CARC 108: Rent/Purchase Guidelines Were Not Met

What it means

The payer denied or reduced payment for a rented or purchased item (typically durable medical equipment) because it did not meet the payer's specific criteria for whether that item should be billed as a rental or as an outright purchase. This often happens when the billing method (rental vs. purchase) doesn't match the payer's rules for that particular equipment type, rental duration, or item cost threshold.

Common causes

Billing an item as a purchase when the payer requires it to be billed as a rental (or vice versa)
Exceeding the maximum allowed rental period before conversion to purchase was requested or approved
Missing or incorrect rental/purchase modifier (e.g., RR, NU, UE) on the claim
Failure to follow payer-specific capped rental rules for certain DME categories
Item does not meet medical necessity or usage criteria required for the requested billing method
Incorrect claim frequency or duplicate billing during an active rental period

How to fix it

Review the payer's specific rent-vs-purchase policy for the equipment code billed, including any capped rental timelines
Confirm the correct modifier (RR for rental, NU for new purchase, UE for used equipment) was applied to the claim line
Check whether the rental period has reached the point where conversion to purchase is required or allowed, and rebill accordingly
Verify documentation supports the medical necessity and expected duration of use that justifies the billing method chosen
Correct and resubmit the claim with the appropriate billing method, modifier, and supporting documentation
Contact the payer to confirm their specific rent/purchase guideline requirements before resubmitting

Appeal / resubmit

Before appealing, obtain the payer's written rent/purchase policy for the specific HCPCS code to confirm which billing method applies. If appealing, include documentation showing the expected or actual duration of equipment use, physician orders supporting medical necessity, and a corrected claim with the proper modifier if the original billing method was incorrect. Note that supporting documentation may help clarify the issue but does not guarantee a reversal of the denial.

Related codes

Frequently asked

Does this mean the equipment itself wasn't covered?

Not necessarily. The denial is about how the item was billed (rental vs. purchase) rather than whether the equipment type is covered at all.

What's the difference between the RR and NU modifiers?

RR indicates the item is being rented, while NU indicates a new purchase. Using the wrong one for the payer's requirements can trigger this denial.

Can I just switch from rental to purchase billing and resubmit?

Only if the payer's guidelines and the rental timeline support that change. Review the specific policy first, since submitting incorrectly again may result in another denial.

More free billing tools: all denial codes · denial lookup · Medicare fee calculator

This content is informational only and does not constitute billing or legal advice. It does not guarantee any specific outcome, reimbursement, or claim resolution. Always verify current payer-specific policies and consult a qualified billing or compliance professional for guidance on individual claims.