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.

How Often DME fee schedule has been updated ?

Update Frequency


The DMEPOS fee schedule is updated annually to apply update factors and quarterly to include new codes and correct errors.

The July 2003 update of the DMEPOS fee schedule is located at http://cms.hhs.gov/manuals/pm_trans/AB03071.pdf

The October 2003 quarterly update is located at: http://cms.hhs.gov/manuals/pm_trans/AB03100.pdf




Contents of Fee Schedule File

The fee schedule file provided by CMS contains HCPCS codes and related prices subject to the DMEPOS fee schedules, including application of any update factors and any changes to the national limited payment amounts. The file does not contain fees for drugs that are necessary for the effective use of DME. It also does not include fees for items for which fee schedule amounts are not established. See Chapter 23 for a description of pricing for these. The CMS releases via program issuance, the gap-filled amounts and the annual update factors for the various DMEPOS payment classes:

• IN = Inexpensive/routinely purchased...DME;

• FS = Frequency Service...DME;

• CR = Capped Rental... DME;

• OX = Oxygen and Oxygen Equipment... OXY;

• OS = Ostomy, Tracheostomy and Urologicals...P/O;

• S/D = Surgical Dressings...S/D;

• P/O = Prosthetics and Orthotics...P/O;

• SU = Supplies...DME; and

• TE = TENS...DME,

The RHHIs need to retrieve data from all of the above categories. Regular FIs need to retrieve data only from categories P/O, S/D and SU. FIs need to retrieve the SU category in order to be able to price supplies on Part B SNF claims.

Phasing in and updating fee schedule amounts for year 2016

The adjustments to the fee schedule amounts will be phased in for claims with dates of service January 1, 2016, through June 30, 2016, so that the fee schedule amount is based on a blend of 50 percent of the current fee schedule amounts (the fee schedule amounts that would have gone into effect on January 1, 2016, if they had not been adjusted based on information from the CBP) and 50 percent of the adjusted fee schedule amount. For claims with dates of service on or after July 1, 2016,
the fee schedule is based on 100 percent of the adjusted fee schedule amount.

In most cases, the adjusted fee schedule amounts will not be subject to the annual DMEPOS covered item update and will only be updated when SPAs from the CBP are updated. Updates to the SPAs may occur at the end of a contract period, as additional items are phased into the CBP, or as new CBPs in new areas are phased in. In cases where SPAs from CBPs no longer in effect are used to adjust fee schedule amounts, the SPAs will be increased by an inflation adjustment factor that corresponds to the year in which the adjustment is made (for example, 2016) and for each subsequent year (for example, 2017, 2018).

The DME MAC and Part B MAC DMEPOS fee schedule file shall be adjusted to include the rural fee and rural fee indicator and these changes will be reflected in the file format and data requirements specified in Chapter 23, Section 60.1 of the Medicare Claims Processing Manual Similarly, the fiscal intermediary (FI) DMEPOS fee schedule file format, outlined in Chapter 23, Section 50.2 of the Medicare Claims Processing Manual will be updated to include the rural fee and rural fee
indicator. Beginning January 1, 2016, the DMEPOS fee schedule file will contain HCPCS codes that are subject to the adjusted payment amount methodology as well as codes that are not subject to the adjustments. The DMEPOS fee schedule file will continue to be updated and available for download on a quarterly basis as necessary.

The parenteral and enteral nutrition (PEN) fee schedule file will accommodate adjusted fees for the enteral HCPCS codes that are state specific. The PEN file layout is outlined in Chapter 23, Section 70.1 of the Medicare Claims Processing Manual.

Fee schedule update from Medicare 2016

Implementation of adjusted DMEPOS fee schedule amounts using information from the national competitive bidding program

The adjusted fee schedule amounts for the applicable Healthcare Common Procedure Coding System (HCPCS) codes will be used to pay claims with dates of service on or after January 1, 2016, and will be included in the DMEPOS fee schedule files beginning January 1, 2016.


Medicare payment for most DMEPOS is based on either fee schedules or single payment amounts (SPAs) established under the CBP in certain specified geographic areas, as mandated by 1847(a) and (b) the Act. Competitive bidding was phased in with the round 1 rebid contracts beginning January 1, 2011, in nine competitive bid areas (CBAs). Contracts for the round 1 rebid expired December 31, 2013. The Centers for Medicare & Medicaid Services (CMS) is required by law to recompete contracts for the DMEPOS CBP at least once every three years. The same nine CBAs were rebid under the round 1 recompete with the contracts and process claims with date of service
beginning January 1, 2014. Competitive bidding was phased in with the round 2 contracts beginning July 1, 2013, in 100 additional CBAs. Beginning with the round
2 recompete scheduled to take effect July 1, 2016, CBAs covering more than one state will be subdivided into CBAs that do not cross state lines, resulting in an increase in the total number of CBAs.


The product categories and HCPCS codes included in each tound of the CBP are available at http://www. dmecompetitivebid.com/palmetto/cbic.nsf/DocsCat/Home.Section 1834(a)(1)(F) of the Act mandates adjustments to the fee schedule amounts for DME furnished on or after January 1, 2016, based on information from the CBP. Section 1842(s)(3(B) of the Act provides authority for making adjustments to the fee schedule amounts for enteral nutrients, equipment, and supplies (enteral nutrition) based on information from the CBP. The methodologies for using information from the CBP to adjust the fee schedule amounts for DME and enteral nutrition are set forth in regulations at 42 Code of Federal Regulations (CFR) 414.210(g). There are three general methodologies:

** Adjustment of fee schedule amounts for areas within the contiguous United States, with a special rule for rural areas;
** Adjustment of fee schedule amounts for areas outside the contiguous United States; and
** Adjustment of fee schedule amounts for certain items for all areas in cases where the items have been included in competitive bidding programs in 10 or
fewer CBAs.

Fee schedule amounts for areas within the contiguous  United States


This methodology for adjusting the fee schedule amounts uses the average of SPAs from CBPs located in eight  different regions of the contiguous United States to adjust the fee schedule amounts for the states located in each of the eight regions. These regional SPAs or RSPAs are also subject to a national ceiling (110 percent of the average of the RSPAs for all contiguous states plus the District of Columbia) and a national floor (90 percent of the average of the RSPAs for all contiguous states plus the District of Columbia). This methodology applies to enteral nutrition and most DME items furnished in the contiguous United  States (that is, those included in more than 10 CBAs).

There is also a special rule for areas within the contiguous United States that are designated as rural areas. The fee schedule amounts for these areas will be adjusted to equal the national ceiling amounts described above. Regulations at §414.202 define a rural area to be a geographical area represented by a postal ZIP Code where at least 50 percent of the total geographical area of the ZIP code is estimated to be outside any metropolitan statistical area (MSA). A rural area also includes any ZIP code within an MSA that is excluded from a competitive bidding area established for that MSA.

As a result of these adjustments, the national fee schedule amounts for enteral nutrition will transition to statewide fee schedule amounts.


Fee schedule amounts for areas outside the contiguous United States


Areas outside the contiguous United States (noncontiguous areas such as Alaska, Guam, Hawaii) are subject to a different methodology that adjusts the fee schedule amounts so that they are equal to the higher of the average of SPAs for CBAs in areas outside the contiguous United States (currently only applicable to Honolulu, Hawaii) or the national ceiling amounts described above and calculated based on SPAs for areas within the  contiguous United States.


Fee schedule amounts for items included in 10 or fewer CBAs

DME items included in 10 or fewer CBAs are subject to a different methodology that adjusts the fee schedule amounts so that they are equal to 110 percent of the average of the SPAs for the 10 or fewer CBAs. This methodology applied to all areas (non-contiguous and contiguous).

Medicaid DMEPOS Fee Schedule

DMEPOS Fee Schedule 

The Provider Type 33 DMEPOS Fee Schedule is online at
http://dhcfp.nv.gov/Rates/PT/PT%2033%20DME%20Fee%20Sched%2005-06-09%20ds.pdf


 Services/Products are listed according to their Healthcare Common Procedure Coding System (HCPCS), Level II alpha/numeric code.

The DMEPOS fee schedule provides coverage information and more.

• Non-covered codes show “999” in the “Flag Code” column; all other listed codes are covered.
• Service limits (if applicable) are shown in the “Limits” column.
• Prior authorization requirements are shown in the “PA Type” column on the fee schedule. In the “PA Type” column:
• “00” means that PA is not required.
• “01” means that PA is always required.
• “02” means that PA is required to exceed the
service limitations.