Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

JANET REHNQUIST 

INSPECTOR GENERAL 

JUNE 2002 

OEI-03-00-00410 

Medicare Maintenance Payments for 

Capped Rental Equipment 
OFFICE OF INSPECTOR GENERAL

http://www.oig.hhs.gov/ 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as amended, 

is to protect the integrity of the Department of Health and Human Services (HHS) programs, as well as 

the health and welfare of beneficiaries served by those programs. This statutory mission is carried out 

through a nationwide network of audits, investigations, and inspections conducted by the following 

operating components: 

Office of Audit Services 

The OIG's Office of Audit Services (OAS) provides all auditing services for HHS, either by conducting 

audits with its own audit resources or by overseeing audit work done by others. Audits examine the 

performance of HHS programs and/or its grantees and contractors in carrying out their respective 

responsibilities and are intended to provide independent assessments of HHS programs and operations in 

order to reduce waste, abuse, and mismanagement and to promote economy and efficiency throughout the 

Department. 

Office of Evaluation and Inspections 

The OIG's Office of Evaluation and Inspections (OEI) conducts short-term management and program 

evaluations (called inspections) that focus on issues of concern to the Department, the Congress, and the 

public. The findings and recommendations contained in the inspections reports generate rapid, accurate, 

and up-to-date information on the efficiency, vulnerability, and effectiveness of departmental programs. 

Office of Investigations 

The OIG's Office of Investigations (OI) conducts criminal, civil, and administrative investigations of 

allegations of wrongdoing in HHS programs or to HHS beneficiaries and of unjust enrichment by 

providers. The investigative efforts of OI lead to criminal convictions, administrative sanctions, or civil 

monetary penalties. The OI also oversees State Medicaid fraud control units which investigate and 

prosecute fraud and patient abuse in the Medicaid program. 

Office of Counsel to the Inspector General 

The Office of Counsel to the Inspector General (OCIG) provides general legal services to OIG, rendering 

advice and opinions on HHS programs and operations and providing all legal support in OIG’s internal 

operations. The OCIG imposes program exclusions and civil monetary penalties on health care providers 

and litigates those actions within the Department. The OCIG also represents OIG in the global settlement 

of cases arising under the Civil False Claims Act, develops and monitors corporate integrity agreements, 

develops model compliance plans, renders advisory opinions on OIG sanctions to the health care 

community, and issues fraud alerts and other industry guidance. 
EXECUTIVE SUMMARY 

PURPOSE 

To determine the cost-effectiveness of Medicare maintenance payments for capped rental 

equipment. 

BACKGROUND 

Medicare Part B pays for certain pieces of durable medical equipment such as hospital beds, 

nebulizers, and wheelchairs under the capped rental category. Payments for capped rental 

equipment are made monthly and cannot exceed 15 months of rental. After the rental period 

has ended, Medicare will pay for either the continuing maintenance or repair of these items. In 

2000, Medicare paid approximately $111 million for maintenance and $19 million for repairs of 

capped rental equipment. Medicare beneficiaries were responsible for 20 percent of these 

payments in the form of coinsurance. 

Once a Medicare beneficiary has been renting the equipment for 10 consecutive months, the 

supplier must give the beneficiary the option of purchasing the equipment. If a beneficiary 

chooses to continue renting the equipment, Medicare will pay for an additional 5 months of 

rental. Suppliers may then bill for maintenance and servicing of the equipment beginning 6 

months after the rental period has ended and every 6 months thereafter. Maintenance billed in 

one month covers any servicing performed for 6 months following the service date. Suppliers 

are not required to perform maintenance in order to receive the semi-annual maintenance 

payment. If the beneficiary chooses to purchase the equipment, Medicare will pay for 13 

months of rental. After the rental period has ended, Medicare will pay for repairs on purchased 

equipment when service is performed. 

We primarily focused on two sources of information for this report: (1) a 5-year review (1996 

to 2000) of maintenance and repair payments for capped rental equipment that beneficiaries 

decided to rent or purchase in 1996 and (2) a survey of suppliers who received payment from 

Medicare for the maintenance and servicing of capped rental equipment in June 2000. 

FINDINGS 

Medicare paid substantially more for maintenance than repairs over a 5-year period 

for the 31 equipment codes in our review 

We tracked, over a 5-year period (1996 to 2000), the maintenance and repair payments for 

3,553 pieces of equipment representing 31 equipment codes that beneficiaries decided to rent or 

purchase in 1996. We found that, on average, Medicare paid substantially more for 

maintenance on rented equipment than repairs on purchased equipment over the 5 years. 

Maintenance Payments for Capped Rental Equipment i OEI-03-00-00410 
For half of the 31 equipment codes, there were no associated repairs over the 5-year period. 

We found that, overall, Medicare would have saved 96 percent of the maintenance payments 

made to suppliers for the services in our review had Medicare paid for actual equipment repair 

rather than routine maintenance. If this 96 percent is applied to the total maintenance payments 

for the 31 codes in 2000, Medicare would have saved $98 million of the $102 million paid for 

maintenance that year. 

Only 9 percent of capped rental equipment actually received any maintenance and 

servicing from June to December 2000 

In addition to a 5-year review comparing maintenance payments to repair payments, we also 

reviewed a sample of equipment to determine if any maintenance and servicing was actually 

provided. Out of 964 maintenance services with a June 2000 service date, we requested 

documentation for a sample of 260 services. Overall, just 9 percent of the capped rental 

equipment with a June 2000 service date actually received any servicing between June and 

December 2000. We estimate that of the $7.3 million Medicare paid for maintenance services 

from June 2000, $6.5 million was paid for equipment that received no actual servicing. 

CONCLUSION 

The findings of this report illustrate that Medicare’s current policy of paying for maintenance and 

servicing of capped rental equipment is not cost-effective. We found that Medicare pays 

substantially more in maintenance payments for rented items than it does for actual repairs on 

purchased equipment. In addition, we found that Medicare beneficiaries are receiving little or no 

routine maintenance on their rented equipment. 

RECOMMENDATION 

We recommend that the Centers for Medicare & Medicaid Services eliminate the 

semi-annual maintenance payment currently allowed for capped rental equipment and 

pay only for repairs when needed. We believe this change would result in nearly $100 million 

dollars being saved each year by Medicare and its beneficiaries. As a broader issue relating to 

capped rental equipment, CMS may also want to consider if eliminating the 15-month rental 

option would be a viable solution. By requiring any continuous rentals to be converted to a 

purchase after the 13th month of rental, the need for the semi-annual maintenance payment 

would automatically be eliminated. 

Agency Comments 

The CMS agreed with our recommendation and stated that they will consider a legislative 

initiative to eliminate the 15-month rental option. This initiative would result in significant savings 

to the Medicare program by eliminating the semi-annual maintenance and servicing fee and by 

eliminating monthly rental payments for months 14 and 15. Appendix E contains the full text of 

CMS’ comments. 

Maintenance Payments for Capped Rental Equipment ii OEI-03-00-00410 
TABLE OF CONTENTS 

PAGE

EXECUTIVE SUMMARY .................................................... i

INTRODUCTION ............................................... 1

FINDINGS 

Comparing Maintenance Payments to Repair Payments ............................. 6

Maintenance and Servicing Not Provided ....................................... 7

CONCLUSION ................................................. 9

RECOMMENDATION ........................................... 9

APPENDICES 

A. Comparison of Repair and Maintenance Payments for 31 Equipment Codes ......... 10

B. Description of 26 Equipment Codes in Maintenance Review ..................... 12

C. Maintenance and Servicing Performed on 26 Equipment Codes .................. 14

D. Estimates and Confidence Intervals ........................................ 16

E. Agency Comments .................................................... 17

ACKNOWLEDGMENTS ........................................ 18

Maintenance Payments for Capped Rental Equipment iii OEI-03-00-00410 
INTRODUCTION 

PURPOSE 

To determine the cost-effectiveness of Medicare maintenance payments for capped rental 

equipment. 

BACKGROUND 

Title XVIII of the Social Security Act established coverage requirements for Part B of the 

Medicare Program. Medicare Part B pays for certain pieces of durable medical equipment such 

as hospital beds, nebulizers, and wheelchairs under the capped rental category. Capped rental 

equipment generally costs more than $150 and is not routinely purchased, service intensive, or 

customized. Payments for capped rental equipment are made monthly and cannot exceed 15 

months of rental. After the monthly rental period has ended, Medicare will pay for either the 

continuing maintenance or repairs of these items. In 2000, Medicare paid approximately $111 

million for maintenance and $19 million for repairs of capped rental equipment. Medicare 

beneficiaries were responsible for 20 percent of these payments in the form of coinsurance. 

Once a Medicare beneficiary has been renting the equipment for 10 consecutive months, the 

supplier must give the beneficiary the option of purchasing the equipment. If a beneficiary 

chooses to continue renting the equipment, Medicare will pay for an additional 5 months of 

rental. After that time, the supplier retains ownership of the equipment and Medicare will cover 

maintenance and servicing every 6 months. If the beneficiary chooses to purchase the 

equipment, the rental payments for the equipment end at 13 months instead of 15 months. The 

supplier then transfers the title of the equipment to the beneficiary and Medicare pays only for 

necessary repairs. 

Medicare Maintenance Payments for Rented Equipment 

For equipment that beneficiaries have elected to continue to rent, Medicare will pay for routine 

maintenance and servicing after the 15 month rental cap has been reached. If beneficiaries do 

not inform suppliers of their decision, it is assumed that the beneficiary will continue to rent the 

equipment. Suppliers may begin billing for maintenance and servicing 6 months after the rental 

period has ended, and then they may bill once every 

6 months thereafter. The semi-annual maintenance payment covers any maintenance performed 

during the 6-month time period following the service date billed on the claim. Medicare pays for 

this maintenance and servicing regardless of whether or not the equipment is actually serviced by 

suppliers. 

Maintenance Payments for Capped Rental Equipment 1 OEI-03-00-00410 
Medicare Repair Payments for Purchased Equipment 

For equipment that beneficiaries have elected to purchase at the end of the rental period, 

suppliers may bill Medicare for repairs when they are performed. Repairs include reasonable 

and necessary charges for parts and labor which are not covered under any manufacturer or 

supplier warranty. Routine periodic servicing of equipment is not covered. However, more 

extensive maintenance which is recommended by the manufacturer is covered as repairs. These 

repairs, which should be performed by authorized technicians, can include breaking down sealed 

components and performing tests which require specialized testing equipment. 

METHODOLOGY 

We primarily focused on two sources of information for this report: (1) a 5-year review (1996 

to 2000) of maintenance and repair payments for capped rental equipment that beneficiaries 

decided to rent or purchase in 1996 and (2) a survey of suppliers who received payment from 

Medicare for the maintenance and servicing of capped rental equipment in June 2000. 

5-Year Data Review 

Data Collection and Analysis. We began with a 1 percent file of durable medical equipment 

services from CMS’ 1996 National Claims History file. We extracted all capped rental services 

with a BR or BP modifier indicating that the beneficiary made a decision either to continue to 

rent the equipment (BR modifier) or to purchase the equipment (BP modifier). Then using 

CMS’ National Claims History File data from 1996 through 2000, we extracted all of the 

services for those beneficiaries who decided to rent or purchase equipment in 1996. It is 

possible that during the 5 years we tracked, beneficiaries may have stopped using their rented or 

purchased equipment due to changes in medical condition or death. We did not review 

individual beneficiary histories to determine if the need for the equipment continued over the 5-

year period reviewed. 

There was a total of 60 different equipment codes representing 1,251 pieces of equipment that 

beneficiaries decided to purchase and 2,359 pieces of equipment that beneficiaries decided to 

continue renting in 1996. Of these 60 codes, only 31 had both rented and purchased 

equipment. These 31 codes had a total of 1,244 purchased items and 2,309 rented items. We 

used these 31 codes for our review. Two of these codes were terminated in 1999 and replaced 

by other codes. In these instances, we included the maintenance and repair payments for both 

the original and replacement codes in our totals. 

For the beneficiaries who decided to rent a particular piece of equipment in 1996, we extracted 

all of their maintenance services for that equipment code (indicated by an MS modifier) from the 

1996 to 2000 data. We determined the number of maintenance services received in each year 

and the dollar amount associated with the maintenance services. 

Maintenance Payments for Capped Rental Equipment 2 OEI-03-00-00410 
For the beneficiaries who decided to purchase a piece of equipment in 1996, we extracted all of 

their repair and labor charges associated with that equipment from 1996 to 2000. To do this, 

we selected all the beneficiaries’ services with an RP modifier for repairs as well as services 

billed with codes E1340 and E1350 to account for labor charges. Since a beneficiary may have 

decided to purchase more than one piece of equipment over the years, we reviewed the list of 

repair services to determine if it was an appropriate code for the piece of equipment the 

beneficiary decided to purchase in 1996. We then compiled a list of appropriate repair codes 

for each piece of equipment purchased in 1996. We included all E1340 and E1350 charges, as 

well as all E1399 services (for miscellaneous durable medical equipment) billed with an RP 

modifier in this list. We determined the number of repair services received in each year and the 

dollar amount associated with those repair services. 

For each code in our review, we determined the average of maintenance payments for rented 

equipment and the average of repair payments for purchased equipment. We did this by 

aggregating all the maintenance and repair payments over 5 years and dividing by the total 

number of equipment rented or purchased in 1996 respectively. Throughout this report, we 

refer to these averages as “average maintenance payment” and “average repair payment.” To 

calculate the 5-year dollar savings if the program paid only for equipment repair and not 

maintenance, we began by subtracting the average repair payment from the average maintenance 

payment for each code. We then multiplied this number by the total number of equipment rented 

in 1996 for each of the codes. To calculate the Medicare savings for the services in our review, 

we aggregated the dollar savings for each individual equipment code. To determine the savings 

percentages for each equipment code and overall, we took the amount that Medicare would 

save if the program paid for equipment repair rather than maintenance, and divided it by the total 

maintenance payments from 1996 to 2000. To calculate total Medicare savings, we applied the 

overall savings percentage to the total projected amount Medicare paid for maintenance 

between 1996 and 2000 on these 31 codes. The maintenance and repair payments for the 31 

equipment codes are provided in Appendix A. Point estimates and confidence intervals are 

provided in Appendix D. 

Survey Data 

Sample Design. We began with a 1 percent file of durable medical equipment services from 

CMS’ 2000 National Claims History file which included all claims processed through December 

2000. From this file, we extracted all paid services with an MS modifier indicating maintenance 

and servicing was billed. We verified that all the equipment codes billed with an MS modifier 

were for capped rental equipment. 

We selected our sample maintenance services from 1 month, June 2000. A single maintenance 

service covers a 6-month time frame during which maintenance can be performed. Our analysis 

indicated that June 2000 was similar to the other months of 2000 in terms of the number of 

maintenance services paid and allowed charges. We removed services for deceased 

beneficiaries, and then selected a stratified random sample of maintenance services with a 

service date from June 2000. We stratified our sample to 

Maintenance Payments for Capped Rental Equipment 3 OEI-03-00-00410 
ensure that we would have a variety of equipment types to review. Our sample contained four 

strata based on equipment type. Stratum one included wheelchairs and accessories, stratum two 

included nebulizers, stratum three included hospital beds and accessories, and stratum four 

included all other equipment such as continuous positive airway pressure (CPAP) devices, 

patient lifts, and commodes. After eliminating services for suppliers under review by our Office 

of Investigations, our sample consisted of 260 maintenance services. These services represent 

26 different equipment codes. A description of our sample is presented in Table 1 below. A list 

describing the 26 equipment codes in our sample is provided in Appendix B. 

Table 1. Sample of Maintenance Services from June 2000 

Strata Equipment Type Sampling 

Frame Sample 

1 Wheelchairs and Accessories 348 65 

2 Nebulizers 241 65 

3 Hospital Beds and Accessories 227 65 

4 All Other Equipment 148 65 

TOTAL 964 260 

Data Collection and Analysis. We mailed surveys to the suppliers who billed for the June 

2000 maintenance services in our sample. We collected this data from suppliers from April to 

July 2001. The survey asked suppliers whether or not they provided any maintenance, 

servicing, or repairs on the equipment between June and December 2000. We asked suppliers 

to indicate the dates they performed the service, to describe the type of maintenance performed, 

and to include documentation of the service. If suppliers indicated that on a visit they checked, 

cleaned, repaired, tested, replaced a part, or exchanged the equipment, we counted this as 

maintenance and servicing. If the supplier indicated that they called the beneficiary to see if 

service was needed or if they mailed supplies to beneficiaries, we did not count this as 

maintenance and servicing. 

We sent a second request to providers who did not respond to our initial survey request. In a 

third and final request, we informed suppliers that for the purposes of our study, we would 

conclude that no maintenance or servicing was performed from June to December 2000 if we 

did not receive a response. We received responses for 250 of the 260 services in our sample. 

We did not receive responses for 10 of our sample services. For eight of these services, it 

appeared that suppliers received all three of our requests; therefore, we concluded that there 

was no documentation to support these maintenance services. We were not able to locate 

suppliers for two of these services; therefore, we excluded these services from our analysis. Our 

sample for analysis consisted of 258 services. Estimates and confidence intervals for all statistics 

regarding our sample data are projected to the universe of maintenance services for June 2000. 

The estimates and confidence intervals are provided in Appendix D. 

Maintenance Payments for Capped Rental Equipment 4 OEI-03-00-00410 
____________

This inspection was conducted in accordance with the Quality Standards for Inspections 

issued by the President’s Council on Integrity and Efficiency. 

Maintenance Payments for Capped Rental Equipment 5 OEI-03-00-00410 
FINDINGS 

Our detailed 5-year analysis which involved tracking more than 3,500 pieces of capped rental 

equipment for beneficiaries who decided to rent or purchase the equipment in 1996 

demonstrated that Medicare paid substantially more for maintenance on rented equipment than 

repairs on purchased equipment. Furthermore, our additional analysis of supplier documentation 

for more than 250 maintenance services from June 2000 found only 9 percent of the capped 

rental equipment actually received any maintenance and servicing. The combination of these two 

findings provides strong evidence that Medicare’s current policy of paying for maintenance and 

servicing of capped rental equipment is not cost-effective. 

Medicare paid substantially more for maintenance than repairs 

over a 5-year period for the 31 equipment codes in our review 

We tracked, over a 5-year period (1996 to 2000), the maintenance and repair payments for 

3,553 pieces of equipment representing 31 capped rental equipment codes that beneficiaries 

decided to rent or purchase in 1996. We found that, on average, Medicare paid substantially 

more for maintenance on rented equipment than repairs on purchased equipment over the 5 

years. Between 1996 and 2000, there was only one equipment code where the average repair 

payment was more than the average maintenance payment. For half of the 31 codes, there were 

no associated repairs over the 5-year period. There were 21 equipment codes where Medicare 

would have saved over 90 percent of maintenance payments had the program paid for repairs 

rather than maintenance on the equipment. The seven equipment codes with the highest dollar 

savings in our review are presented in Table 2 on the next page. Appendix A contains a 

comparison of the repair and maintenance payments for all 31 equipment codes. 

We found that, overall, Medicare would have saved 96 percent of the maintenance payments 

made for the services in our review had Medicare paid for actual equipment repair rather than 

routine maintenance. If we apply this 96 percent to the estimated $49 million paid for 

maintenance over the 5 years, Medicare would have saved $47 million on this equipment. This 

savings is based only on the maintenance payments for beneficiaries who decided to rent rather 

than purchase the 31 types of equipment in 1996. If this 96 percent is applied to the total 

maintenance payments for the 31 equipment codes in 2000, Medicare would have saved $98 

million of the $102 million paid for maintenance that year. 

Maintenance Payments for Capped Rental Equipment 6 OEI-03-00-00410 
Table 2. Average Repair and Maintenance Payments for Selected Equipment (1996 to 2000) 

Equipment 

Code 

Description 

of Equipment 

Average 

Repair 

Payment for 

all Purchased 

Items over 

5-Year Period 

Average 

Maintenance 

Payment for 

all Rented 

Items over 5-

Year Period 

Dollar 

Savings if 

Medicare 

Paid for 

Repairs 

Instead of 

Maintenance 

E0260 Hospital bed, semi-electric $10.36 $413.09 $163,105.65 

K0001 Standard wheelchair $5.07 $111.41 $52,850.98 

E0277 Powered pressure reducing air mattress $39.42 $712.91 $44,450.34 

K0003 Lightweight wheelchair $12.96 $221.59 $29,834.09 

K0004 High strength, lightweight wheelchair $0.51 $330.57 $29,045.28 

E0255 Hospital bed, variable height $0.00 $330.08 $28,056.80 

E0570 Nebulizer, with compressor $0.68 $61.76 $27,302.76 

Source: OIG review of CMS’ National Claims History File Data, 1996-2000 

Only 9 percent of capped rental equipment actually received 

any maintenance and servicing from June to December 2000 

In addition to a 5-year review comparing maintenance payments to repair payments, we also 

reviewed a sample of equipment to determine if any maintenance and servicing was actually 

provided. Out of 964 maintenance services with a June 2000 service date, we requested 

documentation for a sample of 260 services. Overall, just 9 percent of the capped rental 

equipment with a service date in June 2000 actually received any servicing between June and 

December 2000. Current Medicare regulations allow suppliers to be paid for maintenance and 

servicing even if they do not perform any service. We estimate that of the $7.3 million Medicare 

paid for maintenance services from June 2000, $6.5 million was paid for equipment that received 

no actual servicing. 

Of the 26 equipment codes in our sample, less than one-third received any servicing from June 

to December 2000. In terms of equipment type, 16 percent of nebulizers, 9 percent of hospital 

beds, 2 percent of wheelchairs, and 17 percent of other equipment such as CPAP devices and 

suction pumps received maintenance during this time frame. 

For the 91 percent of equipment that did not receive any maintenance, some suppliers indicated 

why they had not performed any servicing. Twenty-eight suppliers indicated that although they 

did not perform maintenance from June to December 2000, they had performed maintenance on 

the equipment sometime during the last 3 years. However, most made only one visit during this 

time. Fifteen suppliers indicated that no maintenance was performed because they wait for the 

beneficiary to call them for service. Ten suppliers indicated they did not service the equipment 

because they phoned the beneficiary and were told that the equipment was working properly. 

Maintenance Payments for Capped Rental Equipment 7 OEI-03-00-00410 
Seven suppliers indicated that they provided filters for the equipment but that the beneficiaries 

were able to replace the filters themselves; therefore, a maintenance visit was not necessary. 

Of the 9 percent of equipment that received maintenance and servicing from June to December 

2000, most (24 of 28 items) received just one maintenance visit. Only four pieces of equipment 

received more than one maintenance visit in the 6-month time period. For a majority of 

equipment, the one maintenance visit included having a part replaced. Of the equipment that had 

a part replaced, five were hospital beds that had parts such as a crank, head board, and hand 

control cable replaced. Three nebulizers had accessory parts such as filters replaced, and three 

CPAP devices had accessory parts such as filters and tubing replaced. Even though suppliers 

are allowed to bill Medicare separately for nebulizer and CPAP filters and other accessories, we 

considered it maintenance and servicing if the supplier, not the beneficiary, replaced these parts. 

Some suppliers performed other types of maintenance and servicing including checking, cleaning, 

testing, repairing, or exchanging the equipment. While suppliers performed multiple types of 

service on some equipment, three-quarters of the equipment received only one type of 

maintenance on a single visit. See Appendix C for the type of maintenance and servicing 

performed on all of the equipment reviewed. 

Maintenance Payments for Capped Rental Equipment 8 OEI-03-00-00410 
CONCLUSION 

The findings of this report illustrate that Medicare’s current policy of paying for maintenance and 

servicing of capped rental equipment is not cost-effective. We found that Medicare pays 

substantially more in maintenance payments for rented items than it does for actual repairs on 

purchased equipment. In addition, we found that Medicare beneficiaries are receiving little or no 

routine maintenance on their rented equipment. 

RECOMMENDATION 

We recommend that the Centers for Medicare & Medicaid Services eliminate the 

semi-annual maintenance payment currently allowed for capped rental equipment and 

pay only for repairs when needed. We believe this change would result in nearly $100 million 

dollars being saved each year by Medicare and its beneficiaries. As a broader issue relating to 

capped rental equipment, CMS may also want to consider if eliminating the 15-month rental 

option would be a viable solution. By requiring any continuous rentals to be converted to a 

purchase after the 13th month of rental, the need for the semi-annual maintenance payment 

would automatically be eliminated. 

Agency Comments 

The CMS agreed with our recommendation and stated that they will consider a legislative 

initiative to eliminate the 15-month rental option. This initiative would result in significant savings 

to the Medicare program by eliminating the semi-annual maintenance and servicing fee and by 

eliminating monthly rental payments for months 14 and 15. Appendix E contains the full text of 

CMS’ comments. 

Maintenance Payments for Capped Rental Equipment 9 OEI-03-00-00410 
APPENDIX A 

Comparison of Repair and Maintenance Payments 

for 31 Equipment Codes (1996 to 2000) 

Equipment 

Code 1 

Equipment 

Description 

Average 

Repair 

Payment for 

all Purchased 

Items over 

5-Year Period 

Average 

Maintenance 

Payment for 

all Rented 

Items over 

5-Year Period 

Difference 

between 

Average 

Maintenance 

and Average 

Repair 

Payment 

Dollar 

Savings if 

Medicare 

Paid for 

Repairs 

Instead of 

Maintenance 

Percent 

Savings if 

Medicare 

Paid for 

Repairs 

Instead of 

Maintenance 

E0146 Folding walker $0.00 $0.00 $0.00 $0.00 0% 

E0165 Commode chair $6.58 $21.78 $15.20 $334.40 70% 

E0180 Pressure pad, alternating 

w/pump $25.28 $37.70 $12.42 $422.28 33% 

E0181 Pressure pad, alternating 

w/pump, heavy duty $0.00 $37.00 $37.00 $1,073.00 100% 

E0235 Paraffin bath unit, portable $0.00 $0.00 $0.00 $0.00 0% 

E0250 Hospital bed, fixed height $0.00 $118.04 $118.04 $1,180.40 100% 

E0255 Hospital bed, variable $0.00 $330.08 $330.08 $28,056.80 100% 

E0260 Hospital bed, semi-electric $10.36 $413.09 $402.73 $163,105.65 97% 

E0265 Hospital bed, total electric $0.00 $465.41 $465.41 $2,792.46 100% 

E0277 Powered pressure reducing 

air mattress $39.42 $712.91 $673.49 $44,450.34 94% 

E0452 

Intermittent assist device 

with CPAP $0.00 $1,287.16 $1,287.16 $16,733.08 100% 

E0480 Percussor $0.00 $0.00 $0.00 $0.00 0% 

E0570 Nebulizer, with compressor $0.68 $61.76 $61.08 $27,302.76 99% 

E0600 Suction pump $0.00 $60.88 $60.88 $1,826.40 100% 

E0601 Continuous positive airway 

pressure (CPAP) device $0.00 $417.10 $417.10 $24,608.90 100% 

E0630 Patient lift, hydraulic $18.82 $235.67 $216.85 $10,842.50 92% 

E0745 

Neuro-muscular stimulator 

for shock $0.00 $106.41 $106.41 $532.05 100% 

Maintenance Payments for Capped Rental Equipment 10 OEI-03-00-00410 
APPENDIX 

Equipment 

Code 1 

Equipment 

Description 

Average 

Repair 

Payment for 

all Purchased 

Items over 

5-Year Period 

Average 

Maintenance 

Payment for 

all Rented 

Items over 

5-Year Period 

Difference 

between 

Average 

Maintenance 

and Average 

Repair 

Payment 

Dollar 

Savings if 

Medicare 

Paid for 

Repairs 

Instead of 

Maintenance 

Percent 

Savings if 

Medicare 

Paid for 

Repairs 

Instead of 

Maintenance 

E0910 Trapeze bar, attached to $0.00 $44.56 $44.56 $2,450.80 100% 

E0940 Trapeze bar, free standing $0.00 $37.40 $37.40 $598.40 100% 

E1031 Rollabout chair $0.00 $50.25 $50.25 $552.75 100% 

K0001 Standard wheelchair $5.07 $111.41 $106.34 $52,850.98 95% 

K0002 

Standard hemi 

(low seat) wheelchair $31.72 $140.52 $108.80 $1,958.40 77% 

K0003 Lightweight wheelchair $12.96 $221.59 $208.63 $29,834.09 94% 

K0004 High strength, lightweight 

wheelchair $0.51 $330.57 $330.06 $29,045.28 100% 

K0006 Heavy-duty wheelchair $13.29 $333.49 $320.20 $7,044.40 96% 

K0007 Extra heavy-duty $0.00 $457.44 $457.44 $2,744.64 100% 

K0010 Standard weight frame 

power wheelchair $253.10 $687.56 $434.46 $2,606.76 63% 

K0011 Standard weight powered 

wheelchair w/control $279.22 $836.84 $557.62 $7,249.06 67% 

K0012 Lightweight portable power 

wheelchair $199.15 $0.00 ($199.15) ($199.15) ) 

K0193 CPAP device, with 

humidifier $0.00 $0.00 $0.00 $0.00 0% 

K0195 Elevating wheelchair 

leg rests $0.27 $39.03 $38.76 $6,356.64 99% 

TOTAL $466,354.07 96% 

PROJECTED 

TOTAL $46,635,407 

A 

Source: OIG review of CMS’ National Claims History File Data, 1996-2000 

1 In October 1999, equipment code E0452 was replaced by code K0532 and equipment code K0193 was 

replaced by code E0601. We included the maintenance and repair payments for both the original and 

replacement codes in our review. 

Maintenance Payments for Capped Rental Equipment 11 OEI-03-00-00410 
APPENDIX B 

Description of 26 Equipment Codes in Maintenance Review 

STRATA 1 - WHEELCHAIRS AND ACCESSORIES 

Codes Description 

E1090 High-strength lightweight wheelchair; detachable arms, desk or full-length, swing-away, 

detachable footrests 

E1150 Wheelchair; detachable arms, desk or full-length, swing-away, detachable, elevating legrests 

K0001 Standard wheelchair 

K0002 Standard hemi (low seat) wheelchair 

K0003 Lightweight wheelchair 

K0004 High strength, lightweight wheelchair 

K0006 Heavy-duty wheelchair 

K0007 Extra heavy-duty wheelchair 

K0012 Lightweight portable motorized/power wheelchair 

K0101 One-arm drive attachment, each 

K0195 Elevating legrest, pair (for use with capped rental wheelchair base) 

STRATA 2 - NEBULIZERS 

Codes Description 

E0570 Nebulizer, with compressor 

STRATA 3 - HOSPITAL BEDS AND ACCESSORIES 

Codes Description 

E0250 Hospital bed, fixed height, with any type side rails, with mattress 

E0255 Hospital bed, variable height, hi-lo, with any type side rails, with mattress 

E0260 Hospital bed, semi-electric (head and foot adjustment), with any type side rails, with mattress 

E0265 Hospital bed, total electric (head, foot, and height adjustments), with any type side rails, with 

mattress 

E0910 Trapeze bar, also know as Patient Helper, attached to bed, with grab bar 

Maintenance Payments for Capped Rental Equipment 12 OEI-03-00-00410 
APPENDIX B 

STRATA 4 - ALL OTHER EQUIPMENT 

Codes Description 

E0146 Folding walker, wheeled, with seat 

E0165 Commode chair, stationary, with detachable arms 

E0180 Pressure pad, alternating with pump 

E0181 Pressure pad, alternating with pump, heavy duty 

E0277 Powered pressure reducing air mattress 

E0600 Suction pump, home model, portable 

E0601 Continuous positive airway pressure (CPAP) device 

E0630 Patient lift, hydraulic, with seat or sling 

K0532 Respiratory assist device, bi-level pressure capability, without backup rate feature, used with 

noninvasive interface, e.g., nasal or facial mask 

Source: 2000 HCPCS published by Medicode Inc. 

Maintenance Payments for Capped Rental Equipment 13 OEI-03-00-00410 
APPENDIX C 

Maintenance and Servicing Performed 

On 26 Equipment Codes Reviewed

The table below shows the equipment that received maintenance and servicing from June through 

December 2000, as well as the different types of maintenance and servicing performed for each 

equipment code. A check indicates that at least one piece of equipment for that code received a 

particular type of maintenance during the period of our review. 

HCPCS 

Code 

Equipment 

Description 

Number 

in our 

Sample 

Number that 

Received 

Maintenance 

June-Dec 2000 

Number that 

Received One 

Visit JuneDec 2000 

Number that 

Received More 

than One Visit 

June-Dec 2000 

Type of Maintenance and Servicing 

Checked Cleaned 

Tested 

Repaired 

Part replaced 

Exchanged 

Wheelchairs and Accessories 

E1090 

High strength, 

lightweight 

wheelchair 

detachable arms 

1 0 0 0 - - - - - -

E1150 Wheelchair, standard, 

with leg rests 1 0 0 0 - - - - - -

K0001 Standard wheelchair 25 0 0 0 - - - - - -

K0002 Standard hemi (low 

seat) wheelchair 2 0 0 0 - - - - - -

K0003 Lightweight 

wheelchair 8 0 0 0 - - - - - -

K0004 

High strength 

lightweight 

wheelchair 

7 0 0 0 - - - - - -

K0006 Heavy-duty 

wheelchair 4 0 0 0 - - - - - -

K0007 Extra heavy-duty 

wheelchair 1 0 0 0 - - - - - -

K0012 Lightweight portable 

power wheelchair 1 0 0 0 - - - - - -

K0101 One-arm drive 

attachment 1 0 0 0 - - - - - -

K0195 Elevating wheelchair 

leg rests 14 1 1 0 - - - - U -

Maintenance Payments for Capped Rental Equipment 14 OEI-03-00-00410 
APPENDIX C 

HCPCS 

Code 

Equipment 

Description 

Number 

in our 

Sample 

Number that 

Received 

Maintenance 

June-Dec 2000 

Number that 

Received One 

Visit JuneDec 2000 

Number that 

Received More 

than One Visit 

June-Dec 2000 

Type of Maintenance and Servicing 

Checked 

Cleaned 

Tested 

Repaired 

Part replaced 

Exchanged 

Nebulizers 

E0570 Nebulizer, with 

compressor 64 10 7 3 U U U U U U

Hospital Beds and Accessories 

E0250 Hospital bed, fixed 

height 4 0 0 0 - - - - - -

E0255 Hospital bed, variable 

height 7 0 0 0 - - - - - -

E0260 Hospital bed, semielectric 46 6 5 1 - - - U U U

E0265 Hospital bed, total 

electric 2 0 0 0 - - - - - -

E0910 Trapeze bar 6 0 0 0 - - - - - -

Other Equipment 

E0146 Folding walker 1 0 0 0 - - - - - -

E0165 Commode chair 6 0 0 0 - - - - - -

E0180 Pressure pad, 

alternating with pump 5 1 1 0 - - - - U -

E0181 

Pressure pad, 

alternating with pump, 

heavy duty 

1 0 0 0 - - - - - -

E0277 Powered pressured 

reducing air mattress 2 1 1 0 - - - - U -

E0600 Suction pump 7 1 1 0 - - - - - U

E0601 

Continuous positive 

airway pressure 

(CPAP) device 

27 7 7 0 U - - - U -

E0630 Patient lift, hydraulic 11 0 0 0 - - - - - -

K0532 Respiratory assist 

device 4 1 1 0 U - U - - -

Totals 258 28 24 4 

Source: OIG Survey Data, 2001 

Maintenance Payments for Capped Rental Equipment 15 OEI-03-00-00410 
APPENDIX D 

Estimates and Confidence Intervals

The table below contains statistical estimates presented in Findings section of this report. Point 

estimates and corresponding 95 percent confidence intervals were weighted based on the 

sample design as described in the Methodology section. 

Statistic Point Estimate 95 Percent Confidence 

Interval 

Percent of Equipment that Received Maintenance 

and Servicing from June through December 2000 9.17% 5.88% - 12.46% 

Percent of Nebulizers that Received Maintenance 

and Servicing from June through December 2000 15.63% 6.67% - 24.58% 

Percent of Hospital Beds that Received 

Maintenance and Servicing from June through 

December 2000 

9.23% 2.15% - 16.31% 

Percent of Wheelchairs that Received 

Maintenance and Servicing from June through 

December 2000 

1.54% 0.00% - 4.56% 

Percent of Other Equipment that Received 

Maintenance and Servicing from June through 

December 2000 

17.19% 7.89% - 26.48% 

Total June 2000 Medicare Payments for 

Maintenance and Servicing where No 

Maintenance was Performed 

$6,508,828 $5,888,202 - $7,129,453 

Total June 2000 Medicare Payments for 

Maintenance and Servicing $7,306,998 $6,672,518 - $7,941,479 

Total 1996-2000 Medicare Payments for 

Maintenance and Servicing of Equipment that 

Beneficiaries Decided to Rent in 1996 

$48,607,283 $47,227,524 - $49,987,042 

Total 1996-2000 Medicare Payments for Repairs 

of Equipment that Beneficiaries Decided to 

Purchase in 1996 

$5,192,415 $4,532,632 - $5,852,198 

Maintenance Payments for Capped Rental Equipment 16 OEI-03-00-00410 
APPENDIX E 

Comments from the

Centers for Medicare & Medicaid Services

Maintenance Payments for Capped Rental Equipment 17 OEI-03-00-00410 
ACKNOWLEDGMENTS 

This report was prepared under the direction of Robert A. Vito, Regional Inspector General for 

Evaluation and Inspections in Philadelphia, PA and Linda M. Ragone, Deputy Regional Inspector 

General. Other principal Office of Evaluation and Inspections staff who contributed include: 

Tara J. Bernabe, Project Leader Stephanie Lattin, Program Specialist 

Cynthia R. Hansford, Program Assistant Brian Ritchie, Technical Support Staff 

Cortney Hayflinger, Program Analyst 

Maintenance Payments for Capped Rental Equipment 18 OEI-03-00-00410