Determining Capped Rental vs. First Month Purchase & Purchase Price
Let’s clear up one of the most confusing parts of DME billing: figuring out when a power wheelchair or accessory is a capped rental only and when it qualifies for first-month purchase.
We’ll also look at how to calculate the purchase price from the rental fee schedule amount.
🦼 Power Wheelchairs and Capped Rental Rules
All Power Wheelchairs fall under the Capped Rental fee schedule category.
However, not all are treated the same way — some have a First Month Purchase Option, while others must be rented for the full 13-month period.
⚙️ Complex Rehab Power Wheelchairs
HCPCS codes K0835–K0843 and K0848–K0864
These are considered Complex Rehabilitative Power Wheelchairs (CRPWCs).
Suppliers must give beneficiaries the choice to either rent or purchase at the time of initial setup.
- If the beneficiary chooses to purchase, payment is made in a lump sum.
- If they choose to rent, standard monthly payments apply (15% for months 1–3, then 6% for months 4–13).
- All capped rental accessories used with these CRPWCs also qualify for the first-month purchase option.
Remember:
- Use the BP modifier on capped rental items selected for purchase.
- Do not use KH on purchased capped rental items (KH is only for the first rental month).
- As of Oct 1, 2018, KH is no longer required on purchased (NU or UE) wheelchairs and accessories.
🪑 Standard Power Wheelchairs
HCPCS codes K0813–K0931 and K0898
These must be rented following standard capped rental rules — no first-month purchase option.
Rental payments are calculated as:
- Months 1–3: 15% of the purchase price
- Months 4–13: 6% of the purchase price
Once 13 payments are made, ownership transfers to the beneficiary.
🔋 Inexpensive or Routinely Purchased Accessories
Items like batteries, seat cushions, backs, and detachable/adjustable arms are always Inexpensive/Routinely Purchased — meaning they can always be purchased outright.
💰 Calculating the Purchase Price
When you’re checking the DMEPOS Fee Schedule, the listed rental (RR) amount helps you calculate the total purchase price.
🧮 Power Base Calculations
| Type | Calculation | Notes |
|---|---|---|
| Complex Rehab Power Base (with purchase option) | Purchase Allowable = Rental (RR) ÷ 0.15 | 15% is the first-month rental rate |
| Capped Rental Only Power Base | Total Rental Allowable = (Rental ÷ 0.15) × 1.05 | 5% add-on for capped rental total |
⚙️ Accessory Calculations
| Type | Calculation | Notes |
|---|---|---|
| Complex Rehab Accessory (with purchase option) | Purchase Allowable = Rental (RR) × 10 | 10 months of payment total |
| Capped Rental Only Accessory | Total Rental Allowable = Rental (RR) × 10.5 | 10.5 months of total allowed rental value |
🏷️ Modifiers to Remember
| Modifier | Use |
|---|---|
| BP | Required when a capped rental item is purchased |
| KH | Do not use for purchased items |
| KY | Required on accessories used with Group 2 Complex Bases when the patient lives in a CB (Competitive Bidding) area |
📘 Reference — Medicare Manual, Chapter 5
Complex Rehabilitative Power Wheelchairs (K0835–K0843, K0848–K0864) and their accessories can be rented or purchased.
Suppliers must give beneficiaries the choice at the time of setup. If the beneficiary chooses purchase, payment is made as a lump sum using modifiers NU/UE and BP.For rentals beginning on or after Jan 1, 2011:
- Months 1–3: 15% of the purchase price
- Months 4–13: 6% of the purchase price
The purchase fee schedule amount = rental fee schedule for month 1 ÷ 0.15.
Effective Oct 1, 2018, KH is no longer required for purchased NU/UE items.