DME payment catagory

 General Payment Rules


DMEPOS are categorized into one of the following payment classes:

• Inexpensive or other routinely purchased DME;

• Items requiring frequent and substantial servicing;

• Certain customized items;

• Other prosthetic and orthotic devices;

• Capped rental items; or

• Oxygen and oxygen equipment.

The CMS determines the category that applies to each HCPSC code and issues instructions when changes are appropriate. See §§130 for billing information for each payment class. DME, including DME furnished under the home health benefit and Part B DME benefit, is paid on the basis of the fee schedule.


Oxygen and oxygen equipment are paid on the basis of a fee schedule.

Any DME or oxygen furnished to inpatients under a Part A covered stay is included in the SNF or hospital PPS rate. When an inpatient in a hospital or SNF is not entitled to Part A inpatient benefits, payment may not be made under Part B for DME or oxygen provided in the hospital or SNF because such facilities do not qualify as a patient's home. The definition of DME in §1861(n) of the Act provides that DME is covered by Part B only when intended for use in the home, which explicitly does not include a SNF or hospital. (See the Medicare Benefit Policy Manual, Chapter 15). This does not preclude separate billing for DME furnished after discharge.

Payment to providers and suppliers other than Home Health Agencies (HHAs) for supplies that are necessary for the effective use of DME is made on the basis of a fee schedule, except that payment for drugs is made under the drug payment methodology rules (See Chapter 17 for drug payment information.)

Payment for prosthetics and orthotics is made on the basis of a fee schedule whether it is billed to the DMERC or the FI.
Payment under Part B for surgical dressings is made on the basis of the fee schedule except:

• Those applied incident to a physician's professional services;

• Those furnished by an HHA; and

• Those applied while a patient is being treated in an outpatient hospital department.