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The rules say that plans must pay for a medical service or item if regular Medicare would pay for it in this case. 
You can find this rule at 42 Code of Federal Regulations (CFR) Section 422.101. 
 
The rules state that equipment which the enrollee owns or is a capped rental item may be replaced in cases of 
loss or irreparable damage. Irreparable damage refers to a specific accident or to a natural disaster (e.g., fire, 
flood). A physician's order and/or new Certificate of Medical Necessity (CMN), when required, is needed to 
reaffirm the medical necessity of the item. 

Irreparable wear refers to deterioration sustained from day-to-day usage over time and a specific event cannot 
be identified. Replacement of equipment due to irreparable wear takes into consideration the reasonable useful 
lifetime of the equipment. If the item of equipment has been in continuous use by the enrollee on either a rental 
or purchase basis for the equipment's useful lifetime, the enrollee may elect to obtain a new piece of 
equipment. Replacement may be reimbursed when a new physician order and/or new CMN, when required, is 
needed to reaffirm the medical necessity of the item. 

The reasonable useful lifetime of durable medical equipment is determined through program instructions. In the 
absence of program instructions, A/B MACS (B) may determine the reasonable useful lifetime (RUL) of 
equipment, but in no case can it be less than 5 years. Computation of the useful lifetime is based on when the 
equipment is delivered to the enrollee, not the age of the equipment. Replacement due to wear is not covered 
during the reasonable useful lifetime of the equipment. During the reasonable useful lifetime, Medicare does 
cover repair up to the cost of replacement (but not actual replacement) for medically necessary equipment 
owned by the enrollee. These rules can be found in the Medicare Benefit Policy Manual Chapter 15, Section 
110.2 for Repairs, Maintenance, Replacement, and Delivery. 
 
The rules say that the supplier must maintain detailed records describing the need for and nature of all repairs 
including a detailed explanation of the justification for any component or part replaced as well as the labor time 
to restore the item to its functionality. 
 
REPLACEMENT EQUIPMENT: 
 
For situations 3 and 4 described in the CERTIFICATION section of the "Coverage Indications, Limitations 
and/or Medical Necessity" of the LCD, the following special instructions apply: 
 
Initial Date should be the date that the replacement equipment is initially needed. This is generally understood 
to be the date of delivery of the oxygen equipment. 
 
The Recertification Date should be 12 months following the Initial Date when the value on the Initial CMN 
(for the replacement equipment) meets Group I criteria or 3 months following the Initial Date when the 
qualifying blood gas value on the Initial CMN meets the Group II criteria. (Note: The Initial Date [for the 
replacement equipment] should also be entered on the Recertification CMN.) 
 
Claims for the initial rental month (and only the initial rental month) must have the RA modifier (Replacement 
of DME item) added to the HCPCS code for the equipment when there is replacement due to reasonable useful 
lifetime or replacement due to damage, theft, or loss. 
 
Claims for the initial rental month must include a narrative explanation of the reason why the equipment was 
replaced and supporting documentation must be maintained in the supplier's files. 
 
A treating practitioner?s order and/or new Certificate of Medical Necessity (CMN), when required, is needed to 
reaffirm the medical necessity of the item for replacement of an item. 
 
You can find this information in Medicare's Local Coverage Article: Oxygen and Oxygen Equipment - Policy 
Article (A52514). 
 
The rules say that a portable oxygen system is covered if the beneficiary is mobile within the home and the 
qualifying blood gas study was performed while at rest (awake) or during exercise. If the only qualifying blood 
gas study was performed during sleep, portable oxygen will be denied as not reasonable and necessary. 
 
If coverage criteria are met, a portable oxygen system is usually separately payable in addition to the stationary 
system. See exception in the related Policy Article Non-Medical Necessity Coverage and Payment Rules, 
OXYGEN EQUIPMENT, Initial 36-Months section. 
 
If a portable oxygen system is covered, the supplier must provide whatever quantity of oxygen the beneficiary 
uses; Medicare?s reimbursement is the same, regardless of the quantity of oxygen dispensed. 
 
Home oxygen therapy is reasonable and necessary only if all of the following conditions are met: 
 
    1. The treating practitioner has determined that the beneficiary has a severe lung disease or hypoxia-related 
symptoms that might be expected to improve with oxygen therapy, and 
    2. The beneficiary's blood gas study meets the criteria stated below, and 
    3. The qualifying blood gas study was performed by a treating practitioner or by a qualified provider or 
supplier of laboratory services, and 
    4. The qualifying blood gas study was obtained under the following conditions: 
        If the qualifying blood gas study is performed during an inpatient hospital stay, the reported test must be 
the one obtained closest to, but no earlier than 2 days prior to the hospital discharge date, or 
        If the qualifying blood gas study is not performed during an inpatient hospital stay, the reported test must 
be performed while the beneficiary is in a chronic stable state ? i.e., not during a period of acute illness or an 
exacerbation of their underlying disease, and 
    5. Alternative treatment measures have been tried or considered and deemed clinically ineffective. 
 
You can find this information in Medicare's Local Coverage Determination (LCD): Oxygen and Oxygen 
Equipment (L33797). 
 
If you want to read these Medicare rules, you can go to this website www.medicareappeal.com.