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Durable Medical Equipment (DME)


Durable medical equipment (DME) refers to items that: can withstand repeated use; are primarily and customarily used for medical purposes; are generally not useful in the absence of illness or injury; and are used in the home. For purposes of reimbursement, a beneficiary’s “home” excludes inpatient hospitals and SNFs, or any other “institutional” healthcare facility. Accordingly, beneficiaries in these institutional settings are not entitled to separate benefits under Part B for DMEPOS [durable medical equipment, prosthetics, orthotics, and supplies] items. Examples of DME items can include: wheelchairs, crutches, parenteral/enteral supplies, medical supplies, etc. Prosthetics include devices that replace functioning of all or part of internal body organs – for example, infusion equipment, parenteral and enteral nutrients. Orthotics includes devices that correct deformities/improve mobility—for example, artificial limbs.


Other items covered under the DMEPOS benefit include: inhalation drugs; intraocular lenses; medical supplies—such as catheters, and ostomy care—furnished by a home health agency as part of a home health service furnished under 42 C.F.R. § 409.40(e); and dental prostheses. 42 C.F.R. § 414.202.


DMEPOS is generally furnished only with physician’s prescription and Certification of Medical Necessity (CMN). To enroll as DMEPOS supplier in the Medicare program, an entity must satisfy the “21 supplier standards.” 42 C.F.R. § 424.57. In Medicare Modernization Act (MMA), § 302, Congress further directed that the Secretary establish quality standards for DME suppliers with independent accreditation organizations.

Future Direction

In August 2006 CMS posted new quality standards for suppliers of DMEPOS. These new standards were required under MMA § 302(a)(1). DMEPOS suppliers must comply with the new quality standards in order to furnish items or services, and to receive or retain a billing number. 71 Fed. Reg. 48391-48397 (August 18, 2006).

Excerpt from Excerpt from Barry D. Alexander, Medicare Part B, Fundamentals of Health Law (American Health Lawyers Association Nov. 2011).

Section 302 of the MMA also established requirements for a new Competitive Bidding Program for certain DMEPOS to replace the current national fee schedules Medicare uses. Under the program, DMEPOS suppliers compete to become Medicare contract suppliers by submitting bids to furnish certain items in competitive bidding areas, and the Centers for Medicare & Medicaid Services (CMS) awards contracts to enough suppliers to meet beneficiary demand for the bid items. All contract suppliers must comply with Medicare enrollment rules, be licensed and accredited, and meet financial standards. From CMS website,

Under the MMA, the DMEPOS Competitive Bidding Program was to be phased in so that competition under the program would first occur in 10 areas in 2007. As required by law, CMS conducted the Round One competition in 10 areas and for 10 DMEPOS product categories, and successfully implemented the program on July 1, 2008, for two weeks before the contracts were terminated by subsequent law. Id.

The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) temporarily delayed the program in 2008, terminated the Round One contracts that were in effect, and made other limited changes. As required by MIPPA, CMS conducted the supplier competition again in 2009, referring to it as the Round One Rebid. On January 1, 2011, CMS launched the first phase of Medicare's competitive bidding program in nine different areas of the country for nine product categories. Id.

MIPPA requires the competition for Round Two to occur in 2011 in 70 additional metropolitan statistical areas (MSAs) and authorizes competition for national mail order items and services after 2010. The Affordable Care Act of 2010 expands the number of Round Two MSAs from 70 to 91 areas and mandates that all areas of the country are subject either to DMEPOS competitive bidding or payment rate adjustments using competitively bid rates by 2016. Id.

Generally, the DME industry has faced significant scrutiny under federal fraud and abuse laws for a number of years, initially under the “Operation Restore Trust” antifraud initiative and more recently by new Medicare Strike Forces as part of the federal Health Care Fraud Prevention and Enforcement Action Team initiative. The Department of Health and Human Services Office of Inspector General issued compliance program guidance for the DME industry in 1999, 64 Fed. Reg. 36368 (July 6, 1999), and continues to make oversight of DME suppliers part of its annual audit activities.