CMS Pub. 100-04, ch. 20, § 30.1.1

For payment purposes, used equipment is considered routinely purchased equipment and

is any equipment that has been purchased or rented by someone before the current

purchase transaction. Used equipment also includes equipment that has been used under

circumstances where there has been no commercial transaction (e.g., equipment used for

trial periods or as a demonstrator).

However, if a beneficiary rented a piece of brand new equipment and subsequently

purchased it, the payment amount for the purchase should be high enough so that the total

combined rental and purchase amounts at least equal the fee schedule for the purchase of

comparable new equipment. The payment amount may be established in this manner

only to the extent it does not exceed the actual charge made for the purchase.

EXAMPLES: The fee schedule amounts for an item of DME are ordinarily as follows:

$500 for purchase when the item is new.

$375 for purchase when the item is used.

$50 per month for renting the item.

Situation 1: A beneficiary rented the item when it was brand new for one month and then

purchased it for $500. The amount allowed for the purchase is $450 (i.e., $500 minus the

$50 allowed for the one month of rental) rather than $375.

Situation 2: A beneficiary rented the item for one month when it was brand new and then

purchased it for $400. The amount allowed for the purchase is $400 rather than the $450

that is allowable in situation 1 since the payment amount may not exceed the actual

charge for an item.