Modifier KH
Initial Claim / First Month Rental
Learn how Modifier KH is used for DMEPOS rental billing, how it fits into capped rental claims, how KH differs from KI and KJ, and the important Medicare exception for purchased NU claims.
Modifier KH at a Glance
The essential information for DME billers and AR callers.
Initial Claim
CMS identifies KH with the DMEPOS initial claim and first-month rental concept.
First Rental Month
For applicable capped-rental DME, KH is associated with the first month of rental.
Months 2–3
KI identifies the second or third month of rental for applicable capped-rental billing.
Later Months
KJ is used for applicable capped-rental months four through fifteen and certain PEN pump billing.
⚠ Important CMS Rule — Do Not Miss This
CMS states that KH is no longer required for purchased claims reported with the NU modifier for dates of service on or after October 1, 2018.
Therefore, do not teach KH as a universal “purchase or first month rental” modifier without explaining this exception. For an applicable capped-rental first-month rental claim, KH remains relevant.
What Is Modifier KH?
A simple explanation for beginners and experienced DME billing professionals.
CMS Definition
CMS lists KH as:
DMEPOS item, initial claim, purchase or first month rental
However, CMS later clarified that KH is no longer required on purchased claims reported with the NU modifier effective October 1, 2018.
Plain-English Explanation
For current Medicare billing, the most important practical use to remember is:
KH = Initial / First Month Rental
It tells Medicare that the claim represents the beginning of an applicable DME rental sequence.
KH → KI → KJ Rental Sequence
The easiest way to understand capped-rental modifiers.
KH — Initial Rental
Used for the applicable initial claim / first rental month.
KI — Second / Third Month
Used for the applicable second and third rental months.
KJ — Months 4–15
Used for applicable capped-rental months four through fifteen.
Simple Memory Trick
KH = Start → KI = Continue → KJ = Later
What Is Capped Rental DME?
Understanding the payment category makes KH easier to understand.
Rental Payment System
Medicare generally pays rental amounts for covered capped-rental DME rather than paying the full purchase amount immediately.
Continuous Use
The capped-rental framework generally operates over a continuous-use period.
Ownership
For applicable capped-rental DME, Medicare generally pays rental for up to 13 months of continuous use, after which ownership transfers to the beneficiary.
First Month
The first applicable rental month is associated with the KH modifier.
Months 2–3
Applicable second and third rental months use KI.
Months 4–15
Applicable later capped-rental months use KJ.
CMS Payment Policy
CMS states that capped-rental DME is generally rented for a continuous-use period not exceeding 13 months, at which point the beneficiary takes ownership. The payment methodology varies by DME category.
Capped Rental Timeline
Follow the claim sequence from the first rental month.
Month 1 — KH
Applicable initial claim / first rental month.
Month 2 — KI
Applicable second rental month.
Month 3 — KI
Applicable third rental month.
Months 4–15 — KJ
Applicable later capped-rental months.
Ownership After Applicable Rental Period
For standard capped-rental DME, Medicare generally transfers ownership to the beneficiary after 13 months of continuous use.
KH vs KI vs KJ
Compare the three key rental modifiers.
| Modifier | Meaning | Rental Period | Practical Use |
|---|---|---|---|
| KH | DMEPOS item, initial claim, purchase or first month rental | First rental month | Initial / first applicable rental month |
| KI | DMEPOS item, second or third month rental | Months 2–3 | Continuing rental |
| KJ | DMEPOS item, PEN pump or capped rental months four through fifteen | Months 4–15 | Later capped-rental period |
Don’t Mix Up the Sequence
Do not automatically use KH on every DME purchase claim. CMS specifically removed the KH requirement for purchased claims reported with NU beginning October 1, 2018.
KH vs RR
One of the most common DME modifier questions.
KH
Identifies the applicable initial claim / first month rental within the DMEPOS capped-rental modifier sequence.
“This is the beginning of the applicable rental sequence.”
RR
RR identifies that DME is being furnished as rental. KH provides the more specific position in the applicable capped-rental sequence.
“This DME is being rented.”
KH vs NU
Critical distinction for purchased DME claims.
KH — First Rental Month
For an applicable capped-rental claim, KH is associated with the initial/first rental month.
NU — New Equipment
NU identifies new equipment. CMS removed the KH requirement for purchased claims reported with NU effective October 1, 2018.
AR Tip
If you see a purchased DME claim with NU and someone says “KH is missing,” verify the date of service and current CMS instructions before correcting the claim. CMS’s published instruction specifically removed the KH requirement for purchased NU claims.
Modifier KH Billing Workflow
A practical workflow for DME billing teams.
Documentation Checklist
KH is only one part of a compliant DME claim.
- Beneficiary name and Medicare information.
- Active Medicare Part B eligibility.
- Correct DMEPOS HCPCS code.
- Correct rental/purchase status.
- Correct rental month sequence.
- Applicable KH modifier for the initial rental month.
- Written order when required.
- Medical necessity documentation.
- Face-to-face encounter documentation when required.
- Prior authorization when applicable.
- Proof of delivery.
- Supplier records.
- Documentation supporting continued need when applicable.
Modifier KH Real-World Examples
Practical scenarios for medical billing and AR teams.
A supplier furnishes an applicable capped-rental DME item for the first month of rental.
KH identifies the applicable initial/first rental month.
The same applicable capped-rental item continues into the second rental month.
KI is the applicable modifier for the second rental month.
The equipment remains in the applicable capped-rental sequence for month three.
KI remains applicable to the second and third rental months.
The item reaches the later capped-rental period.
KJ applies to the applicable capped-rental months four through fifteen.
A DME item is purchased and reported with the NU modifier.
CMS states that KH is no longer required for purchased NU claims on or after October 1, 2018.
A purchased DME item is used equipment.
UE identifies used DME. KH is not required simply because the item is a purchase.
Common Modifier KH Errors
Mistakes that can create DME claim problems.
Using KH on Every Claim
KH is not a modifier that should simply be repeated on every DME claim.
Ignoring Rental Month
Verify whether the claim is month one, months two or three, or a later capped-rental month.
KH + NU Confusion
CMS removed the KH requirement for purchased NU claims effective October 1, 2018.
Confusing KH With RR
RR identifies rental generally; KH identifies the applicable initial/first-month position.
Skipping KI
Months two and three have their own modifier sequence.
Using KH on Month 4
Do not restart the modifier sequence without a valid reason and applicable Medicare guidance.
Ignoring Continuous Use
Interruptions can affect the continuous-use period and rental billing sequence.
Assuming KH Guarantees Payment
KH does not establish coverage or medical necessity by itself.
Not Checking CMS Updates
DMEPOS billing requirements can change, so verify current CMS instructions before correcting a claim.
AR Caller Workflow for KH Denials
A practical root-cause process for denied DME claims.
Review ERA/EOB
Identify the exact claim-line denial and adjustment.
Capture CARC/RARC
Document every applicable adjustment and remark code.
Check DOS
Verify the date of service because modifier rules can depend on the applicable CMS instruction.
Identify Rental Month
Determine whether the claim represents month one, months two/three or a later rental month.
Verify HCPCS
Confirm that the item is actually subject to the applicable capped-rental rules.
Verify Modifier
Confirm KH, KI or KJ based on the applicable rental sequence.
Check Documentation
Verify the order, medical necessity and proof of delivery requirements.
Contact Payer
Ask for the exact denial reason and correction requirements.
Correct or Appeal
Select a corrected claim, reconsideration or appeal based on the documented root cause.
AR Call Script for Modifier KH
Professional payer-call language.
“I’m calling regarding a DME claim that was submitted with the KH modifier.”
“Could you please provide the exact reason the claim line was denied?”
“Can you provide the CARC and RARC codes associated with the denial?”
“Can you confirm whether this claim is being processed as an initial or first-month rental claim?”
“Can you confirm whether the HCPCS code is classified under the applicable capped-rental payment category?”
“Can you confirm whether KH is required for this date of service and HCPCS code?”
“Is the denial related to the KH modifier, rental month sequence, coverage, authorization or documentation?”
“If this is a purchased claim with NU, can you confirm whether KH is required under your current processing guidelines?”
“Would you recommend a corrected claim or an appeal?”
“May I have the call reference number and representative ID for our records?”
KH Denial Root-Cause Analysis
Do not assume every denial is a modifier error.
Wrong Rental Month
KH may have been billed when KI or KJ was applicable.
Not Capped Rental
The HCPCS may belong to another DME payment category.
Incorrect HCPCS
The equipment may have been reported under an incorrect code.
Purchased NU Claim
The claim may be a purchase reported with NU, where CMS no longer requires KH.
Authorization Issue
The item may require prior authorization.
Medical Necessity
Documentation may not establish the beneficiary’s need for the DME.
Should KH Be Used?
Use this practical decision process before submitting or correcting a claim.
Continuous Use and Rental Period
Why rental history matters to AR callers.
Why Rental History Matters
A DME rental claim should not be reviewed in isolation. The prior rental history can determine which modifier belongs on the current claim.
“What rental month is this claim actually representing?”
Interruptions Can Matter
CMS has specific rules addressing interruptions in the use of capped-rental DME. Depending on the duration and circumstances of the interruption, the continuous-use period may continue or end.
Verify the applicable CMS guidance and payer processing history.
Modifier KH Quick Cheat Sheet
- KH is associated with the DMEPOS initial claim / first month rental.
- For applicable capped-rental DME, KH represents the first rental month.
- KI is used for applicable second and third rental months.
- KJ is used for applicable capped-rental months four through fifteen.
- CMS removed the KH requirement for purchased claims reported with NU effective October 1, 2018.
- Do not automatically use KH on every DME purchase.
- Verify the HCPCS payment category.
- Verify the rental month.
- Verify continuous-use history.
- Verify coverage and medical necessity.
- Verify prior authorization when applicable.
- Verify order and documentation requirements.
- Review CARC/RARC before changing a modifier on a denied claim.
- KH does not guarantee Medicare reimbursement.
Official CMS Resources
Primary sources for verifying Modifier KH and DMEPOS billing rules.
Billing Disclaimer
Modifier KH should be applied based on the specific HCPCS code, payment category, rental history, date of service and current Medicare or payer instructions. This page is educational and does not replace the applicable CMS manual, DME MAC guidance or payer-specific billing policy.
Modifier KH FAQs
What does Modifier KH mean?
KH means DMEPOS item, initial claim, purchase or first month rental under CMS’s modifier description.
What is Modifier KH mainly used for?
In current practical Medicare DME billing, KH is particularly important for the applicable first month of capped-rental DME.
Is KH used for the first month of rental?
Yes. CMS identifies KH with the first month rental concept for applicable DMEPOS claims.
What modifier is used for months 2 and 3?
CMS identifies KI for the second or third month of rental.
What modifier is used after month 3?
CMS identifies KJ for applicable capped-rental months four through fifteen.
Is KH required on a purchased NU claim?
No. CMS removed the KH requirement for purchased claims reported with NU effective October 1, 2018.
Can KH be used with NU?
Do not automatically add KH to a purchased NU claim. CMS specifically removed the KH requirement for purchased NU claims effective October 1, 2018.
Is KH the same as RR?
No. RR identifies rental generally. KH identifies the applicable initial/first-month position in the DMEPOS rental modifier sequence.
Does KH guarantee Medicare payment?
No. KH does not independently establish coverage, medical necessity, authorization or reimbursement.
What should an AR caller check when KH is denied?
Review the ERA/EOB, CARC/RARC, HCPCS code, rental month, continuous-use history, payment category, coverage, authorization and documentation.
What happens if the supplier bills KH on month 4?
The claim should be reviewed against the applicable rental sequence. For applicable capped-rental billing, month 4 falls into the KJ period rather than the KH first-month period.
How long is capped-rental DME generally rented?
CMS states that capped-rental DME is generally rented for a continuous-use period not exceeding 13 months, after which the beneficiary takes ownership. Specific payment rules and exceptions should always be checked.
What is the easiest way to remember KH?
Remember: KH = Keep Here at the start. More accurately for billing: KH = Initial / First Rental Month.
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