Durable medical equipment billing, or DME billing, is a complicated yet necessary part of medical billing. DME claim complexity is typically much higher compared to other areas of medical billing.
Under the National Library of Medicine’s Medical Subject Headings (MeSH) classification, the University of Chicago defines DME as:
“Devices which are very resistant to wear and may be used over a long period of time.”
But what items does this include? Typically, this may include:
- Hospital beds
- Artificial limbs (categorized within DMEPOS)
- Wheelchairs
- Ventilators
- Oxygen equipment
What Makes Durable Medical Equipment Billing Special?
Most billers may assume that medical billing is limited to the services or medication provided to the patients. However, equipment cost is a vital contributor to the final billed amount.
DME is intended for ongoing patient use and follows billing and documentation requirements that differ from many professional services. Unlike a typical one-time professional service, DME may involve:
- Recurring claims
- Replacement rules
- Purchase or rental billing
- Ongoing documentation requirements
- Delivery
- Continued use
- Replacement eligibility
- Prior authorization
- Coverage limits
Because DME has distinct coverage, coding, documentation, and reimbursement requirements, billing teams must follow the applicable DME/DMEPOS billing guides. Similarly, they must also follow the payer-specific guidelines (more on this ahead).
Also, since DME coverage and reimbursement requirements can change, billing teams should verify the current payer and regulatory requirements before claim submission.
While professional services are commonly reported with CPT codes, DME billing relies heavily on HCPCS Level II codes to identify:
- Supplies
- Equipment
- Related items
This structure involves various documentation requirements establishing the medical necessity behind a specific item for a specific patient.
As DME claims have such complex requirements, billers are likely to encounter more errors than a typical office-visit claim.
DME Billing Guidelines & Regulatory Requirements
DME billing may be governed by Medicare, Medicaid, and commercial payer rules that differ in several respects from standard professional billing. The following Medicare DME billing and coding guidelines may apply:
Meeting the Definition of Durable Medical Equipment
Before an item can be billed as DME, it must meet the applicable definition and payer-established coverage criteria.
Under Medicare, this includes requirements related to:
- Medical purpose
- Suitability for home use
- Expected useful life
These criteria help determine whether an item qualifies as DME for coverage and reimbursement purposes. Under Medicare’s DME framework, covered equipment generally must:
- Be appropriate for use in the home
- Be primarily and customarily used to serve a medical purpose
- Have an expected useful life of at least 3 years
More importantly, the claim may be denied if an item does not qualify under the applicable DME definition or coverage criteria. Note that the claim may be denied even if the rest of the details are accurate.
Thus, billing teams should verify both coverage eligibility and medical necessity before DME billing.
Equipment-Specific Coding
DME items are generally reported using HCPCS Level II codes specific to the equipment, supply, or service. This applies to mobility devices, respiratory equipment, and other applicable DME.
HCPCS Level II codes, descriptors, coverage policies, and payer requirements can change, so DME billing teams should maintain current coding references rather than rely on static code sheets.
Certificate of Medical Necessity Documentation
Centers for Medicare & Medicaid Services (CMS) discontinued the general use of the CMS Certificate of Medical Necessity (CMN) in 2022. However, certain DME items may still require specific documentation or forms under applicable payer policies. When a CMN is required, it contains information supporting:
- The reason why the equipment is needed
- Relevant order details
- Specific certification
- Which specific patient requires the equipment
- Signature dates
Important DME Billing Note: Documentation requirements vary for each payer, item, and coverage category. Thus, DME billing staff should verify current requirements before submitting the claim.
Modifiers and Rental-Versus-Purchase Distinctions
DME claims may require modifiers that communicate billing circumstances such as:
- Rental versus purchase
- Replacement
- Other applicable billing circumstances
These distinctions can affect claim processing and reimbursement, making accurate modifier selection an important part of DME billing and coding. Billers must verify the modifier before submitting the claim to a payer.
Common Challenges in Durable Medical Equipment Billing
Although CMS establishes clear requirements for durable medical equipment billing and coding, billers may still encounter challenges.
DME billing challenges typically arise because of DME’s nature. Here’s a breakdown of challenges commonly faced:
Policy and Code Changes
As mentioned earlier, HCPCS Level II codes, descriptors, and related coverage requirements are updated periodically. So, a billing reference from last year may be outdated and inapplicable.
Billers who rely on static information must rework and resubmit their claims, which delays reimbursement and wastes valuable resources.
Rental Versus Purchase Determinations
Billing a wrong DME item as a rental or a purchase delays the claim or results in recoupment. The determination depends on the item’s:
- Coverage rules
- Medicare/payer payment methodology
- Rental/purchase provisions
Therefore, billers must verify this to preserve reimbursement timing and total revenue.
Multi-payer Variation
The DME billing coverage criteria, authorization thresholds, and documentation expectations vary across Medicare, Medicaid, and commercial payers. Billing under an incorrect payer with a one-size-fits-all billing workflow is fairly challenging to sustain and must be avoided.
Missing or Incomplete Medical Necessity Documentation
Supporting documentation for DME claims typically requires specific signatures and multiple dates. Additionally, billers must mention (when applicable):
- An order date
- Any revision date
- Separate signatures from the ordering practitioner and supplier
Even a minor error such as an incorrect recertification date on an applicable claim can delay reimbursement.
Best Practices to Streamline DME Billing and Coding
Streamlining DME billing and coding requires front-end coverage verification, documentation controls, accurate HCPCS coding, and payer-specific claim review. The following best practices can help DME suppliers reduce preventable denials and improve reimbursement accuracy:
Verify DME Status Before Ordering
Before ordering, billing teams should verify that the item meets the applicable payer’s DME definition and coverage criteria (covered above).
If an item does not meet the payer’s coverage criteria, reimbursement may be denied. Thus, upfront verification prevents supplying equipment that is not covered.
Provide Complete Documentation
A defensible DME claim greatly depends on accurate documentation. Each document must support the claim. Documentation should meet the payer’s current requirements for the specific equipment category, including all required:
- Dates
- Signatures
- Orders
- Supporting records
Use Current Coding System
Billers should monitor HCPCS Level II code updates because outdated or invalid codes can result in claim rejections, denials, or payment recoupments.
Review Modifier and Rental-Versus-Purchase
The rental-versus-purchase and new-versus-replacement designations are vital for a DME claim. Thus, billers must conduct a dedicated review before submission.
The review should also confirm that the selected modifiers and billing circumstances comply with the HCPCS code and payer requirements.
This additional review can identify modifier and billing-context discrepancies that are missed by standard claim edits.
Review Payer-Specific Coverage Before Delivery
When prior authorization is required, the payer’s authorization criteria and documentation requirements should be satisfied before the equipment is delivered.
This payer-specific review can reduce preventable denials and the need for costly appeals after delivery.
Monitor Denial Trends and Patterns
Oftentimes, DME claims face delays or denials due to repeated errors that go overlooked because the practice views them as isolated incidents. However, proper claim analysis can reveal potential underlying gaps in DME billing.
Get DME Billing Claims Right the First Time
DME billing involves a combination of:
- Medical necessity documentation
- Modifier accuracy
- Specialized coding
- Strict equipment criteria
Even minute errors can compound into delayed cash flow and denied claims. Suppliers and practices must:
- Verify DME status upfront
- Complete documentation
- Follow current coding changes
If you want to reduce preventable denials, NeuraBill’s DME billing services are available at competitive rates. Their DME billing and coding support can help your practice reduce preventable claim issues and minimize unnecessary appeals.
