New Policy for Using Modifier KY Effective Oct. 1

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  • May 13, 2011
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Suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) not under contract with Medicare in the Competitive Bidding Program (CBP) may continue to be paid for certain purchased, covered accessories or supplies furnished to Medicare beneficiaries for use with capped rental equipment, provided the non-contract supplier is also furnishing the capped rental equipment on a grandfathered basis. That much hasn’t changed. The way in which to report the accessories and supplies for Medicare claims payment, however, is changing.
A “grandfathered” supplier is a non-contract supplier who was providing capped rental items for a Medicare beneficiary when the CBP took effect. Grandfathered suppliers may continue to supply and be paid for certain accessories and related supplies for capped rental items, until the rental cap payment is reached.
The purchased, covered accessories or supplies that are subject to this policy, identified by applicable HCPCS Level II codes, are:

  • Continuous Positive Airway Pressure Devices, Respiratory Assistive Devices, and Related Supplies and Accessories – A4604, A7030, A7031, A7032, A7033, A7034, A7035, A7036, A7037, A7038, A7039, A7044, A7045, A7046, E0561, and E0562
  • Hospital Beds and Related Accessories – E0271, E0272, E0280, and E0310
  • Walkers and Related Accessories – E0154, E0156, E0157, and E0158

Previously, non-contract, grandfathered suppliers submitting claims for purchased, covered accessories or supplies were instructed to use modifier KY on claims with dates of service on or after Jan. 1.
After Sept. 30, however, modifier KY should not be used on claims for such HCPCS Level II codes. Medicare will deny claims submitted with modifier KY on or after Oct. 1.
Once the rental payment cap is reached, Medicare will no longer pay a non-contract, grandfathered supplier for furnishing such purchased accessories or supplies.
Source: CMS Transmittal 896, Change Request (CR) 7389, issued May 6

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