Rented durable medical equipment is billed differently from purchased equipment, and the modifier that goes on each monthly claim tells Medicare which stage of the rental the item is in. Get the sequence wrong and claims deny, or the rental count drifts out of step with what the payer has on file. This guide walks through how capped rental works, what each rental and purchase modifier means, and where billing teams need to double-check.
Last reviewed: October 2026. Sources are listed at the end; confirm details with your DME MAC, because local policy articles change.
How Medicare pays for capped rental equipment
For capped rental items, Medicare rental payments stop after 13 continuous months of use, and the supplier must transfer title to the beneficiary after the 13th continuous month of payments (42 CFR 414.229). That 13-month ceiling is why rental claims carry a month-specific modifier: the payer needs to know whether a claim is the first month, the second or third month, or a later month in the rental.
Key point: the rental clock counts continuous months of use, not calendar months since the order. A short interruption does not restart it, but a long one can (see the break-in-service section below).
The rental and purchase modifiers at a glance
| Modifier | What it means (HCPCS descriptor) | Where it applies |
|---|---|---|
| RR | Rental of DME | Reported when the item is being rented |
| NU | New equipment (purchase) | Reported when new equipment is purchased |
| UE | Used equipment (purchase) | Reported when used equipment is purchased |
| KH | DMEPOS item, initial claim, purchase or first month rental | First rental month, or a purchase initial claim |
| KI | DMEPOS item, second or third month rental | Rental months 2 and 3 |
| KJ | DMEPOS item, parenteral/enteral nutrition (PEN) pump or capped rental, months four to fifteen | Capped rental months 4 through 13; PEN pumps through month 15 |
| MS | Six-month maintenance and servicing fee for reasonable and necessary parts and labor not covered by a manufacturer or supplier warranty | Maintenance and servicing on equipment, subject to the rules below |
The KJ descriptor says months four to fifteen because it covers two different situations: capped rental items run through month 13, while PEN pumps run through month 15. Do not describe KJ as simply months 4 to 13 without that caveat.
A month-by-month capped rental example
For a capped rental item, the monthly pattern looks like this. The HCPCS code for the item stays the same; the month modifier changes.
- Month 1: rental modifier RR with KH (initial claim).
- Months 2 and 3: RR with KI.
- Months 4 through 13: RR with KJ.
- After month 13: rental payments end and the beneficiary owns the item.
Tip: keep a rental-month tracker for every capped rental patient, with the first date of service, each month billed and any gaps. Month counts are the thing that goes wrong first when a patient changes suppliers, goes into a facility or returns equipment temporarily.
The purchase option
For capped rental items, the supplier must offer the beneficiary the option to purchase the item during the 10th continuous rental month. Complex rehabilitative power wheelchairs work differently: the purchase option must be offered when the item is first furnished, and if the beneficiary chooses it, it is paid as a lump sum. Since 2011 that first-month purchase option has applied only to complex rehabilitative power wheelchairs (42 CFR 414.229).
Break in service
An interruption in use of no more than 60 consecutive days, plus the days remaining in the rental month in which the interruption began, is treated as temporary and does not restart the rental count. A longer gap starts a new rental period only when there is a new prescription, new medical necessity documentation and a statement explaining the interruption (42 CFR 414.230). If a patient returns after a long gap, verify the paperwork before billing month 1 again.
After the cap: ownership and maintenance
Once the beneficiary owns the equipment, payment for maintenance and servicing is governed by separate rules in the CMS Claims Processing Manual (Chapter 20) and 42 CFR 414.210 and 414.229, and the MS modifier is tied to that servicing. The exact payment interval and eligibility conditions differ by item type and by when the equipment was first furnished, so check the current text in the manual and your MAC’s policy articles before billing MS rather than relying on a general rule.
Places to double-check before you submit
- The month modifier matches the rental month on file with the payer (KH, then KI, then KJ).
- Purchase modifiers (NU, UE) are not mixed with rental modifiers on the same item.
- The item really is a capped rental item and not a different payment category.
- Any gap in service is under the 60-day temporary-interruption limit, or the new-rental paperwork is complete.
- Documentation of medical necessity supports each month billed.
Related guides
- DME Billing Modifiers: NU, RR, KX, GA/GZ, KH/KI/KJ Guide
- KX Modifier Explained: When to Use It and When Not To
- DME codes that require prior authorization
- Free Modifier and Place of Service reference tool
- Free denial code lookup
- NU, UE and RR Modifiers: Meaning and When to Use Each
- KS vs. KX Modifier: Glucose Monitor Supply Billing
Sources
- Noridian Medicare JD DME, modifiers page (updated April 2026): med.noridianmedicare.com/web/jddme/topics/modifiers
- Noridian KJ modifier page: med.noridianmedicare.com/web/jddme/topics/modifiers/kj
- 42 CFR 414.229 (capped rental): ecfr.gov
- 42 CFR 414.230 (break in service): ecfr.gov
- CMS Claims Processing Manual, Chapter 20: cms.gov
This article is educational and is not legal or coding advice. Always confirm current rules with your DME MAC and the official CMS manuals.