The Repair Business: Friend or Foe

By Denise M. Fletcher, Esq.

It’s happened to everyone. A Medicare beneficiary shows up in your store with a power chair needing repair. The problem is you didn’t provide the chair, and the supplier that did is no longer in business or just doesn’t want to fix the chair. Suddenly, you are faced with repairing a chair you didn’t provide. This can be challenging from both an ethical and financial perspective. This can be even more challenging in a competitive bidding area.

For rental items, any cost for repairs or replacement parts during the rental period is the responsibility of the supplier. After title transfers to the beneficiary, the repairs are the responsibility of the beneficiary, and the beneficiary has the freedom to have repairs performed by any supplier it chooses.

The rules do not prohibit suppliers located in a competitive bidding area (“CBA”) not awarded a competitive bidding contract from providing and billing for repair services. Medicare will cover the costs associated with such repairs even when a non-contract supplier repairs a competitive bid item. This article discusses (1) the services and parts which will qualify as repairs; (2) the submission of claims for these services and parts; and (3) Medicare’s payment for repairs.

What Repair Services are Covered by Medicare?

Because the labor involved in a repair or maintenance service is not subject to competitive bidding, any Medicare-enrolled supplier may repair beneficiary-owned equipment, including equipment which falls within a product category subject to competitive bidding. For Medicare to cover the labor and parts associated with repairs, the following criteria must be met:

  1. The repair or maintenance service is not covered by either the manufacturer’s or supplier’s warranty; and
  2. The repair is necessary to make the equipment serviceable; or
  3. The service qualifies as non-routine maintenance recommended by and performed according to the manufacturer’s specifications.

Medicare will cover not only the cost of labor, but also the parts involved in the repair service. Thus, when a component or an entire part, such as a battery or a tire, of the base equipment is needed to repair and make the equipment serviceable, the supplier performing the repair may furnish the needed part, even if the supplier does not have a contract and the part is a competitive bid item. Furthermore, accessories and optional features, such as elevating leg rests, seating systems, and adjustable arm rests, may be repaired by any Medicare-enrolled supplier.

What are the Limitations?

Items which fall within a product category subject to competitive bidding must be furnished by a contract supplier when:

  1. The item is not part of a repair.
  2. The base equipment is replaced in its entirety. Thus, when the base equipment is replaced because the equipment was lost, stolen, irreparably damaged, or used beyond the reasonable useful lifetime of the equipment, then the beneficiary must obtain the equipment from a contract supplier.
  3. A part or accessory is replaced for reasons other than repair of the base equipment. For example, if an accessory is altered because the beneficiary’s medical condition has changed, then Medicare will not consider the service to qualify as a repair.
  4. The beneficiary requires a replacement seat cushion (E2601-E2608; E2622-E2625) or a replacement back cushion that is not integral to the base equipment (E2611-E2616; E2620-E2621). According to Medicare, these items can never qualify as parts required for a repair.

What is Required to Submit a Claim for Repair Services?

When a service qualifies as a repair, the supplier can bill for the labor involved by submitting a claim with Healthcare Common Procedures Coding System (“HCPCS”) code K0739. The claim should also include the HCPCS codes for any replacement parts furnished. The HCPCS codes for the repair parts must include the modifier “RB.” If the replacement part is subject to round one of competitive bidding, then the modifier “KG” must also be added. For replacement parts subject to round two of competitive bidding, modifier “KK” must be added in addition to the RB modifier.

Generally, suppliers will submit one claim covering the labor and parts supplied during the repair service. However, there may be situations where a non-contract supplier will submit two claims. Suppliers must accept assignment when furnishing items subject to competitive bidding. Thus, if a non-contract supplier performs a repair involving a part subject to competitive bidding, but the supplier does not generally accept assignment, then the supplier will have to submit two claims. One claim will cover the labor and non-competitive bid items provided on an unassigned basis while the other claim will cover the competitive bid items which the supplier must furnish under assignment.

As with all claims submitted to Medicare, suppliers must have adequate documentation to support the claim for a repair. In the documentation, the supplier should include (1) identification of the equipment repaired; (2) the reason for the repair; (3) justification for any replacement parts furnished during the repair; (4) evidence of the labor units billed under K0739; and (5) any other documentation required in the local coverage determination policy applicable to the supplier’s area.

How Will Medicare Pay for Repairs?

Because the labor involved in repair services is not subject to competitive bidding, Medicare will reimburse suppliers based on the general payment rules for such services. Likewise, if a part needed for the repair is not a competitive bid item, then the general payment rules apply, and Medicare will pay based on the lesser of the actual charge or the fee schedule amount for the part. For replacement parts which are competitive bid items, Medicare will pay the single payment amounts set during the competitive bidding process.

Repairing a power chair provided by another supplier is one of those topics which spark debate. The discussion usually pits the ethical and regulatory responsibility of the original supplier to repair the equipment against the responsibility of another supplier to repair the equipment. Putting the debate aside, the repair business may be a viable option for businesses which are denied a contract in the competitive bidding program. Non-contract suppliers may retain some of their existing clientele by offering repair services and may still be able to participate during the competitive bidding program through subcontracts with contract suppliers which do not provide repair and maintenance services.

These written materials are not intended to be legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general information purposes only. The law pertaining to these issues may have changed since these written materials were submitted. The read should consult his or her own attorney for legal advice.