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Important information for non-contract, grandfathered suppliers that submit claims for the payment of purchased accessories and supplies for use with grandfathered equipment under the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program.

Through testing of the Medicare claims processing system, the Centers for Medicare & Medicaid Services (CMS) has identified a possible problem when non-contract, grandfathered suppliers submit claims for the payment of purchased accessories and supplies for use with grandfathered equipment under the DMEPOS Competitive Bidding Program.  CMS has created a temporary solution that will enable affected suppliers to continue to receive Medicare payment for such items.  This temporary solution will require affected suppliers to append affected Healthcare Common Procedure Coding System (HCPCS) codes with the “KY” modifier.

Specifically, in order to secure payment, grandfathered suppliers must use the KY modifier on claims with dates of service on or after January 1, 2011, for purchased, covered accessories or supplies furnished for use with grandfathered equipment.  The HCPCS codes identified below are the codes for which use of the KY modifier is authorized.

Continuous Positive Airway Pressure Devices, Respiratory Assistive Devices, and Related Supplies and Accessories

A4604  A7037 A7030  A7038

A7031  A7039 A7032  A7044

A7033  A7045 A7034  A7046

A7035  E0561 A7036  E0562

Hospital Beds and Related Accessories






Walkers and Related Accessories






Purchase claims submitted for these codes without the KY modifier will be denied.  Also, claims submitted with the KY modifier for HCPCS codes other than those listed above will be denied. 

The correct payment for covered accessories and supplies used in conjunction with a grandfathered item under a competitive bidding program is 80 percent of the single payment amount calculated for the item for the Competitive Bidding Area in which the beneficiary maintains a permanent residence.  However, payments made under this temporary solution will result in payment on a fee schedule basis rather than payment using the single payment amounts. 

Further information related to whether and how claims will be adjusted when such claims are paid using fee schedule amounts, rather than single payment amounts, will be provided in a future communication.  Suppliers may submit appeals of denied claims for purchased accessories and supplies used in conjunction with grandfathered items to the appropriate DME MAC for consideration.

Further information concerning when a permanent solution will be implemented will be communicated as soon as possible. 

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