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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 medically necessary services are those that are reasonable and necessary for the diagnosis or 
treatment of an illness or injury. Medically necessary services include services to improve the functioning of a 
malformed body member. You can find this rule in the Social Security Act, Section 1862(a)(1)(A). 
 
The rules say that oxygen and oxygen equipment is covered under the Durable Medical Equipment benefit 
(Social Security Act 1861(s)(6)). In order for a beneficiarys equipment to be eligible for reimbursement the 
reasonable and necessary (R&N) requirements set out in the related Local Coverage Determination must be 
met. In addition, there are specific statutory payment policy requirements, discussed below, that also must be 
met. 
 
REASONABLE USEFUL LIFETIME (RUL): 
 
The reasonable useful lifetime for oxygen equipment is 5 years. The RUL is not based on the chronological age 
of the equipment. It starts on the initial date of service and runs for 5 years from that date. RUL also does not 
take into account exchanges of equipment, new suppliers, or changes of modality (concentrator, gaseous, 
liquid). 
 
Stationary and portable oxygen equipment is often provided at the same time therefore the RUL for both items 
run concurrently. When the RUL of a beneficiarys portable oxygen equipment differs from the RUL of the 
beneficiarys stationary oxygen equipment, the RUL of the stationary oxygen equipment shall govern the 
application of RUL-based rules and processes for both types, stationary and portable, of oxygen equipment. 
 
Until such time as the end date of the RUL of the stationary oxygen equipment is reached, the supplier must 
continue to furnish both the portable and stationary oxygen equipment. 
 
If the beneficiary elects to obtain replacement of the stationary and the portable oxygen equipment, both types 
of oxygen equipment must be replaced at the same time. When the stationary and the portable oxygen 
equipment are replaced, a new 36-month rental period and new RUL is started for both the replacement 
stationary oxygen equipment and the replacement portable oxygen equipment. 
 
Beginning January 1, 2011, a beneficiary who resides in a DMEPOS competitive bidding area (CBA) may 
obtain replacement of both the stationary and portable oxygen systems only from a contract supplier having a 
competitive bidding contract for the CBA in which the beneficiary permanently resides. OXYGEN EQUIPMENT: 
 
Initial 36 months 
 
Reimbursement for oxygen equipment is limited to 36 monthly rental payments. Payment for accessories (e.g., 
cannula, tubing, etc.), delivery, back-up equipment, maintenance, and repairs is included in the rental 
allowance. Payment for oxygen contents (stationary and/or portable) is included in the allowance for stationary 
equipment (E0424, E0439, E1390, E1391). 
 
Payment for stationary equipment is increased for beneficiaries requiring greater than 4 liters per minute (LPM) 
of oxygen flow and decreased for beneficiaries requiring less than 1 LPM. If a beneficiary qualifies for 
additional payment for greater than 4 LPM of oxygen and also meets the requirements for portable oxygen, the 
appropriate modifiers (QB or QF) must be used. 
 
The supplier who provides oxygen equipment for the first month must continue to provide any necessary 
oxygen equipment and all related items and services through the 36-month rental period, unless one of the 
following exceptions is met: 
 
    Beneficiary relocates temporarily or permanently outside of the suppliers service area 
    Beneficiary elects to obtain oxygen from a different supplier 
    Individual case exceptions made by CMS or DME MAC 
    Item becomes subject to competitive bidding 
 
Providing different oxygen equipment/modalities (e.g., concentrator [stationary or portable], gaseous, liquid, 
trans-filling equipment) is not permitted unless one of the following requirements is met: 
 
    Supplier replaces the equipment with the same or equivalent item 
    Treating practitioners orders different equipment 
    Beneficiary chooses to receive an upgrade and signs an Advance Beneficiary Notice of Non-coverage 
(ABN) 
    CMS or the DME MAC determines that a change in equipment is warranted 
 
A new 36-month rental period can begin only in the following situations: 
 
    Specific incident of damage beyond repair (e.g., dropped and broken, fire, flood, etc.) or the item is stolen or 
lost 
    Break-in-need for at least 60 days plus the days remaining in the month of discontinuation and new medical 
necessity is established 
 
A new 36-month rental period does not start in the following situations: 
 
    Replacing equipment due to malfunction, wear and tear, routine maintenance, repair 
    Providing different equipment based on a treating practitioner order or beneficiary request for an upgrade 
    Break-in-need less than 60 days plus the days remaining in the month of discontinuation  
    Break-in-billing  
    Changing suppliers 
You can find this information in the Local Coverage Article: Oxygen and Oxygen Equipment A52514. 
 
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.