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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 say that providers/suppliers must report services correctly. Procedures should be reported with the 
Current Procedural Terminology (CPT) code that describes the services performed. You can find this rule in 
the Centers for Medicare and Medicaid Services, Medicare National Correct Coding Initiative Policy Manual 
for Medicare Services, Chapter I(A). 
 
The rules say that the law requires that all medical supplies (routine and nonroutine) be provided by the home 
health agency (HHA) while the patient is under a home health plan of care. Durable medical equipment 
(DME), including supplies covered as DME, are paid separately from the home health prospective payment 
system (HH PPS) and are excluded from the consolidated billing requirements governing the HH PPS. The 
determining factor is the medical classification of the supply, not the diagnosis of the patient.  
 
Medical supplies are items that, due to their therapeutic or diagnostic characteristics, are essential in enabling 
HHA personnel to conduct home visits or to carry out effectively the care the physician has ordered for the 
treatment or diagnosis of the patient's illness or injury. All supplies which would have been covered under the 
cost-based reimbursement system are bundled under home health PPS. Payment for the cost of supplies has 
been incorporated into the per visit and 30-day period payment rates. Supplies fit into two categories. They are 
classified as: 
 
 Routine - because they are used in small quantities for patients during the usual course of most home 
visits; or 
 Nonroutine - because they are needed to treat a patient's specific illness or injury in accordance with 
the physician or allowed practitioner's plan of care and meet further conditions discussed in more detail 
below. 
 
 All HHAs are expected to separately identify in their records the cost of medical and surgical supplies that are 
not routinely furnished in conjunction with patient care visits and the use of which are directly identifiable to 
an individual patient. You can find this rule in the Centers for Medicare and Medicaid Services, Internet Only 
Manual, Publication 100-02, Medicare Benefit Policy Manual, Chapter 7, Sections 10.10(B) and 50.4.1. 
 
The rules say that for HH PPS, the fifth position indicates a severity group for non-routine supplies (NRS). The 
HH PPS grouper software assigned each episode into one of 6 NRS severity levels and created the fifth 
position of the health insurance prospective payment system (HIPPS) code with the values S through X. If the 
HHA was aware that supplies were not provided during an episode, they changed this code to the 
corresponding number 1 through 6 before submitting the claim. You can find this rule in the Centers for 
Medicare and Medicaid Services, Division of Institutional Claims Processing, Definition and Uses of Health 
Insurance Prospective Payment System Codes.  
 
If you want to read these Medicare rules, you can go to this website www.medicareappeal.com. 
 
The Plan contract says that the Plan covers items and services in accordance with Medicare rules.