Durable Medical Equipment (DME) is often furnished on a rental basis rather than an outright purchase. Medicare Part B covers many DME items when they are medically necessary for use in the patient’s home. Depending on the HCPCS code and Medicare payment category, some equipment is always rented, some may be purchased, and others fall under the capped rental payment methodology.

Modifier RR is one of the most frequently used modifiers in DME billing. It identifies that the supplier is billing for the rental of durable medical equipment rather than the sale of new or used equipment.

Correct use of Modifier RR is essential because Medicare reimburses rental equipment differently from purchased equipment. Incorrect modifier selection can result in claim denials, overpayments, or payment recoupments.

Modifier

Modifier Name

Rental (Durable Medical Equipment)

Plain English Explanation

Modifier RR tells the insurance payer:

“The supplier is renting durable medical equipment to the beneficiary rather than selling it.”

The equipment remains the property of the supplier unless ownership transfers under applicable Medicare or payer rules.

Purpose of Modifier RR

Modifier RR is used to:

Identify rental DME.
Distinguish rentals from purchased equipment.
Support Medicare rental payment methodologies.
Ensure proper DMEPOS reimbursement.
Comply with CMS billing requirements.

Understanding Modifier RR

Many DME items fall into one of the following Medicare payment categories:

Payment Category	Billing Method
Rental Only	RR
Capped Rental	RR during rental months
Purchase Only	NU (when applicable)
Inexpensive/Routinely Purchased	NU or RR depending on payer rules and payment category

Modifier RR tells Medicare that the supplier is requesting payment for a rental period rather than an outright purchase.

When to Use Modifier RR

Use Modifier RR when:

The DME is being rented.
Medicare or the payer allows or requires rental.
Billing a monthly rental period.
Billing capped rental months.
Documentation supports continued medical necessity.

Examples include:

Oxygen equipment
Hospital beds
Patient lifts
Wheelchairs (depending on payment category)
CPAP devices during capped rental months
Enteral infusion pumps
Suction pumps

When NOT to Use Modifier RR

Do not use Modifier RR when:

Equipment is purchased (use NU, if applicable).
Used equipment is sold (use UE).
Billing replacement equipment (use RA, when appropriate).
Billing replacement parts (use RB).
The HCPCS code is classified as purchase only.

Medicare Rules

Under Medicare:

Modifier RR identifies rental DME.
It is required when billing rental equipment.
Some equipment is classified as rental only.
Many items are classified as capped rental, generally allowing monthly rental payments for up to 13 continuous months, after which ownership may transfer to the beneficiary if Medicare rules are met.
Continued payment depends on ongoing medical necessity and compliance with Medicare documentation requirements.

Certain equipment categories, such as oxygen equipment, have unique payment methodologies that differ from standard capped rental rules.

Commercial Insurance Rules

Many commercial insurers follow Medicare’s DME billing framework.

However, payer policies may differ regarding:

Rental duration.
Purchase conversion.
Prior authorization.
Frequency limitations.
Medical necessity requirements.
Modifier sequencing.

Always review payer-specific DME policies before claim submission.

Documentation Requirements

Documentation should include:

Physician order.
Medical necessity documentation.
Face-to-face evaluation, when required.
Rental agreement.
Proof of delivery.
HCPCS code.
Modifier RR.
Rental month information, when applicable.
Continued need documentation.
Supplier records.

Real Billing Examples

Example 1 – Hospital Bed Rental

A beneficiary requires a semi-electric hospital bed for recovery following major surgery.

Billing

HCPCS E0260
Modifier RR

Example 2 – Oxygen Equipment Rental

A patient with chronic hypoxemia qualifies for home oxygen therapy.

Billing

Appropriate oxygen equipment HCPCS code
Modifier RR

Example 3 – CPAP Rental

A beneficiary begins PAP therapy for obstructive sleep apnea under Medicare’s capped rental rules.

Billing

HCPCS E0601
Modifier RR

Example 4 – Wheelchair Rental

A patient requires a wheelchair temporarily during fracture recovery.

Billing

Appropriate wheelchair HCPCS code
Modifier RR

Example 5 – Incorrect Use

A supplier bills:

E0135-NU

when the equipment is being rented.

This is incorrect because NU identifies a purchase, while RR identifies a rental.

CMS-1500 Claim Example

Field	Example
HCPCS	E0260
Modifier	RR
Diagnosis Pointer	Appropriate ICD-10-CM diagnosis
Units	1 rental month

Common Denial Reasons

Incorrect modifier.
RR billed on a purchase-only item.
Missing physician order.
Missing proof of delivery.
Missing prior authorization.
Continued medical necessity not documented.
Incorrect rental month billing.
Invalid modifier combination.

How to Correct the Denial

Verify the HCPCS payment category.
Confirm the item is being rented.
Review physician documentation.
Verify proof of delivery.
Confirm continued medical necessity.
Correct the modifier if needed.
Resubmit the claim or appeal with supporting documentation.

Coding Tips

Verify whether the HCPCS code is rental, purchase, or capped rental.
Use RR only for rental claims.
Maintain documentation supporting continued need.
Track rental months carefully for capped rental items.
Review DME MAC guidance regularly for policy updates.

Modifier RR vs Modifier NU

Modifier	Description
RR	Rental DME
NU	New DME Purchase

Modifier RR vs Modifier UE

Modifier	Description
RR	Rental Equipment
UE	Used Equipment Purchase

Modifier RR vs Modifier KH

Modifier	Description
RR	Rental Equipment
KH	Initial claim for the first month of a capped rental

Note: For capped rental items, Medicare often requires RR in combination with KH, KI, or KJ to indicate both the rental status and the applicable rental month.

Modifier RR vs Modifier RA

Modifier	Description
RR	Rental Equipment
RA	Replacement of DME Item

Frequently Asked Questions (FAQs)

Q1. What does Modifier RR mean?

Answer: It indicates that the DME item is being furnished on a rental basis.

Q2. Can Modifier RR be used for purchased equipment?

Answer: No. Purchased equipment is generally reported with Modifier NU when applicable.

Q3. What is capped rental?

Answer: Capped rental is a Medicare payment category in which eligible DME is rented for a limited number of monthly payments before ownership may transfer to the beneficiary under Medicare rules.

Q4. Is Modifier RR required every rental month?

Answer: Yes. RR is typically reported for each billed rental period unless payer-specific instructions state otherwise.

Q5. Can RR and KH be billed together?

Answer: Yes. For capped rental items, Medicare commonly requires RR together with KH (first month), KI (second or third month), or KJ (months four through fifteen), as applicable.

AR Caller Tips

When following up on DME rental denials:

Verify whether the claim is for rental or purchase.
Confirm the HCPCS payment category.
Review prior authorization status.
Verify proof of delivery.
Confirm continued medical necessity.
Check rental month sequencing for capped rental items.
Document the payer representative’s name, reference number, and appeal instructions.

Interview Questions

Question 1

What does Modifier RR represent?

Answer: Rental durable medical equipment.

Question 2

What modifier is used for a new DME purchase?

Answer: Modifier NU.

Question 3

Can RR be billed with KH?

Answer: Yes, for the first month of a Medicare capped rental when required by Medicare billing instructions.

Question 4

Why is Modifier RR important?

Answer: It tells the payer that reimbursement should follow the rental payment methodology rather than the purchase methodology.

Practice Scenario

Scenario

A Medicare beneficiary is prescribed a semi-electric hospital bed that qualifies for monthly rental. The supplier delivers the equipment, maintains ownership, and bills Medicare for the rental month.

Question

Which modifier should be reported?

Answer

Modifier RR should be appended to the appropriate HCPCS code because the equipment is being furnished on a rental basis.

Related DME Modifiers

NU – New Durable Medical Equipment Purchase
UE – Used Durable Medical Equipment Purchase
KH – Initial Claim for First Rental Month
KI – Second or Third Rental Month
KJ – Fourth Through Fifteenth Rental Month
RA – Replacement of DME Item
RB – Replacement of a Part Furnished During Repair
NR – New Equipment Rented and Subsequently Purchased

Common Billing Mistakes

Billing RR for purchased equipment.
Billing NU instead of RR.
Missing continued medical necessity documentation.
Incorrect rental month reporting.
Missing proof of delivery.
Using incorrect modifier combinations.
Billing beyond allowable rental limits.

Key Takeaways

Modifier RR identifies rental durable medical equipment.
It distinguishes rentals from purchased equipment.
Always verify whether the HCPCS code falls under rental, purchase, or capped rental rules.
Maintain complete documentation, including physician orders, proof of delivery, and continued medical necessity.
Correct use of Modifier RR helps ensure Medicare compliance and minimizes DME claim denials.

References

CMS Medicare Claims Processing Manual, Chapter 20 – DMEPOS.
Medicare Benefit Policy Manual – Durable Medical Equipment.
DME Medicare Administrative Contractor (DME MAC) Supplier Manuals.
HCPCS Level II Code Book.
Medicare DMEPOS Supplier Standards and Coverage Guidance.

Conclusion

Modifier RR is one of the most important modifiers in DME billing because it identifies equipment furnished on a rental basis. Correct application requires understanding Medicare payment categories, tracking rental periods accurately, maintaining complete supporting documentation, and following DME MAC guidance. Proper use of Modifier RR helps ensure compliant billing, accurate reimbursement, and fewer claim denials.

Educational Disclaimer

This article was prepared with the assistance of artificial intelligence (AI) for educational and informational purposes. It is based on publicly available CMS guidance, Medicare DMEPOS billing principles, and general medical coding practices. It is not an official publication of CMS or the American Medical Association (AMA). Always consult the latest CMS Medicare Claims Processing Manual, HCPCS Level II Code Book, DME Medicare Administrative Contractor (DME MAC) guidance, Local Coverage Determinations (LCDs), and payer-specific billing policies before coding, billing, or submitting claims.