient's Medically Related Social Needs .--Medical social services are those social services which contribute meaningfully to the treatment of a patient's condition. Such services include, but are not limited to: (a) assessment of the social and emotional factors related to the patient's illness, his need for care, his response to treatment, and his adjustment to care in the facility; (b) appropriate action to obtain case work services to assist in resolving problems in these areas; (c) assessment of the relationship of the patient's medical and nursing requirements his home situation, his financing resources, and the community resources available to him in making the decision regarding his discharge.

The rendering of medical social services by an SNF is optional. Even though skilled nursing facilities can participate in the Medicare program without offering such services, Medicare will continue to allow, as an element of cost, expenditures for medical social services provided by a facility or its inpatients. However, skilled nursing facilities that continue to render social services must comply with the staffing and other standards for social services presently in the regulations (Conditions of Participation: Skilled Nursing Facilities. Regulation 405.1130).

Although furnishing medical social services is not mandatory, many facilities have found that the social worker performs a valuable services both to the facility staff and the patient. The staff has often been helped by the social worker to better understand the medically related social needs of the patient. Adjustment by the patient is facilitated by the social worker who can also aid the family to avail itself of appropriate community resources.

230.5     Drugs and Biologicals .--(See also §230.6 for blood.) Drugs and biologicals for use in the facility which are ordinarily furnished by the facility for the care and treatment of inpatients are covered.

Three basic requirements must be met for a drug or biological furnished by a facility to be included as a covered SNF service. (1) The drug or biological must represent a cost to the institution in rendering services to the beneficiary. (2) The drugs or biological must meet the statutory definition. Under the statute, payment may be made for a drug or biological only where it is included, or approved for inclusion, in the latest official edition of the United States Pharmacopoeia-National Formulary (USP-NF) , the United States Pharmacopoeia Drug Information (USP DI), or the American Dental Association (ADA) Guide to Dental Therapeutics, except for those drugs and biologicals unfavorably evaluated in the ADA Guide to Dental Therapeutics. Combination drugs are also included in the definition of drugs if the combination itself or all of the therapeutic ingredients of the combination are included, or approved for inclusion, in any of the above drug compendia. Drugs and biologicals are considered approved for inclusion in a compendium if approved under the established procedure by the professional organization responsible for revision of the compendium. (3) The drug or biological must be reasonable and necessary as specified in §280.1.

Such drugs and biologicals are not limited to those routinely stocked by the facility but include those obtained for the patient from an outside source such as a pharmacy in the community. Since the provision of drugs and biologicals is considered an essential part of skilled nursing care, a facility must assure their availability to inpatients in order to be found capable of furnishing the level of care required for participation in the program. When a facility secures drugs and biologicals from an outside source, their availability is assured only if the facility assumes financial responsibility for the necessary drugs and biologicals; i.e., the supplier looks to the facility, not the patient, for payment.

1. Drugs Included in the Drug Compendia.--Coverage is provided only for those drugs and biologicals included, or approved for inclusion, in the latest official editions or revisions of the compendia listed above.
   
   

Where a drug is excluded from coverage because it is unfavorably evaluated in either the AMA Drug Evaluations or Accepted Dental Therapeutics, the exclusion applies to all uses for which the drug or biological was so unfavorably evaluated.

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230.5 (Cont.)    COVERAGE OF SERVICES    11-01

Drugs and biologicals are considered "approved for inclusion" in a compendium of approved under the procedure established by the professional organization responsible for revision of the compendium.

2. Drugs Not Included in the Compendia.--Drugs not included, or approved for inclusion, in the drug compendia are nevertheless covered if such drug (1) was furnished the patient during his prior hospitalization; and (2) was approved for use in the hospital by the hospital's pharmacy and drug therapeutics ( or equivalent) committee; and (3) is required for the continuing treatment of the patient in the skilled nursing facility.
   
   
3. Combination Drugs.--Combination drugs are covered if the combination itself or all the therapeutic ingredients of the combination are included, or approved for inclusion, in any of the designated drug compendia. Under the limited circumstances mentioned in B above, a combination drug approved by a hospital pharmacy and drug therapeutics committee may also be covered as an extended care service.
   
   
4. Drugs for Use Outside the Facility.--Drugs and biologicals furnished by a facility to an inpatient for use outside the facility are, in general, not covered as extended care services. However, if the drug or biological is deemed medically necessary to permit or facilitate the patient's departure from the facility, and a supply is required until he can obtain a continuing supply, the drugs or biologicals would be covered as an extended care service. Drugs and biologicals furnished to outpatients of skilled nursing facilities are not covered.
   
   
5. Immunosuppressive Drugs-.-Until January 1, 1995, immunosuppressive drugs are covered under Part B for a period of 1 year following discharge from a hospital for a Medicare covered organ transplant. CMS interprets the 1-year period after the date of the transplant procedure to mean 365 days from the day on which an inpatient is discharged from the hospital. Beneficiaries are eligible to receive additional Part B coverage within 18 months after the discharge date for drugs furnished in 1995; within 24 months for drugs furnished in 1996; within 30 months for drugs furnished in 1997; and within 36 months for drugs furnished after 1997. Beginning January 1, 2000, §227 of the Medicare, Medicaid and SCHIP Balanced Budget Refinement Act of 1999 extended coverage to eligible beneficiaries whose coverage for drugs used in immunosuppressive therapy expires during the calendar year to receive an additional 8 months of coverage beyond the current 36 month period. This benefit does not extend Medicare entitlement or eligibility to "ESRD only" Medicare beneficiaries. These beneficiaries will continue to lose their Medicare coverage for immunosuppressive drug therapy 36 months after discharge from a hospital following a covered transplant.
   
   

Section 113 of the BIPA 2000 by eliminates the time limit for coverage of immunosuppressive drugs under the Medicare program. Effective with immunosuppressive drugs furnished on or after December 21, 2000, there is no longer any time limit for Medicare benefits. This policy applies to all Medicare immunosuppressive drugs in the past, but whose immunosuppressive drug benefit was terminated entitled beneficiaries who meet all of the other program requirements for coverage under this benefit. Therefore, for example, currently entitled beneficiaries who had been receiving benefits for solely because of the time limit described above for non-ESRD beneficiaries, would now resume receiving that benefit for immunosuppressive drugs furnished on or after December 21, 2000.

Covered drugs include those immunosuppressive drugs that have been specifically labeled as such and approved for marketing by the FDA, as well as those prescription drugs, such as prednisone, that are used in conjunction with immunosuppressive drugs as part of a therapeutic regimen reflected in FDA approved labeling for immunosuppressive drugs. Therefore, antibiotics, hypertensives, and other drugs that are not directly related to rejection are not covered.

Page 2-40/Rev. 371

11-01    COVERAGE OF SERVICES    230.6

The FDA has identified and approved for marketing only the following specifically labeled immunosuppressive drugs:

• Sandimmune (cyclosporine), Sandoz Pharmaceutical (oral or parenteral form);
  
  
• Imuran (azathioprine), Burroughs-Wellcome (oral);
  
  
• Atgam (antithymocyte/globuline), Upjohn (parenteral);
  
  
• Orthoclone (OKT3 (muromonab-CD3), Ortho Pharmaceutical (parenteral);
  
  
• Prograf (tacrolimus), Fujisawa USA, Inc.; and
  
  
• Cellcept (mycophenolate mofetil), Roche Laboratories.
  
  
• Daclizumab (Zenapax)
  
  
• Cyclophosphamide (Cytoxan)
  
  
• Prednisone
  
  
• Prednisolone
  
  

For coverage of immunizations, etc., see §260.A.7.

230.6    Blood.--Extended care services covered under Part A include unreplaced blood (after satisfaction of the 3 pint blood deductible) and processing costs beginning with the first pint. However, blood transfusions are ordinarily performed by hospitals and not by SNF's. Thus, in the usual case, when an SNF patient needs blood, a participating hospital will provide the blood and the laboratory services and perform the transfusion for SNF. In such a case, the hospital's charge for such blood and services is a blood cost and/or blood processing cost to the SNF. (See D below for rules on distinguished between blood processing costs where blood is obtained from an outside source.) The SNF's charges to the beneficiary must be in accordance with C below. (NOTE: Ambulance transportation of the patient between the hospital and SNF for the purpose of obtaining a blood transfusion is covered under Part if the conditions for coverage of ambulance services are met. See §§262ff.)

In the unusual situation where the SNF stores, cross-matches, or types blood, rather than having this done by a qualified hospital or independent laboratory, the SNF must, as a condition of participation, meet Standard (j) of section 405.l028 of the Regulations on Conditions of Participation for Hospitals. Where the SNF only transfuses blood to inpatients, it would be required to meet only factors (1), (3), (4), and (6) and (9) of sections 405.1029(j). (See section 405.1128 of Regulations on Conditions of Participation for Skilled Nursing Facilities.) (42 CFR 405. Subpart K.)

1. Application of the Blood Deductible.--Program payment may not be made for the first three pints of whole blood or equivalent units of packed red cells received by a beneficiary in a benefit period. However, payment may be made for any blood processing costs (i.e., administration, storage, etc.) incurred by an SNF beginning with the first pint or unit in a benefit period. (See §524, Item l9A for rules on distinguishing between blood charges and blood processing charges.)
   
   

The blood deductible applies only to the first three pints of blood furnished in a benefit period, even if more than one SNF furnished blood. The blood deductible is in addition to any other applicable deductible and coinsurance amounts for which the patient is responsible.

To be covered as an extended care service or to count toward the Part A blood deductible, the blood must be furnished to an SNF inpatient on a day which counts toward the l00 extended care benefit days available in a benefit period. For example, whole blood is not covered by Part A and does not

Rev. 371/Page 2-41

230.6 (Cont.)    COVERAGE OF SERVICES    11-01

count toward the Part A blood deductible when furnished to an SNF inpatient after he has exhausted his benefit days in a benefit period. However, where the patient is discharged on his first day of entitlement or on the SNF's first day of participation, the SNF is permitted to submit a billing form with no accommodation charge, but with ancillary charges including blood. (See §242.4.)

2. Items Subject to the Blood Deductible.--The blood deductible applies only to whole blood and packed red cells. The term whole blood means human blood from which none of the liquid or cellular components have been removed. Where packed red cells are furnished, a unit of packed red cells is considered equivalent to a pint of whole blood. Other components of blood such as platelets, fibrinogen, plasma, gamma globulin, and serum albumin are not subject to the blood deductible. However, these components of blood are covered as biologicals.
   
   
3. Obligation of the Beneficiary to Pay for or Replace Deductible Blood.-A provider may charge the beneficiary or a third party its customary charge for whole blood or units of packed red cells which are subject to either the Part A or Part B blood deductible, unless the individual, another person, or a blood bank replaces the blood or arranges to have it replaced.
   1. Replacement.--For replacement purposes, a pint of whole blood is considered equivalent to a unit of packed red cells. A deductible pint of whole blood or unit of packed red cells is considered replaced when a medically acceptable pint or unit is given or offered to the provider or, at the provider's request, to its blood supplier. Accordingly, where an individual or a blood bank offers blood as a replacement for a deductible pint or unit furnished a Medicare beneficiary, the provider may not charge the beneficiary for the blood, whether or not the provider or its blood supplier accepts the replacement offer. Thus a provider may not charge the beneficiary for the blood, whether or not the provider or its blood supplier accepts the replacement offer. Thus a provider may not charge a beneficiary merely because it is the policy of the provider or its blood supplier not to accept blood from a particular source which has offered to replace blood on behalf of the beneficiary. However, a provider would not be barred from charging a beneficiary for deductible blood, if there is a reasonable basis for believing that replacement blood offered by or on behalf of the beneficiary would endanger the health of a recipient or that the prospective donor's health would be endangered by making a blood donation. Once a provider accepts a pint of replacement blood from a beneficiary or another individual acting on his behalf, the blood is deemed to have been replaced, and, the beneficiary may not be charged for the blood, even though the replacement blood is later found to be unfit and has to be discarded.
      
      

When a provider accepts blood donated in advance, in anticipation of need by a specific beneficiary, whether the beneficiary's own blood, that is, an autologous donation, or blood furnished by another individual or blood assurance group, such donations are considered replacement for pints or units subsequently furnished the beneficiary.

2. Adjustment of Provider's Cost Reimbursement to Reflect Deductible Amounts Collected.--At the end of the year when program reimbursement for blood is being computed, the cost of all unreplaced deductible and unreplaced nondeductible blood supplied will be reduced by the amount the provider collected from beneficiaries or other parties for unreplaced deductible pints. If more blood is donated by, or on behalf of, a beneficiary than is needed for full replacement on a pint-for-pint or unit basis, the value of the excess blood is not deducted from the amount payable to the provider. But, such donations would tend to reduce the cost of blood to the provider.
   
   
4. Distinction Between Blood Costs and Blood Processing Costs.--Since the blood deductible applies only to blood costs, and does not apply to blood processing costs, it is necessary that SNF's distinguish between those two costs for purpose of Medicare cost reporting in accordance with the following rules:
   
   

Page 2-42/Rev. 371

10-79     COVERAGE OF SERVICES     230.6(Cont.)

        1.    Blood Costs.--In general, SNF blood costs will consist of amounts it spends to procure blood, including:

            a.    The cost of such activities as soliciting and paying donors and drawing blood for its own blood bank, and

            b.    Where an SNF purchases blood from an outside blood source (e.g., a commercial or voluntary blood bank or a blood bank operated by another provider) an amount equal to the amount on credit which the outside blood source customarily gives the SNF if the blood is replaced.

        2.    Blood Processing Costs.--In general, an SNF's blood processing costs will consist of amounts spent to process and administer blood after it has been procured, including:

            a.    The cost of such activities as storing, typing, cross-matching and transfusing blood,

            b.    The cost of spoiled or defective blood, and

            c.    Where an SNF purchases blood from an outside blood source, the portion of the outside blood source's blood fee which remains after credit is given for replacement; i.e., the amount which cannot be credited or rebated by replacement of the blood. Thus, where an outside blood source charges the provider the same amount, whether or not the blood is replaced, the entire blood fee is a blood processing cost to the SNF.

NOTE:    The above rules for distinguishing blood costs and blood processing costs where blood is obtained from an outside blood source apply only where the source charges the same for blood furnished Medicare beneficiaries as it charges for blood furnished nonbeneficiaries and gives the same credit for blood which is furnished Medicare beneficiaries as for blood which is furnished nonbeneficiaries.

        Where an outside blood source charges the SNF more for blood furnished Medicare beneficiaries than for blood furnished nonbeneficiaries, or gives a larger credit for blood replaced by nonbeneficiaries than it gives for blood replaced by beneficiaries, the program will use only the lower charge and higher credit as a basis for determining the SNF's reasonable costs for blood furnished by that particular blood source.

Example:    The XYZ Blood Bank operates a blood assurance plan under which it does not charge for blood furnished members of the plan, unless the member is a Medicare beneficiary, in which case a charge is made only for nondeductible pints. It charges for all blood furnished nonmembers of the plan regardless of their Medicare status. Since the XYZ Blood Bank charges SNF"s for blood furnished members who are Medicare beneficiaries, but

Rev. 169/Page 2-43

230.8     COVERAGE OF SERVICES      10-79

        does not charge where the member is not a Medicare beneficiary, SNF's serviced by XYZ are paying more for blood furnished to members who are Medicare beneficiaries than for blood furnished nonbeneficiaries. Accordingly, amounts which SNF's pay the XYZ Blood Bank for blood furnished to Medicare beneficiaries who are members of the blood bank's blood assurance plan may not be recognized as a reasonable cost, nor may SNF's charge Medicare beneficiaries for such blood since blood is a covered inpatient SNF service. However, since the blood bank charges the same amount for all blood furnished to nonmembers of its blood assurance plan (i.e., whether or not the nonmembers are entitled to Medicare), reimbursement may be made to SNF"s for blood furnished by the blood bank to nonmembers who are Medicare beneficiaries.

230.7    Supplies, Applicances, and Equipment.--Supplies, appliances, and equipment furnished for use in the facility which are ordinarily furnished by the facility for the care and treatment of inpatients are covered extended care services.

The following are examples of covered SNF supplies: oxygen surgical dressings, and splints, casts, and other devices used for the reduction of fractures and dislocations.

Under certain circumstances, supplies, appliances, and equipment used during the beneficiary's stay are covered even though they leave the facility with the patient when he is discharged. These are circumstances in which it would be unreasonable or impossible form a medical standpoint to limit the patient's use of the item to the periods during which the individual is an inpatient. An example of a covered item which may leave the facility with the patient is a brace temporarily attached to the patient's body while he is receiving treatment as an inpatient and which is also necessary to permit or faciliate the patients' release from the facility.

Supplies, appliances, and equipment furnished to a patient for use only outside the facility would not, in general, be covered as extended care services. However, a temporary or disposable time provided to a patient which is medically necessary to permit or facilitate his departure from the facility and is required until such time as he can obtain a continuing supply would be covered as an extended care service.

230.8    Medical Services of an Intern or Resident-in-Training.--The medical services of an intern or resident-in-training under an approved teaching program of a hospital with which the facility has in effect the required transfer agreement are covered under hospital insurance.

An "approved teaching program" means a program approved by the Council on Medical Education of the Americana Medical Association or, in the case of an osteopathic hospital, approved by the Committee on Hospitals of the Bureau of Professional Education of the American Osteopathic Association. In the case of services of an intern or resident-in-training in the

Page 2-44/Rev. 169

10-95     COVERAGE OF SERVICES     230.10

field of dentistry in a hospital or osteopathic hospital, the teaching program must have the approval of the Council on Dental Education of the American Dental Association.

The services of interns and residents-in-training in the field of podiatry who are in a residency program approved by the Council on Podiatric Medical Education of the American Podiatric Medical Association are covered on the same basis as the services of other interns and residents in other approved residency programs.

The medical and surgical services furnished to your patients by interns and residents-in-training of a hospital with which you have a transfer agreement are covered under medical insurance if they are not covered under hospital insurance.

The services performed by interns and residents, including a physician employed by a hospital which is authorized to practice only in a hospital setting, are payable on a reasonable cost basis even though the intern or resident is a licensed physician. These services are not payable on a reasonable charge basis as physician services.

230.9    Other Diagnostic or Therapeutic Services Provided by Hospital.-

Extended care services include other diagnostic or therapeutic services provided by a hospital with which the facility has a transfer agreement. While you are permitted to secure diagnostic and therapeutic services for your inpatients from the transfer hospital, the hospital must provide the services directly. If the transfer hospital does not have the capacity to provide the services directly, but provides them through an arrangement with an outside source, the services do not constitute covered extended care services.

230.10    Other Services.--

    A.    General.--Other services which are necessary to the health of the patients are covered if they are generally provided by SNFs. The medical and other health services listed in §260 are generally provided by SNFs and are therefore covered services.

For coverage of diagnostic X-ray and radiological therapy under Part A, see §§260.1 and 260.2.

The use of an operating room and any special equipment, supplies, or services that are associated with such a room do not constitute covered services except when furnished by a hospital with which you have a transfer agreement (see §230.9), since operating rooms are not generally maintained by SNFs. However, supplies and nursing services connected with minor surgery performed in an operating room or any special equipment or supplies associated with it are covered services and reimbursed as part of the cost of routine services.

Items or services that are not included as inpatient hospital services are excluded from coverage as extended care services.

    B.    Routine Personal Hygiene Items and Services.--Routine personal hygiene items and services required to meet needs of residents are covered items and services. These include but are not limited to: hair hygiene supplies; combs; brushes; bath soaps; disinfecting soaps or specialized cleansing agents when indicated to treat special skin problems or fight infection; razors; shaving cream; toothbrushes; toothpaste; denture adhesive; denture cleansers; dental floss; moisturizing lotion; tissues; cotton balls; cotton swabs; deodorant;

Rev. 340 /Page 2-45

230.10 (Cont.)     COVERAGE OF SERVICES     10-95

incontinence care and supplies; sanitary napkins and related supplies; towels; wash cloths; hospital gowns; over-the-counter drugs; hair and nail hygiene services; bathing; and basic personal laundry.

    C.    Respiratory Therapy Provided by Hospital with which SNF Has Transfer Agreement.

        1.    Definition.--Respiratory therapy is defined as those services that are prescribed by a physician for the assessment, diagnostic evaluation, treatment, management, and monitoring (as defined in §230.10B.4c) of patients with deficiencies and abnormalities of cardiopulmonary function.

Respiratory therapy services include but are not limited to:

            a.    The application of techniques for support of oxygenation and ventilation in the acutely ill patient. These techniques include, but are not limited to:

                o    establishment and maintenance of artificial airways;
                o    ventilator therapy and other means of airway pressure manipulation;
                o    precise delivery of oxygen concentration; and
                o    techniques to aid removal of secretions from the pulmonary tree.

            b.    The therapeutic use and monitoring of medical gases (especially oxygen), bland and pharmacologically active mists and aerosols and such equipment as resuscitators and ventilators;

            c.    Bronchial hygiene therapy, including deep breathing and coughing exercises, IPPB, postural drainage, chest percussion and vibration, and nasotracheal suctioning;

            d.    Diagnostic tests for evaluation by a physician, e.g., pulmonary function tests, spirometry, and blood gas analyses;

            e.    Pulmonary rehabilitation techniques which include:

                o    exercise conditioning;
                o    breathing retraining; and
                o    patient education regarding the management of the patient's respiratory problems; and

            f.    Periodic assessment and monitoring of the acute and chronically ill patients for indications for, and the effectiveness of, respiratory therapy services.

Such services are performed by respiratory therapists or technicians, physical therapists, nurses and other qualified personnel.

To qualify for reimbursement under Medicare, such therapy:

            a.    must qualify as a covered service, and

            b.    must be reasonable and necessary for the diagnosis or treatment of an illness or injury.

Page 2-45.1/Rev. 340

08-82     COVERAGE OF SERVICES      230.10(Cont.)

        2.    Qualification as a Covered Service.-- Respiratory therapy can be covered under Medicare in the following circumstances.

            a.    Skilled nursing facility - Services furnished in the skilled nursing facility setting would be covered under the posthospital extended care benefit if furnished to the inpatients of a skilled nursing facility by a "transfer hospital" (see §230.9.), or if furnished by a nurse on the staff of the SNF.

            b.    Diagnostic testing - Although the diagnostic testing referred to in §230.10B.1.d is considered respiratory therapy, coverage of such tests is governed by the guidelines relating to the coverage of diagnostic tests. (See §§230.9 and 532.)

        3.    Criteria for Determining if Respiratory Therapy is Reasonable and Necessary.--To be considered reasonable and necessary for the diagnosis or treatment of an individual's illness or injury, respiratory therapy services furnished to a beneficiary must be (l) consistent with the nature and severity of the individual's complaints and diagnosis, (2) reasonable in terms of modality, amount, frequency and duration of the treatments, and (3) generally accepted by the professional medical community as being safe and effective treatment for the purpose used. More specific instructions for applying these criteria appear in (a) through (c) below.

            a.     Consistent with the Nature and Severity of the Individual's Symptoms and Diagnosis.-- A patient's primary or secondary diagnosis alone may justify the need for respiratory therapy, (e.g., acute respiratory failure, pneumonitis, retained secretions, atelectasis, chronic obstructive pulmonary disease). However, there may be cases in which the primary or secondary diagnosis alone does not justify the need for respiratory therapy, but the medical evidence indicates a combination of diagnoses which may justify therapy. In such cases, the intermediary will obtain documentation from the provider which explains the medical necessity for the therapy.

            b.     Reasonable in Terms of Modality, Amount, Frequency and Duration of the Treatment.--Although respiratory therapy services may be reasonable and necessary based on the nature and severity of the patient's condition, they must also be reasonable and necessary with respect to modality, amount, frequency, and duration. For example, while a patient may require a particular type of modality to accomplish a certain therapeutic objective, the reasonableness and medical necessity may be questionable where more than one type of modality is used at the same time to accomplish the same therapeutic objective; e.g., IPPB and incentive spirometry.

Rev. 198/Page 2-45.2

230.10(Cont.)     COVERAGE OF SERVICES     08-82

In most circumstances, the need for therapy would decrease with improvement of the condition, or increase if the condition worsened. Therefore, in most instances, respiratory therapy would not be considered reasonable and necessary when furnished in the same amount and/or frequency throughout the patient's hospital stay; i.e., it would be expected that the level and intensity of the care should be modified as discharge nears. Where the amount and frequency of respiratory therapy furnished throughout the hospital stay remains constant and the primary or secondary diagnosis indicates that, under normal circumstances, a decline in amount and frequency could be anticipated, intermediaries will obtain an explanation from the provider.

            c.     Generally Accepted by the Professional Community as Being Safe and Effective Treatment for the Purpose Used.--In the absence of evidence to the contrary, it may be presumed that respiratory therapy is an accepted treatment and may be covered under Medicare.

        4.    Additional Guidelines for Applying Criteria.--While there are many conditions for which respiratory therapy may be indicated, for Medicare purposes coverage of respiratory therapy services cannot be recognized when performed on a mass basis with no distinction made as to the individual patient's actual condition and need for such services. In addition, the intermediary should make a distinction between respiratory therapy services and routine nursing services.

The following discussion illustrates some examples of the application of the above guidelines.

            a.     Setting Up Equipment and Instructing Patients in Its Use.-- When appropriate, setting up of respiratory equipment, instructing and monitoring patient progress in the use of equipment or on postural drainage, and breathing exercises by a respiratory therapist or technician are considered reasonable and necessary services even though the direct patient supervision of such therapy may be the responsibility of the nursing service.

            b.     Oxygen Therapy.--Oxygen therapy is administered utilizing many devices ranging from the simple nasal cannula to progressively complex techniques providing controlled oxygen concentrations. Such devices are usually applied, maintained, and monitored by respiratory therapists and technicians. These services will be covered provided the need and the effectiveness is documented.

The goal of oxygen therapy is to maintain adequate tissue and cell oxygenation while trying to minimize the danger of oxygen toxicity. Periodic measurement of the arterial PO2 or oxygen saturation at rest and/or during exercise aids in determining the appropriate amount of oxygen to be administered, and is necessary until the patient has achieved a stable status.

If the intermediary notes the use of continuous oxygen without periodic assessment of arterial PO2 or oxygen saturation, it should request additional documentation to determine the medical necessity for the service. The physician's order must state the oxygen device and/or the specific flow rate or concentration of oxygen desired.

Page 2-45.3/Rev. 198

08-82     COVERAGE OF SERVICES      230.10(Cont.)

A prescription for "oxygen PRN" or "oxygen as needed" does not meet these requirements. An intermittent or PRN oxygen therapy order must include time limits and specific indications for initiating and terminating therapy.

            c. Monitoring Services.--The term monitoring as used in the context of this instruction means: periodic checking of the equipment in actual use for the purpose of ascertaining that it is functioning properly (see 4b. above); monitoring the individual patient's condition for purposes of assuring that the patient is receiving the proper mixtures of medical gases, mists and aerosols (see 230.10B.1b.); periodic checking of the acute and chronically ill patients for the purposes described in §230.10B.1f.; and checking the patient's progress for the purposes described in §230.10B.4a. Checking solely to determine if a patient is using oxygen and the amount of oxygen used is not considered the type of monitoring that requires specialized skills or training, and therefore is not a covered respiratory therapy service.

        5.    Patient Education Programs.--Instructing a patient in the use of equipment, breathing exercises, etc., may be considered reasonable and necessary to the treatment of the patient's condition and can usually be given a patient during the course of treatment by any of the health personnel involved therein, e.g., physician, nurse, respiratory therapist or technician. While patient activities involved in the management of respiratory problems are not ordinarily of such complexity as to warrant a structured or formal patient education program, there may be instances where such a program may be appropriate; e.g., where the patient will experience significant behavior modification or rely on mechanical support after discharge from the hospital. However, the content of structured or formal education programs must be reasonable and necessary, that is, such programs should meet but not exceed the needs of patients. For Medicare purposes, the provision of information that is over and beyond that ordinarily provided during the course of a treatment (e.g., extensive theoretical background in the pathology, etiology, and psysiological effects of the disease) is not considered reasonable and necessary to the management and treatment of illnesses.

NOTE:    PSRO determinations as to medical necessity and level of care are a component of Medicare claims determinations. The PSRO's determinations are binding on those issues and must be incorporated into claims adjudication. The intermediary will continue to review claims for other determinations and initiate denials on the basis of lack of eligibility, lack of remaining benefit days, provision of items and services which are not covered under Medicare, and any of the other exclusions under title XVIII.

The intermediary must deny payment if it identifies a service for which payment is always precluded by a Medicare coverage rule and in which no medical judgment need be exercised even if the service was rendered during a PSRO-approved hospital stay or specifically approved by the PSRO. The intermediary may not deny payment for PSRO-approved services on the ground that services were not medically necessary or did not meet the applicable level of care requirements. If a judgmental medical determination is necessary to apply a coverage rule, the intermediary must ask the PSRO to make the medical determination and accept the PSRO's determination as binding when it adjudicates the claim.

Because PSROs may differ in both the method and degree to which they assume responsibility for the review of ancillary services, intermediaries should incorporate in their approved Memorandum of Understanding with each PSRO the specific responsibilities assumed by each party in review of such services.

Rev. 198/Page 2-45.4

240     COVERAGE OF SERVICES     08-82

Duration of Covered Extended Care Services Under Hospital Insurance

240     BENEFIT PERIOD

A benefit period is a period of time for measuring the use of hospital insurance benefits. It is a period of consecutive dates during which covered services furnished to a patient, up to certain specified maximum amounts, can be paid for by the hospital insurance plan. For example, a patient is eligible for 100 days of care in an SNF during the benefit period. As long as a person continues to be entitled to hospital insurance, there is no limit on the number of benefit periods he may have. The term "benefit period" is synonymous with "spell of illness." Since the term "spell of illness" could connote a single illness or a particular "spell" of sickness, the term "benefit period" should be used in communications with the public.

    A.    Starting a Benefit Period.--A benefit period begins with the first day (not included in a previous benefit period) on which a patient is furnished inpatient hospital or extended care services by a qualified provider in a month for which the patient is entitled to hospital insurance benefits.

A provider qualified to start a benefit period is a hospital (including a psychiatric or tuberculosis hospital) or SNF that meets all the requirements of the definition of such an institution. A hospital which meets the requirements in § 203.2 is also a qualified hospital for purposes of beginning a benefit period when it furnishes the patient covered inpatient

Page 2-46/Rev. 198

6-79     COVERAGE OF SERVICES      240(Cont.)

emergency services. Generally, the benefit period begins when covered inpatient services are initially furnished to an entitled individual. A benefit period may begin with a stay in a qualified Canadian or Mexican hospital when it furnishes the patient covered inpatient hospital services.

Admission to a qualified SNF will being a benefit period even though payment for the services cannot be made because the prior hospitalization or transfer requirement has not been met. (See § 212.) Inpatient care in a Christian Science Sanatorium (whether as hospital or extended care services) can being or prolong a benefit period.

    B.    Ending a Benefit Period.--The benefit period ends with the close of a period of 60 consecutive days during which the patient was neither an inpatient of a hospital nor an inpatient of an SNF. To determine the 60-consecutive-day period, begin counting with the day on which the individual was discharged.

    C.    Prolonging a Benefit Period.--It is important to note that for purposes of continuing a benefit period the hospital or skilled nursing facility in which the stay occurs need not meet all the requirements that are necessary for starting a benefit period. Inpatient services will prolong the beneficiary's benefit period if the hospital meets the initial requirement of the definitions in §203 or §203.1. That is, it is primarily engaged in providing, by or under the supervision of physician(s), to inpatients (1) diagnostic and therapeutic services for medical diagnosis, treatment, and care of injured, disabled, or sick persons, or rehabilitation services for injured, disabled, or sick persons, or rehabilitation services for injured, disabled, or sick persons; or (2) psychiatric services for the diagnosis and treatment of mentally ill persons; or (3) medical services for the diagnosis and treatment of tuberculosis.

Similarly, inpatient services in a skilled nursing facility will prolong a beneficiary's benefit period if the facility (including one primarily for the care and treatment of mental disease or tuberculosis) meets at lest the requirement that it is primarily engaged in providing to inpatients skilled nursing care and related services for patients who require medical or nursing care, or rehabilitation services for injured, disabled, or sick persons.

A stay in a hospital outside the United States will prolong a benefit period.

An individual may be discharged from and readmitted to a hospital or SNF several times during a benefit period and still be in the same benefit period if 60 days have not elapsed between discharge and readmission. The stay need not be for related physical or mental conditions. (For necessary relationship of SNF patient's condition to prior hospitalization, see §212.)

Example l:    X was born August 9, l902. On July 28, 1967, X entered a participating general hospital. After he had been in the hospital for 2 week X was discharged on August 11, 1967. On his doctor's orders X entered a participating skilled nursing facility on August 15, 1967, and remained there until his discharge on October 27, 1967. He had not further inpatient stays in 1967. X's benefit period began on August 1, 1967,

Rev. 165/Page 2-47

242.1     COVERAGE OF SERVICES     6-79

the first day of the month he attained age 65 and was entitled to hospital insurance. The benefit period ended December 25, l967, the end of the 60-day period beginning with the date of his last discharge.

Example 2:    Y, over age 65, entered a participating general hospital on July 28, l968, for treatment of a heart condition. He was discharged on August 11, 1968. On August 20, 1968, Y entered a nonparticipating nursing home which provided primarily skilled nursing care and related services. Y remained in this facility until his discharge on October 27, 1968. On December 25, 1968, Y was again admitted to a participating hospital because of injuries suffered in an accident.

            He was discharged on January 13, 1969, and had no further inpatient stays in 1969.

            Y's benefit period began on July 28, 1968. His stay in the nursing home began less than 60 days after his hospital discharge and the benefit period was continued even though the stay was not covered. The subsequent hospital stay began less than 60 days after the nursing home discharge and continued the benefit period, although the condition treated was unrelated to his prior stays. The period ended March 13, 1969, the end of the 60-day period beginning with the day of discharge.

Example 3:    Z, over age 65 and entitled to hospital insurance benefits, was admitted to General Hospital on August 1, 1966, and discharged on august 10, 1966, having received nonemergency hospital services. General Hospital met all the requirements in the definition of a hospital except those concerning UR and health and safety. While General Hospital met the minimum requirements for a prior-stay hospital. Z's benefit period did not begin with his admission to the hospital because (1) the hospital did not meet all of the requirements in the definition of a hospital and (2) although the hospital satisfied the requirements for coverage of emergency services, Z did not receive emergency inpatient care. Z was admitted to Haven Convalescent Home on August 20, 1966, and remained an inpatient of the home until his discharge on March 1, 1967. He had not further inpatient stays in 1967. Haven Convalescent Home became a participation SNF on January 1, 1967. Z's benefit period began January 1, 1967, the day Haven Convalescent Home was determined to be a qualified skilled nursing facility and the services Z received on that date were covered extended care services. Z's benefit period ended April 29, 1967, the end of the 60-day period beginning with the date of his discharge from the convalescent home.

242    EXTENDED CARE BENEFIT DAYS

A patient having hospital insurance coverage is entitled, subject to the coinsurance requirement (§ 158), to have payment made on his behalf for up to 100 days of covered inpatient extended care services in each benefit period. (For definition of benefit period, see § 240.)

242.1    Counting Inpatient Days.--The number of days of care charged to a beneficiary for inpatient skilled nursing facility service is always in units of full days. A day begins at midnight and ends 24 hours later. The midnight-to-midnight method is to be used in reporting days of care for Medicare reporting purposes, even if the facility uses a different definition of day for statistical or other purposes.

Page 2-48/Rev. 165

01-85     COVERAGE OF SERVICE     242.4

A part of a day including the day of admission, counts as a full day. However, the day of discharge, death, or a day a patient begins a leave of absence is not counted as a day. (Charges for ancillary services on the day of discharge, death, or the day a leave of absence begins are covered.) If admission and discharge or death occur on the same day, the day is considered a day of admission and counts as one inpatient day. (For billing when a patient is discharged, dies, or is transferred to another facility before midnight of the day of admission, see section 516.8.)

242.2    Late Discharge.--When a patient chooses to continue to occupy his accommodations in a facility beyond the check-out time, for personal reasons, the facility may charge the beneficiary for his continued stay. Such a stay beyond the check-out time, for the comfort or convenience of the patient, is not covered under the program and the facility's agreement to participate in the program does not preclude the facility from charging the patient. However, it is expected that facilities will not impose late charges on a beneficiary unless he has been given reasonable notice (for example, 24 hours) of his impending discharge.

Where the patient's medical condition is the cause of the stay past the check-out time (e.g., the patient needs further services, is bedridden and awaiting transportation to his home, or dies in the facility), the stay beyond the discharge hour is covered under the program and the facility may not charge the patient. (See section 524, Item 19, Accommodation.)

A late charge imposed by a facility does not affect the counting of days for: (a) ending a benefit period, and (b) the number of days of inpatient care available to the individual. (See sections 240 and 244.) A late charge by a hospital does not affect counting of days for meeting the prior inpatient stay requirement for coverage of extended care services.

242.3    Leave of Absence.--The day the patient began a leave of absence is treated as a day of discharge and is not counted as an inpatient day unless she returns to the facility by midnight of the same day. The day the patient returns to the facility from a leave of absence is treated as a day of admission and is counted as an inpatient day if she is present at midnight of that day.

242.4    Discharge or Death on First Day of Entitlement or Participation.--In special situations program payment is not made for accommodations on the day of discharge or death, but may be made for ancillary services under Part A provided on that day: (a) where a patient is admitted prior to the first day of his entitlement and dies or is discharged from a participating hospital on the first day of his entitlement; and (b) where a patient in a nonparticipating hospital dies or is discharged on the first day the hospital becomes a participating hospital. Although in these situations a day of utilization is not counted, a spell of illness begins and any charges for covered services are applied against the inpatient hospital deductible. (See section 524 for billing in these cases.)

Rev. 221/Page 2-49

244     COVERAGE OF SERVICES      01-85

244.    SERVICES COUNTING TOWARD MAXIMUMS

Extended care services count toward the maximum number of benefit days payable per benefit period only if:

    1.    Payment for the services is made, or

    2.    Payment for the services would be made if a request for payment were properly filed and if the physician certified that the services were medically necessary. Where payment cannot be made because of the extended care coinsurance requirement, the days(s) used in satisfying this requirement nevertheless count toward the beneficiary's maximum days of extended care.

246.    COINSURANCE--EXTENDED CARE SERVICES

In each benefit period the beneficiary is responsible for a coinsurance amount (one-eighth of the inpatient hospital deductible) for each day from the 21st and through the 100th day of extended care services furnished during a benefit period. (See the chart in §249 for reflecting the applicable coinsurance amounts).

Where the actual charge to the patient is less than the applicable coinsurance rate, the coinsurance is the actual charge per day. In billing both the patient and the program, the coinsurance amount is the same.

247.    BASIS FOR DETERMINING THE COINSURANCE AMOUNTS

For services furnished prior to January 1, 1982, the coinsurance amounts are based on the inpatient hospital deductible applicable for the year in which the individual's benefit period began.

For services furnished on or after January 1, 1982, the coinsurance amounts are based on the inpatient hospital deductible applicable for the year in which the services are furnished.

Example:    A beneficiary was admitted to a hospital on November 20, 1983 and remained there until December 1, 1983 when he was transferred to an SNF. He remained in the SNF until February 3, 1984, a total of 64 days. Since the 21st through the 31st days of the SNF stay was in 1983, the coinsurance amount for those days is $38.00. Since the 32nd through the 64th days of the stay occurred in 1984, the coinsurance amount for those days is $44.50.

Page 2-50/Rev. 221

249    COVERAGE OF SERVICES    02-87

249.    PART A - DEDUCTIBLE AND COINSURANCE AMOUNTS

For inpatient hospital services rendered in years prior to 1982 and after 1986, the applicable inpatient deductible is the one in effect during the calendar year in which the patient's benefit period begins (i.e., in most cases, the year in which the first inpatient hospital services are furnished in the benefit period). For services rendered in 1982 through 1986, the applicable deductible is the one in effect during the year in which the services were furnished. (For hospital and SNF coinsurance days occurring before 1982, the coinsurance amount is based on the deductible applicable for the calendar year in which the benefit period began, even though the coinsurance days may fall in a subsequent year for which a higher deductible is applicable. For coinsurance days after 1982, the coinsurance amount is based on the deductible applicable for the calendar year in which the coinsurance days occur.)

PRIOR TO JULY 1, 1981, THERE WAS A 100 VISIT LIMITATION

Rev. 248/page 2-51

11-95     COVERAGE OF SERVICES     260

260.    MEDICAL AND OTHER HEALTH SERVICES FURNISHED TO PATIENTS OF PARTICIPATING SNFs

    A.    Inpatients.--Payment may be made under Part B for the following medical and other health services when furnished by a participating SNF (either directly or under arrangements) to an inpatient of the SNF, if payment for these services cannot be made under Part A (e.g., the beneficiary has exhausted his/her allowed days of inpatient SNF coverage under Part A in his/her current spell of illness or was determined to be receiving a noncovered level of care, or the 3-day prior hospitalization or the transfer requirement is not met).

        1.    Diagnostic X-ray tests (including portable X-ray), diagnostic laboratory tests, and other diagnostic tests. (See §260.1.) Payment under Part B for a clinical diagnostic laboratory test can be made only to the entity that performed the test. Thus an SNF cannot furnish services under an arrangement for clinical diagnostic laboratory tests under Part B.

        2.    X-ray, radium, and radioactive isotope therapy, including materials and services of technicians. (See §260.2.)

        3.    Surgical dressings, and splints, casts, and other devices used for the reduction of fractures and dislocations. (See §260.3.)

        4.    Prosthetic devices (other than dental) which replace all or part of an internal body organ (including contiguous tissue) or replace all or part of the function of a permanently inoperative or malfunctioning internal body organ, including replacement or repair of such devices. (See §260.4.)

        5.    Leg, arm, back, and neck braces, trusses, and artificial legs, arms, and eyes, including adjustments, repairs, and replacement required because of breakage, wear, loss, or a change in the patient's physical condition. (See §260.5.)

        6.    Outpatient physical therapy, outpatient occupational therapy, or outpatient speech pathology services. (See §271.) (See subsection B.2 for these services furnished to outpatients.)

        7.    Vaccinations or inoculations are excluded from coverage as "immunizations" unless they are directly related to the treatment of an injury or direct exposure to a disease or condition.

Exceptions:    Medicare Part B covers pneumococcal and influenza vaccines, including costs of administration. Medicare Part B also covers hepatits B vaccine and its administration, when furnished to a Medicare beneficiary who is at high or intermediate risk of contracting hepatits B.

High-risk groups currently identified include (see exception on next page):

    o    End-stage renal disease (ESRD) patients;
    o    Hemophiliacs who receive factor VIII or IX concentrates;

Rev. 341 /Page 2-56.1

260 (Cont.)     COVERAGE OF SERVICES     11-95

    o    Clients of institutions for the mentally retarded;
    o    Persons who live in the same household as an hepatitis B virus (HBV) carrier;
    o    Homosexual men; and
    o    Illicit injectable drug abusers.

Intermediate risk groups currently identified include:

    o    Staff in institutions for the mentally retarded; and
    o    Workers in health care professions who have frequent contact with blood or blood-derived body fluids during routine work.

Exception:    Persons in the above-listed groups are not considered at high or intermediate risk of contracting hepatitis B, however, if there is laboratory evidence positive for antibodies to hepatitis B. (ESRD patients are routinely tested for hepatitis B antibodies as part of their continuing monitoring and therapy.)

For Medicare program purposes, the vaccine may be administered (upon the order of a doctor of medicine or osteopathy) by home health agencies, SNFs, ESRD facilities, hospital outpatient departments, persons recognized under the "incident to physicians services" provision of the law, and, doctors of medicine and osteopathy.

A charge separate from the ESRD composite rate is recognized and paid for administration of the vaccine to ESRD patients.

        8.    Hemophilia Clotting Factors.--Section 1861 (s)(2)(I) of the Act provides Medicare coverage of blood clotting factors for hemophilia patients that are competent to use such factors to control bleeding without medical supervision, and items related to the administration of such factors. Hemophilia, a blood disorder characterized by prolonged coagulation time, is caused by deficiency of a factor in plasma necessary for blood to clot. For purposes of Medicare Part B coverage, hemophilia encompasses the following conditions:
        
            o    Factor VIII deficiency (classic hemophilia); and

            o    Factor IX deficiency (also termed plasma thromboplastin component (PTC) or Christmas factor deficiency); and

            o    Von Willebrand's disease.

Claims for blood clotting factors for hemophilia patients with these diagnoses may be covered if the patient is competent to use such factors without medical supervision.

The amount of clotting factors determined to be necessary to have on hand and thus covered under this provision is based on the historical utilization pattern or profile developed by the carrier for each patient. The treating source; e.g., a family physician or comprehensive hemophilia diagnostic and treatment center, must have such information. From these data, the contractor must be able to make reasonable projections concerning the quantity of clotting factors anticipated to be needed by the patient over a specific period of time. Unanticipated occurrences involving extraordinary events, e.g. automobile accidents, and inpatient hospital stays, change these base line data and must be appropriately considered. In addition, changes in a patient's medical needs over a period of time require adjustments in the profile.

Page 2-56.2/Rev. 341

11-95     COVERAGE OF SERVICES     260.3

Part B program payment for 80 percent of the reasonable cost of these services in excess of the Part B deductible will be made to the SNF. (See MCM, Part 3 §2050.5, for exceptions.)

Drugs and biologicals, (except as provided in items 7 and 8) are not covered by Part B when furnished by an SNF.

    B.    Outpatients.--The services described in subsection A as well as those described in this section are covered by Medicare Part B when furnished by a participating SNF to an outpatient are billed by the SNF on Form HCFA-1450.

        1.    Rental or purchase of durable medical equipment for use in the patient's home or place considered to be his/her residence. (See §264.)

        2.    Outpatient physical therapy, occupational therapy, or speech pathology services may be furnished by the facility to its outpatients either in its outpatient department, in the patient's home, or to inpatients of another institution. (See subsection A.6 and §§270-271.4.)

    C.    Ambulance Services.--Ambulance services are covered under Part B, regardless of whether they are furnished to inpatients or outpatients of a SNF. (See §§262-262.3.)

260.1    Diagnostic X-Ray and Clinical Laboratory Tests.--Diagnostic X-ray tests may be provided directly by an SNF if, as part of its compliance with the conditions of participation, the SNF has a radiological department which meets the same standards required of a hospital furnishing such services under the program, or if the SNF meets the portable X-ray supplier standards. Portable X- ray services provided by an SNF under arrangements are covered only if furnished by an approved supplier. When an SNF furnishes laboratory services directly, it must have a valid Clinical Laboratory Improvement Act (CLIA) certificate that covers the types of testing performed by the SNF. If an SNF refers specimens testing to another laboratory, the referral laboratory must have a valid CLIA certificate that covers the types of testing performed by the laboratory. Payment under Part B for clinical diagnostic laboratory tests can be made only to the entity that performed the test. Thus, SNFs cannot furnish services under an arrangement for clinical diagnostic laboratory tests under Part B.

260.2    X-Ray, Radium, and Radioactive Isotope Therapy.--Radiological therapy may be provided directly by an SNF if, as part of its compliance with the conditions of participation, the SNF has a radiological department which meets the same standards required of a hospital furnishing such services under the program.

260.3    Surgical Dressings, and Splints, Casts, and Other Devices Used for Reduction of Fractures and Dislocations.--Surgical dressings are limited to primary and secondary dressings required for the treatment of a wound caused by, or treated by, a surgical procedure that has been performed by a physician or other health care professional to the extent permissible under State law. In addition, surgical dressings required after debridement of a wound are also covered, irrespective of the type of debridement, as long as the debridement was reasonable and necessary and was performed by a health care professional who was acting within the scope of his or her legal authority when performing this function. Surgical dressings are covered for as long as they are medically necessary.

Rev. 341/Page 2-57

260.4     COVERAGE OF SERVICES     11-95

Primary dressings are therapeutic or protective coverings applied directly to wounds or lesions either on the skin or caused by an opening to the skin. Secondary dressing materials that serve a therapeutic or protective function and that are needed to secure a primary dressing are also covered. Items such as adhesive tape, roll gauze, bandages, and disposable compression material are examples of secondary dressings. Elastic stockings, support hose, foot coverings, leotards, knee supports, surgical leggings, gauntlets, and pressure garments for the arms and hands are examples of items that are not ordinarily covered as surgical dressings. Some items, such as transparent film, may be used as a primary or secondary dressing.

If a physician, certified nurse midwife, physician assistant, nurse practitioner, or clinical nurse specialist applies surgical dressings as part of a professional service that is billed to Medicare, the surgical dressings are considered incident to the professional services of the health care practitioner. When surgical dressings are not covered incident to the services of a health care practitioner and are obtained by the patient from an SNF on an order from a physician or other health care professional authorized under State law or regulation to make such an order, the surgical dressings are covered separately under Part B.

Splints and casts, etc., include dental splints.

260.4    Prosthetic Devices.--Prosthetic devices (other than dental) which replace all or part of an internal body organ (including contiguous tissue) or replace all or part of the function of a permanently inoperative or malfunctioning internal body organ and replacements or repairs of such devices are covered when furnished incident to physicians' services or on a physician's order.

Colostomy (and other ostomy) bags and necessary accoutrements required for attachment are covered as prosthetic devices. This coverage also includes irrigation and flushing equipment and other items and supplies directly related to ostomy care regardless of whether the attachment of a bag is required.

Examples of prosthetic devices include cardiac pacemakers, prosthetic lenses (see subsection A), breast prostheses (including a surgical brassiere) for postmastectomy patients, maxillofacial devices and devices which replace all or part of the function of the ear or nose. A urinary collection and retention system with or without a tube is a prosthetic device replacing bladder function in cases of permanent urinary incontinence. The Foley catheter is also considered a prosthetic device when ordered for a patient with permanent urinary incontinence. However, chucks, diapers, rubber sheets, etc., are not covered under this provision since they do not perform the collecting and retention function of the bladder.

If payment cannot be made on an inpatient's behalf under Part A, hemodialysis equipment required by such patient could be covered under Part B as a prosthetic device which replaces the function of a kidney. See §264 for payment of hemodialysis equipment used in the home.

The coverage of prosthetic devices includes replacement of and repairs to such devices as explained in subsection C.

    A.    Prosthetic Lenses.--The term "internal body organ" includes the lens of an eye. Prostheses replacing the lens of an eye include postsurgical lenses customarily used during convalescence from eye surgery in which the lens of the eye was removed. In addition, permanent lenses are also covered when required by an individual lacking the organic lens of the eye because of surgical removal or congenital absence. Prosthetic lenses obtained

Page 2-58/Rev. 341

10-86     COVERAGE OF SERVICES      260.4 (Cont.)

because of surgical removal or congenital absence. Prosthetic lenses obtained on or after the beneficiary's date of entitlement to supplementary medical insurance benefits can be covered even though the surgical removal of the crystalline lens occurred before entitlement.

Payment may be made for one of the following combinations of prosthetic lenses when determined to be medically necessary by a physician (including, on and after Octoer 30, 1972, a doctor of optometry, see §115.1B1) to restore essentially the vision provided by the crystalline lens of the eye:

        1.    Prosthetic bifocal lenses in frames; or

        2.    Prosthetic lenses in frames for far vision, and prosthetic lenses in frames for near vision; or

        3.    When a prosthetic contact lens(es) for far vision is prescribed (including cases of binocular and monocular aphakia) payment can be made for the contact lens(es) and prosthetic lenses in frames for near vision to be worn at the same time as the contact lens(es); and prosthetic lenses in frames to be worn when the contacts have been removed.

Payment cannot be made for cataract sunglasses obtained in addition to the regular (untinted) prosthetic lenses, since the sunglasses duplicate the restoration of vision function performed by the regular prosthetic lenses.

    B.    Dentures are excluded from coverage. However, when a denture or a portion thereof is an integral part (built-in) of a covered prosthesis (e.g., an obturator to fill an opening in the palate) it is covered as part of that prosthesis.

    C.    Supplies, Repairs, Adjustments, and Replacement.--Payment may be made for supplies that are necesary for the effective use of a prosthetic device (e.g., the batteries need to operate an artificial larynx). Adjustment of prosthetic devices required by wear or by a change in the patient's condition are covered when order by a physician. To the extent applicable the provision related to the repair and replacement of durable medical equipment in §264.3 should be followed with respect to the repair and replacement of prosthetic devices. Necessary supplies, adjustments, repairs and replacements are covered even when the devices had been in use before the user enrolled in Part B of the program, so long as the device continues to be medically required.

    D.    Total Parenteral Nutrition and Enteral Nutrition.--Total parenteral nutrition (TPN) systems and enteral nutrition (EN) systems are covered by Medicare as prosthetic devices when the criteria in §SNF-1 of the Coverage Issues Appendix are met. When these criteria are met, the medical equipment and medical supplies (together with nutrients) being used comprise covered prosthetic devices rather than durable medical equipment, however, reimbursement rules relating to DME will continue to apply to such items. (See §264.7.) When a skilled nursing facility supplies TPN or EN systems which meet the criteria for coverage as a prosthetic device to an inpatient whose care is not covered under Part A, the skilled nursing facility must bill one of the two carriers designated to process claims for TPN and EN systems. (See §559.)

(See §261 where a skilled nursing facility furnishes TPN or EN to an individual who is not an inpatient.)

Rev. 246/Page 2-59

260.5     COVERAGE OF SERVICES     10-86

260.5    Leg, Arm, Back, and Neck Braces, Trusses, and Artificial Legs, Arms, and Eyes.--Theses appliances are covered under Part B when furnished incident to physician's services or on a physician's order. A brace includes rigid and semi-rigid devices which are used for the purposes ofsupporting a weak or deformed body member or restricting or eliminating motion in a diseased or injured part of the body. Elastic stockings, garter belts, and similar devices do not come within the scope of the definition of a brace. Back braces include, but are not limited to special corsets, sacroiliac, sacrolumbar, dorsolumbar corsets and belts. A terminal device (e.g., hand or hood) is covered under this provision whether or not an artifical limb is required by the patient.

Stump stockings and harnesses (including replacements) are also covered when these appliances are essential to the effective use of the artifical limb.

Adjustments to an artificial lumb or other appliance required by wear or by a change in the patient's condition are covered when ordered by a physician. To the extent applicable the provisions relating to the repair and replacement of durable medical equipment in §264.3 should be followed with respect to the repair and replacement of artifical limbs, braces, etc. Adjustments, repairs, and replacements are covered even when the item had been in use before the user enrolled in Part B of the program so long as the device continues to be medically required.

261.    TOTAL PARENTERAL NUTRITION AND ENTERAL NUTRITION FURNISHED TO INDIVIDUALS WHO ARE NOT INPATIENTS

Total parenteral nutrition (TPN) systems and enteral nutrition (EN) systems are covered by Medicare as prosthetic devices when the criteria in §SNF-1 of the Coverage Issues Appendix are met. When these criteria are met, the medical equipment and medical supplies (together with nutrients) being used comprise covered prosthetic devices rather than durable medical equipment, however, reimbursement rules relating to DME will continue to apply to such items. (See §264.7.) When a skilled nursing facility supplies TPN or EN systems which meet the criteria for coverage as a prosthetic device to an individual who is not an inpatient, the skilled nursing facility must bill one of the two carriers designated to process claims for TPN and EN systems. (See §559.)

(See §260.4D where a skilled nursing facility furnishes TPN or EN to an inpatient whose care is not covered under Part A.)

262.        AMBULANCE SERVICE

Ambulance services is covered only under Part B. The cost of oxygen and its administration in connection with and as part of the ambulance services is also covered. The Part A intermediary is responsible for processing claims for ambulance service furnished by skilled nursing facilities and for determining the compliance of the provider's ambulance and crew. SNF ambulance services furnished "under arrangement" with suppliers can be covered only if the supplier meets the conditions discussed below. (See §220.2 for the required certification for ambulance service.)

Page 2-60/Rev. 246

10-86     COVERAGE OF SERVICES     262.2

262.1    Vehicle and Crew Requirements

    A.    Vehicle.--The vehicle must be a specially designed and equipped automobile or other vehicle (in some areas of the United State this might be a boat or plane) for transporting the sick or injured. It must have customary patient care equipment including a stretcher, clean linens, first aid supplies, oxygen equipment, and it must also have such other safety and lifesaving equipment required by State or local authorities.

    B.    Crew.--The ambulance crew must consist of at least two members. Those crew members charged with the care or handling of the patient must include one individual with adequate first aid training, e.g., training at least equivalent to that provided by the standard and advanced Red Cross first aid courses. Training "equivalent" to the standard and advanced Red Cross first aid training courses includes ambulance service training and experience acquired in military service, successful completion by the individual of a comparable first aid course furnished by or under the sponsorship of State or local authorities, an educational institution, a fire department, a hospital, a professional organization, or other such qualified organization. On-the-job training involving the administration of first aid under the supervision of or in conjunction with trained first aid personnel for a period of time sufficient to assure the trainee's proviciency in handling the wide range of patient care services that may have to be performed by a qualified attendant can also be considered as "equivalent training."

    C.    Equipment and Supplies.--As mentioned above, the ambulance must have customary patient care equipment and first aid supplies. Reusable devices and equipment such as backboards, neckboards, and inflatable leg and arm splints are considered part of the general ambulance service and should be included in the cost of the trip. On the other hand, a separate reasonable cost based on actual quantities used may be recognized for nonresuable items and disposable supplies such as oxygen, gauze, and dressings required in the care of the patient during his trip.

262.2    Necessity and Reasonableness.--To be covered, ambulance service must be medically necessary and reasonable.

    A.    Necessity for the Service.--Medical necessity is established when the patient's condition is such that use of any other method of transportation is contraindicated. In any case, in which some means of transportation other than an ambulance could be utilized without endangering the individual's health, whether or not such other transportation is actually available, no payment may be made for ambulance service.

    B.    Reasonableness of the Ambulance Trip.--A claim may be denied on the ground that the use of ambulance services was unreasonable in the treatment of the illness or injury involved (§280.1) even though the patient's condition may have contraindicated the use of other means of transportation.

Rev. 246/Page 2-6l

262.3      COVERAGE OF SERVICES     10-86

262.3    Destination.--As a general rule, only local transportation by ambulance is covered. This means that the patient must have been transported to an institution (i.e., a hospital or a skilled nursing facility) whose locality (see paragraph D below) encompasses the place where the ambulance transportation of the patient began and which would ordinarily be expected to have the appropriate facilities for the treatment of the injury or illness involved. In exceptional situations where the ambulance transportation originated beyond the locality of the institution to which the beneficiary was transported, full payment may be made for services only if the evidence clearly establishes that such institution is the nearest one with appropriate facilities. (See paragraph E below.)

The institution to which a patient is transported need not be a participating institution but must meet at least the requirements of §20la (in the case of a nursing facility) or §203a (in the case of a hospital).

The intermediary generally will not deny a claim for ambulance service to a participating hospital or SNF merely on the grounds that there is a nearer nonparticipating institution having appropriate facilities.

    A.    Institution to Beneficiary's Home.--Ambulance service from an instituion to the beneficiary's home is covered when his home is within the locality of such institution or where the beneficiary's home is outside of the locality of such institution and the institution in relation to his home is the nearest one with appropriate facilities.

    B.    Institution to Institution.--Occasionally, the institution to which the patient is initially taken is found to have inadequate facilites for treating him and he is then transported to a second institution having appropriate facilities. In such cases, transportation by ambulance to both institutions would be covered provided the institution to which he is being transferred is determined to be the nearest one with appropriate facilities. In these cases, transportation from such second institution to the patient's home could be covered if his home is within the locality serviced by that institution or by the first institution to which he was taken.

    C.    Partial Payment.--Partial reimbursement may be made for otherwise covered ambulance service which exceeded the limits defined above. Such payment should be based on the amount that would have been payable had the patient been transported from the pick-up point to the nearest appropriate facility. However, when the beneficiary was transported from a distant hospital or a skilled nursing home to his residence, payment should be based on the amount that would have been payable had the beneficiary been transported to his residence from the nearest institution with appropriate facilities.

    D.    Locality.--The term "locality" with respect to ambulance service means the service area surrounding the institution from which individals normally come or are expected to come for hospital or skilled nursing services.

Page 2-62/Rev. 246

6-79     COVERAGE OF SERVICES     262.3(Cont.)

:    Mr. A becomes ill at home and requires ambulance service to the hospital. The small community in which he lives has a 35-bed hospital. Two large metropolitan hospitals are located some distance from Mr. A's community but they regularly provide hospitals services to the community's residents. The community is within the "locality" of the metropolitan hospitals and direct ambulance service to either of these (as well as to the local community hospital) is covered.

    E.    Appropriate Facilities.--The term "appropriate facilities" means that the institution is generally equipped to provde the needed hospital or skilled nursing care for the illness or injury involved. It is the institution, its equipment, its personnel and its capability to provide the services necessary to support the required medical care that determine whether it has appropriate facilities.,

Example:    Mr. A becomes ill at home and requires ambulance service to the hospital. The hospitals servicing the community in which he lives are capable of providing general hospital care. However, Mr. A requires immediate kidney dialysis but the needed equipment is not available in any of these hospitals. The service are of the nearest hospital having dialysis equipment does not encompass the patient's home. Nevertheless, in this case, ambulance service beyond the locality of the hospital with the equipment would be covered since it is the nearest one with appropriate facilities.

The fact that a more distant institution is better equipped, either qualitatively or quantitatively, to care for the patient does not warrant a finding that a closer institution does not have "appropriate facilities." For example, the nearest tuberculosis hospital may be in another State and that State's law precludes admission of nonresidents.

An institution is not considered an appropraite facility if there is no bed available. The intermediary, however, will presume that there are beds available at the local institutions unless evidence is furnished that none of these institutions had a bed available at the time the ambulance services was provided.

The indivdual physician who practices in a hospital is not a consideration in determining whether the hospital has appropriate facilities. Thus, ambulance service to a more distant hospital solely to avail a patient of the service of a specific physician or a physician in a specific specialty does not make the hospital in which the physician has staff privileges the nearest hospital with appropriate facilities.

    F.    Ambulance Service to a Physician's Office is Not Covered..--There may be situations where, in the course of transporting a patient to a hospital the ambulance stops at a physician's office because of the patient's dire need for professional attention and immediately therafter the ambulance continues the trip to the hospital. In such cases, the patient will be deemed not to have been transported to the physician's office and payment may be made for the entire trip.

Rev. 165/Page 2-65

264     COVERAGE OF SERVICES     6-79

    G.    Transportation Requested by a Home Health Agency.--Where a home health agency finds it necessary to have a beneficiary transported by ambulance to a hospital or skilled nursing facility to obtain home health services not otherwise available to the individual, the trip is covered as a Part B service only if the above coverage requirements are met. Such transportation is not covered as a home health service.

    H.    Coverage of Ambulance Service Furnished a Deceased Beneficiary.--An individual is considered to have expired as of the time he is pronounced dead by a person who is legally authorized to make such a pronouncement, usually a physician. Therefore, if the beneficiary was pronounced dead by a legally authorized individual before the ambulance was called no program payment may be made. Where the beneficiary was pronounced dead after the ambulance was called but before pickup, the service to the point of pickup is covered. If otherwise covered ambulance services were furnished to a beneficiary who was pronounced dead while enroute to or upon arrival at the destination, the entire ambulance service is covered.

264.    RENTAL AND PURCHASE OF DURABLE MEDICAL EQUIPMENT

A participating SNF May be reimbursed under Part B on a reasonable cost basis for durable medical equipment which it rents or sells to a beneficiary for use in his home if the following three requirements are met:

    A.    The equipment meets the definition of durable medical equipment (§ 264.l); and
    
    B.    The equipment is necessary and reasonable for the treatment of the patient's illness or injury or to improve the functioning of his malformed body member (264.2); and

    C.    The equipment is used in the patient's home (§ 264.6).

Payment may also be made under this provision for repairs, maintenance, and delivery of equipment as well as for expendable and non-reusable items essential to the effective use of the equipment subject to the conditions in § 264.3.

264.l    Definition of Durable Medical Equipment.--For purposes of coverage under Part B, durable medical equipment is equipment which (l) can withstand repeated use, and (2) is primarily and customarily used to serve a medical purpose, and (3) generally is not useful to a person in the absence of illness or injury, and (4) is appropriate for use in the home. All requirements of the definition must be met before an item can be considered to be durable medical equipment.

    A.    Durability.--An item is considered durable if it can withstand repeated use; i.e., the type of item which could normally be rented. Medical supplies of an expendable nature such as a incontinent pads, lambs wool pads, catheters, ace bandages, elastic stockings, surgical face masks, irrigating kits, sheets and bags are not considered "durable"

Page 2-66/Rev. 165

6-79     COVERAGE OF SERVICES      264.l(Cont.)

within the meaning of the definition. There are other items which , although durable in nature, may fall into other coverage categories such as braces, prosthetic devices, artificial arms, legs, and eyes.

    B.    Medical Equipment.--Medical equipment is equipment which is primarily and customarily used for medical purposes and is not generally useful in the absence of illness or injury. In most instances, no development will be needed to determine whether a specific item of equipment is medical in nature. However, some cases will require development to determine whether the item constitutes medical equipment. This development would include the advice of local medical organizations (providers, medical schools, medical societies) and specialists in the field of physical medicine and rehabilitation. If the equipment is new on the market, it may be necessary, prior to seeking professional advice, to obtain information from the supplier or manufacturer explaining the design, purpose, effectiveness and method of using the equipment in the home as well as the results of any test or clinical studies that have been conducted.

        1.    Equipment Presumptively Medical.--Items such as hospital beds, wheelchairs, hemodialysis equipment, iron lungs, respirators, intermittent positive pressure breathing machines, medical regulators, oxygen tents, crutches, canes, trapezia bars, walkers, inhalators, nebulizers, commodes, suction machines and tractor equipment presumptively constitute medical equipment. (Although hemodialysis equipment is a prosthetic device, it also meets the definition of durable medical equipment, and reimbursement for the rental or purchase of such equipment for use in the beneficiary's home will be made only under the provisions for payment applicable to durable medical equipment.)

        2.    Equipment Presumptively Nonmedical.--Equipment which is primarily and customarily used for a nonmedical purpose may not be considered "medical" equipment for which payment can be made under the medical insurance program. this is true even though the item has some remote medically related use. For example, in the case of a cardiac patient, an air conditioner might possibly be used to lower room temperature to reduce fluid loss in the patient and to restore an environment conducive to maintenance of the proper fluid balance. Nevertheless, because the primary and customary use of an air conditioner is a nonmedical one, the air conditioner cannot be deemed to be medical equipment for which payment can be made.

Other devices and equipment used for environmental control or to enhance the environmental setting in which the beneficiary is placed are not considered covered durable medical equipment. These include, for example room heaters, humidifiers, dehumidifiers, and electric air cleaners. Equipment which basically serves comfort or convenience functions or is primarily for the convenience of a person caring for the patient, such as elevators, stairway elevators, posture chairs, and cushion lift chairs do not constitute medical equipment. Similarly, physical fitness

Rev. 165/Page 2-67

264.2     COVERAGE OF SERVICES     6-79

equipment, e.g., an exer-cycle; first-aid or precautionary-type equipment,e.g., preset portable oxygen units; self-help devices, e.g., safety grip bars; and training equipment, e.g., speech teaching machines and braille training texts, are considered nonmedical in nature.

        3.    Special Exception Items.--Specified items of equipment may be covered under certain conditions even though they do not meet the definition of durable medical equipment because they are not primarily and customarily used to serve a medical purpose and/or are generally useful in the absence of illness or injury. These items would be covered when it is clearly established that they serve a therapeutic purpose is an individual case and would include:

            a.    Gel pads and pressure and water mattresses (which generally serve a preventive purpose) when prescribed for a patient who has bed sores or there is medical evidence indicating that he is highly susceptible to such ulceration; and

            b.    Heat lamps for a medical rather than a soothing or cosmetic purpose, e.g., where the need for heat therapy has been established.

In establishing medical necessity (§ 264.2) for the above items, the evidence must show that the item is included in the physician's course of treatment and a physician is supervising its use.

NOTE:    The above items represent special exceptions and no extension of coverage to other items should be inferred.

264.2    Necessary and Reasonable.--Although an item may be classified as durable medical equipment, it may be covered in every instance. Coverage in a particular case is subject to the requirement that the equipment be necessary and reasonable for treatment of an illness or injury, or to improve the functioning of a malformed body member. These considerations will bar payment for equipment which cannot reasonable be expect to perform a therapeutic function in an individual case or will permit only partial payment when the type of equipment furnished substantially exceeds that required for the treatment of the illness or injury involved.

    A.    Necessity for the Equipment.--Equipment is necessary when it can be expected to make a meaningful contribution to the treatment of the patient's illness or injury or to the improvement of his malformed body member. In most cases the physician's prescription for the equipment will be sufficient to establish that the equipment serves this purpose.

Page 2-68/Rev. l65

6-79     COVERAGE OF SERVICES     264.2(Cont.)

    B.    Reasonableness of the Equipment.--Even though an item of durable medical equipment may serve a useful medical purpose, the intermediary will also consider to what extend, it any, it would be reasonable for the Medicare program to pay for the item prescribed. The following consideration will enter into the intermediary's determination of reasonableness:

        l.    Would the expense of the item to the program be clearly disproportionate to the therapeutic benefits which could ordinarily be derived from use of the equipment?

        2.    Is the item substantially more costly than a medically appropriate and realistically feasible alternative pattern of care?

        3.    Does the item serve essentially the same purpose as equipment already available to the beneficiary?

The following example points up the applicability of these reasonableness guidelines:

Example:    The median price of standard whirlpool bath equipment is about $600 plus plumbing expenses necessary to install it in the patient's home. Program coverage of such equipment in the patient's home should be limited to those cases where it is prescribed for condition where the whirlpool bath can be expect to provide a substantial therapeutic benefit justifying its cost. For example, bursitis or chronic osteoarthritis would not generally justify Medicare payment for whirlpool bath equipment in the home since it would not be reasonable to expect that a whirlpool bath would be significantly more beneficial than a normal warm bath. Moreover, where the patient is not homebound, payment for this item in the patient's home should be restricted to the cost of providing the service elsewhere, e.g., an outpatient department of a participating hospital, if that alternative is less costly.

    C.    Payment Consistent with What is Necessary and Reasonable.--Where a claim is filed for equipment containing features of an aesthetic nature or features of a medical nature which are not required by the patient's condition or where there exists a reasonably feasible and medically appropriate alternative pattern of care which is less costly than the equipment furnished, the amount payable is based on the reasonable costs for the equipment or alternative treatment which meets the patient's medical needs.

Rev. 165/Page 2-69

264.3     COVERAGE OF SERVICES     6-79

The provider may not charge the beneficiary for features not medically required by his condition and which cannot be considered in determining the provider's allowable costs unless the beneficiary or his representative has specifically requested the excessive of deluxe item or services with knowledge of the amount he is to be charged.

264.3    Repairs, Maintenance, Replacement, and Delivery.--Under the circumstances specified below, payment may be made for repair, maintenance, and replacement of medically required durable medical equipment which the beneficiary owns or is purchasing, including equipment which had been in use before the user enrolled in Part B of the program. Since renters of equipment usually recover from the rental charge the expenses they incur with respect to maintaining the working order the equipment they rent out, separately itemized charges for repair, maintenance, and replacement of rented equipment are not covered.

    A.    Repairs.--Repairs to equipment which a beneficiary is purchasing or already owns are covered when necessary to make the equipment serviceable. If the expense for repairs exceeds the estimated expense of purchasing or renting another item of equipment for the remaining period of medical need, no payment can be made for the amount of the excess. (See C below where claims for repairs suggest malicious damage or culpable neglect.)

    B.    Maintenance.--Routine periodic servicing, such as testing, cleaning, regulating and checking of the beneficiary's equipment is not covered. Such routine maintenance is generally expected to be done by the owner rather than by a retailer or some other person who would charge the beneficiary. Normally, purchasers of durable medical equipment are given operating manuals which describe the type of servicing an owner may perform to properly maintain the equipment. Thus, hiring a third party to do such work would be for the convenience of the beneficiary and would not be covered.

However, more extensive maintenance which, based on the manufacturers' recommendations, is to be performed by authorized technicians, would be covered as repairs. This might include, for example, breaking down sealed components and performing tests which require specialized testing equipment not available to the beneficiary.

    C.    Replacement.--Replacement of equipment which the beneficiary own or is purchasing is covered in cases of loss or irreparable damage or wear and when required because of a change in the patient's condition. Expenses for replace required because of loss or irreparable damage may be reimbursed without a physician's order when in the judgment of the intermediary the equipment as originally ordered, considering the age of the order, would still fill the patient's medical needs. However, claims involving replacement equipment necessitated because of wear or a change in the patient's condition should be supported by a current physician's order.

Page 2-70/Rev. l65

6-79     COVERAGE OF SERVICES     264.5

Cases suggesting malicious damage, culpable neglect or wrongful disposition of equipment as discussed in § 264.5 should be reported to the intermediary.

    D.    Delivery.--Reasonable costs for delivery of durable medical equipment whether rented or purchased are covered if the provider customarily makes separate charges for delivery and this is a common practice among the other local providers.

264.4    Coverage of Supplies and Accessories.--Reimbursement may be made for supplies, e.g., oxygen, only when essential to the effective use of medically necessary durable medical equipment. Medications which may be used in connection with durable medical equipment are generally not covered.

Medications fall within the drug restriction and are, therefore, not covered under Part B except for those which cannot be self-administered and are provided as incident to a physician's professional services. This exception would apply to tumor chemotherapy agents such as methotrexate, 5- fluorouracil, and FUDR where used in conjunction with an infusion pump which is considered to be durable medical equipment. Such drugs and related services in charging or recharging the pump are covered only when furnished by a physician or by a technician under circumstances which satisfy the requirements for coverage of the services of auxiliary personnel rendered "incident to" a physician's service (i.e., provided under his personal supervision with the charges for such services included in the physician's bill).

Reimbursement may be made for replacement of essential accessories such as hoses, tubes, mouth pieces,etc., for necessary durable medical equipment, only if the beneficiary own or is purchasing the equipment.

264.5    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 his condition, the beneficiary feels that it would be to his advantage to purchase the equipment rather than to continue to rent it. When such a situation occurs, the provider may deduct all or part of the rentals paid from the purchase price of the equipment.

A beneficiary may sell or otherwise dispose of equipment for which he has not further use, for example, because of recovery from the illness or injury which gave rise to the need for the equipment. (There is no authority for the program to repossess the equipment.) If after such disposal there is again medical need for similar equipment, acquisition of durable medical equipment must be made on a case-by-case basis.

Rev. 165/Page 2-7l

264.6     COVERAGE OF SERVICES     6-79

Cases where it appear to there has been an attempt to create an artificial expense and realize a profit thereby should be reported to the intermediary.

When payments stop because the beneficiary's condition has changed and the equipment is no longer medically necessary, he is responsible for the remaining noncovered charges. Similarly, when payments stop because the beneficiary dies, his estate is responsible for the remaining noncovered charges.

264.6    Definition of Beneficiary's Home.--For purposes of rental and purchase of durable medical equipment, a beneficiary's home may be his own dwelling, an apartment, a relative's home, a home for the aged, or some other type of institution. However, an institution may not be considered a beneficiary's home if it:

    A.    Meets at least the basic requirement in the definition of a hospital (§203), i.e., it is primarily engaged in providing by or under the supervision of physicians, to inpatients, diagnostic and therapeutic services for medical diagnosis, treatment, and care of injured, disabled and sick persons, or rehabilitation services for the rehabilitation of injured, disabled, or sick persons; or

    B.    Meets at least the basic requirement in the definition of a skilled nursing facility (§20l), i.e., it is primarily engaged in providing to inpatients skilled nursing care and related services for patients who require medical or nursing care, or rehabilitation services for the rehabilitation of injured, disabled, or sick persons.

Thus, if an individual is a patient in an institution or distinct part of an institution which provides the services described in A or B above, he is not entitled to have payment made for rental or purchase of durable medical equipment since such an institution may not be considered his home.

When the beneficiary is at home for part of a month and is in an institution which cannot qualify as his home for a part of the same month, payment may be made for the entire months. However, where the provider charges for only part of a month in such a case payment will be made on a prorated basis.

264.7    Payment for Durable Medical Equipment.--

    A.    The Decision to Rent or Purchase.--A beneficiary may elect to rent an item of equipment rather than purchase it even though it may appear that purchase would be more economical for the program. However, the

Page 2-72/Rev. l65

6-79     COVERAGE OF SERVICES     264.7(Cont.)

intermediary will determine the method of payment to be used by the program in making reimbursement for equipment that is purchased. In both rental and purchase on a periodic payment basis, the monthly amount payable to the provider is converted to estimated costs by using the established outpatient cost reimbursement rate.

        1.    Rental Payments.--Where a provider rents durable medical equipment to a beneficiary, the provider will be reimbursed 80 percent of the reasonable cost of making the equipment available less any unmet deductible. Where the provider rents the equipment to the patient, it submits an HCFA-l483 for each month's rental charge. The patient is responsible to the provider for any unmet deductible and the monthly coinsurance.

        2.    Purchase or Equipment.--Where the provider sells the equipment to the patient, it submits one HCFA-l483 to the intermediary showing the purchase price. The intermediary prepares an HCFA-l483 for each month it makes payment showing the amount of the periodic payment for that month. The provider may either bill the patient once for his deductible and coinsurance liability or submit a bill to him each month. When equipment is purchased, the intermediary determines in accordance with the following guidelines whether program payment is to be made in a lump sum or in periodic payments.

            a.     Lump-Sum Payment for Inexpensive Equipment.--Payment for inexpensive equipment will be made in a lump sum subject to the deductible and coinsurance when it is determined to be less costly or more practical to do so. Inexpensive equipment is normally any item of durable medical equipment for which the reasonable charge is $50 or less.

            b.     Periodic Payment.--Where payment is not made in a lump sum, benefits will be paid in monthly installments equivalent to the payment that would have been made had the equipment been rented. However, periodic payment may be made only for the established period of medical necessity for the item or until the total program payments to the provider equal 80 percent of the estimated cost of the item, which ever comes first. The periodic payments are subject to the deductible and coinsurance provision. While periodic payments will be made on a monthly basis, a single payment can be made for periodic payments which have accrued.

    B.    When Expenses are Incurred.--The first month's expense for rental of durable medical equipment is deemed incurred as of the date of delivery of the equipment for purposes of crediting the SMI deductible and for reimbursement. Expenses for subsequent months are incurred as of the same day of the month as the date of delivery. Where equipment is purchased, the periodic monthly benefits will be payable on the same basis. Providers may submit claims as of the date the expenses are incurred and the date of deliver should be specified on the bill.

Rev. 165/Page 2-73

264.7(Cont.)     COVERAGE OF SERVICES     6-79

Example:    In 8/73, Mr. Thomas, a paraplegic, signed an agreement with an SNF to purchase a wheelchair for $200 to use in his home. The wheelchair was delivered to him on 9/8/73, and the SNF submitted a bill. The intermediary determined the reasonable rental charge was $20 a month. Since Mr. Thomas did not have any other covered Part B expenses during the year, periodic payments for 9/73, l0/73, ll/73 were withheld to satisfy the deductible. The first payment became payable on 12/8/73. Since $40 of the deductible was met in the last quarter of l973, payment for l/74 was withheld to satisfy the remaining deductible of $20 for 1974. Periodic payments resumed 2/8/74.

    C.    Determining months for Which Periodic Payments May be Made for Purchased Equipment.-- No payment may be made for any month throughout which the patient is in an institution which does not qualify as his home (§ 264.6). The rules for determining months for which periodic payments may be made for purchased equipment are:

        1.    In cases where equipment is purchased for use in an institution which cannot be considered the patient's home, the use months during which the beneficiary was institutionalized are not covered, but are charge as periodic payment months determined per A.2.b. above. Only those remaining installments (if any) attributable to months during all or part of which the patient was in his home may be considered covered for purposes of crediting the deductible and for reimbursement. The following situation illustrates the application of this policy.

Example:    On February 1, while confined to a participating skilled nursing facility , Mr. Smith who had already met his deductible purchased a wheelchair for which the reasonable charge is $150 and the reasonable rental charge is $15 per month. He remained in the facility until June l0, when he was discharged to his home. The intermediary determines that 10 monthly installments of $12 each (80 percent of $l5) would ordinarily be paid beginning with the month of February. Since Mr. Smith was institutionalized February through May, no payments can be made for those months. However, the payments at $l2 each for the remaining 6 months, June through November, would be made if medical need continued throughout this period.

        2.    A different rule applies where equipment is purchased by a patient for use in his home and he is subsequently admitted to an institution which cannot be considered his home. (See § 264.4 for definition of the beneficiary's home.) In this case, payments would be simply suspended. Upon return of the patient to his home, payments would resume without loss of monthly installments because of the institutionalization. Assuming the deductible is met, payments would continue as long as the equipment is medically necessary or until 80 percent of the reasonable purchase price has been reimbursed, whichever occurs first. The following examples illustrates the application of this policy.

Page 2-74/Rev. l65

05-01    GENERAL INFORMATION ABOUT THE PROGRAM    271

4. Durable Medical Equipment Purchased Before Beneficiary's Coverage Begins.--The dates on which periodic payments for a covered purchased item are due and allocation of the installments for deductible purposes are determined under the rules in subsection B. However, 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. Accordingly, where a purchased item of durable medical equipment was delivered to an individual before his/her coverage period began, the entire expense of the item (whether it was paid for in its entirety at the time of purchase or on a deferred or installment basis), are excluded from coverage since payment cannot be made for any expense incurred before an individual's coverage period began.

270.    COVERAGE OF INPATIENT PART B AND OUTPATIENT PHYSICAL THERAPY, OCCUPATIONAL THERAPY, AND SPEECH PATHOLOGY SERVICES

Under Part A, physical therapy, occupational therapy, and speech pathology services are included in the SNF PPS rate for cost reporting periods beginning on or after July 1, 1998. For inpatient Part B residents and outpatient services, payment for such services is under a fee schedule. The SNF must bill for physical therapy, occupational therapy, or speech pathology services for Part A residents beginning with its first cost reporting period that starts on or after July 1, 1998, and for Part B for services furnished on or after July 1, 1998. The SNF (rather than an outside provider/supplier such as an approved clinic or rehabilitation agency, or a participating hospital or another SNF or an HHA) bills Medicare and payment is made directly to the SNF. The patient is responsible only for applicable Part A coinsurance or the Part B deductible and coinsurance amounts.

270.1    Services Furnished Under Arrangements With Providers.--You may arrange with others to furnish covered outpatient physical therapy, occupational therapy, or speech pathology services. The SNF (rather than an outside provider/supplier, such as an approved clinic or rehabilitation agency, another SNF, or an HHA) bills Medicare, and payment is made directly to the SNF. When such arrangements are made, receipt of payment by you for the arranged services (as with services provided directly) relieves the beneficiary or any other person of further liability to pay for them. (See §206.)

271.    CONDITIONS FOR COVERAGE OF OUTPATIENT PHYSICAL THERAPY, OCCUPATIONAL THERAPY, AND SPEECH PATHOLOGY SERVICES

To be covered under the Medicare program, outpatient physical therapy, occupational therapy, or speech pathology services that you furnish a patient must meet all of the conditions listed in §230.3 and the following requirements.

Rev. 368/Page 2-75

271.1    GENERAL INFORMATION ABOUT THE PROGRAM    05-01

271.1    Physician's Certification and Recertification for Outpatient Physical Therapy, Occupational Therapy, and Speech Pathology Services.--

1. Content of Physician's Certification.--No payment is made for outpatient physical therapy, occupational therapy, or speech pathology services unless a physician certifies that:
2. • The services are or were furnished while the patient was under the care of a physician (see §271.2);
   • A plan for furnishing such services is or was established by the physician, physical therapist, occupational therapist, or speech pathologist and periodically reviewed by the physician (see §271.3); and
   • The services are or were required by the patient.

Since the certification is closely associated with the plan of treatment, the same physician who establishes or reviews the plan must certify to the necessity for the services. Obtain certification at the time the plan of treatment is established or as soon thereafter as possible. Physician means a doctor of medicine, osteopathy (including an osteopathic practitioner) or podiatric medicine legally authorized to practice by the State in which he/she performs these services. In addition, physician certifications by doctors of podiatric medicine must be consistent with the scope of the professional services provided by a doctor of podiatric medicine as authorized by applicable State law.

2. Recertification.--When outpatient physical therapy, occupational therapy, or speech pathology services are continued under the same plan of treatment for a period of time, the physician must recertify at intervals of at least once every 30 days that there is a continuing need for such services and estimate how long services will be needed. Obtain the recertification at the time the plan of treatment is reviewed since the same interval (at least once every 30 days) is required for the review of the plan. The physician who reviews the plan of treatment must sign the recertifications. The form and manner of obtaining timely recertification is up to you.

Page 2-76/Rev. 368

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