CO-108: Rent versus purchase rules not followed

The payer is telling you that its policy rules for renting versus buying an item were not followed on the claim. They believe you billed the wrong arrangement, for example billing a purchase when they only allow rental first, or billing rental longer than allowed before purchase. Mechanically, the edit looks at the HCPCS, modifiers like RR or NU, rental months already paid, and the payer's rent‑to‑own schedule. When the billing pattern does not line up with their guideline, they reduce the line with CO‑108 and the denied amount stays with the provider, not the patient.

In behavioral health and SUD, this most often shows up when a program is supplying equipment that falls under DME or similar benefit rules. Examples include home sleep equipment tied to a sleep or psychiatry program, remote monitoring equipment for high‑risk patients, or devices used in intensive outpatient programs and billed under your NPI. You may see CO‑108 when you try to bill a purchase (NU) for equipment that the payer expects to see as rental first (RR) with a capped number of months, or when you keep billing monthly rental past the payer's maximum allowed rental period. Some payers also apply rent‑purchase rules if you try to bill a replacement purchase too soon after prior rentals paid under the same member ID. Facilities that have added DME‑like services on top of residential or PHP (for example, take‑home monitoring devices for post‑discharge relapse tracking) are at higher risk, especially if the DME billing is new and not aligned with the medical DME policies for that payer or Medicaid MCO.

• Check the EOB and any RARC codes to confirm the payer is applying rent versus purchase rules to that HCPCS line.
• Review the payer's DME or equipment policy for that specific HCPCS and diagnosis to see whether they require rental, purchase, or rent‑to‑own and any month limits.
• Look at prior claims for the same patient and item to see how many rental months were already paid and which modifiers were used (RR vs NU).
• Correct the claim line to match the guideline, for example change from purchase to rental with RR or from rental to purchase with NU and adjust units if the payer now considers it purchased.
• If you believe your original billing is correct based on the policy or medical need, submit an appeal with the policy excerpt and clinical notes explaining why purchase or extended rental is warranted.
• Resubmit as a corrected claim when you change codes or modifiers, and use the payer's appeal process only when you are disputing the application of the guideline.

• Build payer‑specific rent versus purchase crosswalks for any DME or equipment you bill out of behavioral health programs, including required modifiers and rental month caps.
• At intake or discharge planning, verify whether the payer covers the specific item, and whether they require rental before purchase or have rent‑to‑own rules.
• Configure your billing system or clearinghouse edits to flag claims that bill a purchase when prior rentals exist, or that exceed the payer's allowed rental months.
• Train clinical and billing staff who manage any equipment programs (sleep, monitoring, neuro devices) on which items must be rented first and how modifiers affect payment.