Every percentage point growth in Medicare Advantage enrollment costs nursing facilities $274.9 million in lost revenue. Yet efficient Durable Medical Equipment (DME) billing practices can help recover a significant portion of these losses.

This guide shows you exactly how to strengthen your billing processes, reduce claim denials, and secure proper reimbursement for your facility's durable medical equipment.

We'll cover:

• What DME billing is and how to streamline your reimbursement process

• A clear, step-by-step system to improve your billing success rate

• Practical solutions to common challenges and proven best practices

Ready to optimize your DME billing workflow? Let's start with the fundamentals.

What is DME Billing?

DME medical billing is the process of submitting claims to Medicare, as well as Medicare Advantage plans, and private insurers for durable medical equipment — the reusable medical devices your facility provides to patients.

This equipment ranges from wheelchairs and oxygen tanks to hospital beds and CPAP machines.

Unlike standard medical billing, DME claims require specific documentation to prove both medical necessity and proper equipment delivery. Your facility must show:

• The equipment matches the patient's documented medical condition.

• A physician has prescribed the equipment.

• The patient received and is using the equipment correctly.

• The equipment meets quality and safety standards.

Three key players work together in DME claims processing:

• First, your facility serves as the provider, handling everything from verifying patient eligibility to submitting initial claims and managing documentation.
  
  

• Billing companies act as your facility's partner in the claims process. They handle the complex work of processing claims, managing denials and appeals, and keeping your team updated on changing regulations.
  
  

• Insurance companies complete the cycle by reviewing claims, verifying coverage, and processing payments. They set the rules for reimbursement and decide whether claims meet their requirements for payment.

Understanding how these roles interact helps you spot potential bottlenecks in your billing process. For example, if your facility consistently faces denials for missing documentation, you might need better systems for gathering physician orders before submitting claims.

DME billing vs. standard medical billing

DME billing follows stricter rules than regular medical billing. Here's the key difference: Standard medical billing typically covers one-time services like doctor visits or procedures, while DME billing involves ongoing equipment use and maintenance.

Medical billing requires basic documentation — the service provided, diagnosis codes, and proof that the visit happened. DME billing needs more — physician orders, proof of delivery, detailed equipment specifications, and evidence of continued medical necessity.

You'll also need to track whether the equipment is being rented or purchased, as this affects how you bill.

For instance, when billing for a patient's physical therapy session, you submit one claim for that specific service. But when billing for a hospital bed, you need to document not just the initial need, but also prove that the patient still requires it month after month.

This extra complexity in DME billing means having solid documentation systems in place is crucial for avoiding denials and securing proper reimbursement.

DME coverage eligibility

Medicare Part B covers durable medical equipment when it's medically necessary and prescribed for home use. But what exactly counts as DME? 

The equipment must meet five basic criteria: 

1. It's durable enough for repeated use.

2. It serves a medical purpose.

3. The equipment helps someone who's sick or injured.

4. It is used at home.

5. The equipment lasts at least three years.

Common DME items your facility might bill for include:

• Daily living aids: Wheelchairs, walkers, hospital beds, and patient lifts

• Breathing equipment: CPAP machines, oxygen equipment, and nebulizers

• Medical devices: Blood sugar meters, infusion pumps, and suction pumps

Medicare covers 80% of the approved amount for these items after the patient meets their Part B deductible. Your facility will need to decide whether to rent or purchase equipment. Medicare handles payment differently for each option.

Some items must be rented initially, while others can be purchased outright. After a certain number of rental payments, some equipment becomes the patient's property.

What documentation is required for DME billing?

Success with DME billing starts with proper documentation. You'll need:

1. A prescription from a Medicare-enrolled doctor

2. Detailed medical records showing why the equipment is necessary

3. Proof that the equipment will be used in the patient's home

4. Documentation showing the patient needs the equipment for three years or more

Here's a crucial detail many facilities miss: Make sure your DME suppliers are enrolled in Medicare. If they aren't, then your patients might face unexpected costs, and your facility could end up with collection headaches.

DME Billing Process: Step-by-Step Guide

Here’s a scenario to consider: You've just provided essential medical equipment to a patient. Now comes the crucial part — getting paid for it. Follow these steps for how to bill DME claims to Medicare.

Step 1: Collect the necessary prescription and medical documentation

Your claim's success starts with solid paperwork. Think of the prescription as your foundation — it needs the patient's details, exact equipment specifications, and duration of need. Most importantly, secure that prescriber's signature and NPI number.

Back it all up with medical records proving why your patient needs this equipment. Without this documentation, Medicare won't process your claim.

Step 2: Verify Insurance Coverage and Eligibility

Before moving forward, know exactly who's paying. Check both primary and secondary insurance — are they active? What specific DME benefits apply? This is when you calculate what your patient might owe and get that Advance Beneficiary Notice if Medicare coverage looks questionable.

A few minutes spent here can save hours of billing headaches later.

Step 3: Select the appropriate HCPCS codes for billing

Each piece of equipment requires specific HCPCS codes and modifiers for accurate billing. Use NU modifiers for new equipment purchases, RR for rentals, and KX when meeting Medicare coverage criteria. 

Cross-reference your codes with the Medicare fee schedule and coverage determinations. Common errors include missing modifiers for rental equipment or using discontinued codes — both result in immediate denials.

Step 4: Submit claims to Medicare, Medicaid, or private insurers

Submit claims electronically to reduce processing time and track submission status. Medicare claims require a properly completed CMS-1500 form with all mandatory fields filled.

Include your proof of delivery, detailed product documentation, and any required medical necessity forms. Each payer has specific timely filing deadlines — Medicare typically requires submission within 12 months of service date, while private insurers may allow only 90 days.

Step 5: Manage claim denials, rejections, and appeals

Address denials by identifying the specific reason code and required corrective action. Common denial reasons include insufficient documentation of medical necessity, incorrect modifier usage, or missing prior authorization.

Medicare appeals must be filed within 120 days of the initial determination. Prepare appeal packages with additional supporting documentation, medical records, and a detailed explanation of why the denial should be overturned. Track each appeal's status and follow up every 30 days.

Step 6: Collect patient payments and finalize reimbursement

The final piece of your billing puzzle is payment collection. Match payments against what you expected to receive. If you spot partial payments or adjustments, investigate why. Keep your patients in the loop about their portion — clear communication here prevents collection problems later.

Pro tip: Create a checklist for these steps and stick to it. Missing even one small requirement can turn a straightforward claim into a lengthy payment delay.

How long does the DME claims process take?

The duration of the DME claims process depends on several factors, including the type of equipment, documentation requirements, and whether additional medical reviews are needed. Here’s what to expect:

• Standard processing time: Medicare Administrative Contractors (DME MACs) generally process clean claims (i.e., those submitted with complete and correct information) within 14 to 30 days.
  
  

• Delays: If additional documentation or supporting medical records are required, then the process may take longer.
  
  

• Appeals: If a claim is denied, patients and suppliers can appeal the decision, which can add several weeks to months to the process, depending on the level of appeal.

Patients and suppliers should ensure all required documentation is submitted correctly to avoid processing delays.

Can patients be billed directly for DME services?

Patients may only be billed directly for DME services in specific situations, depending on Medicare coverage rules and whether the supplier accepts the assignment.

If Medicare covers the DME item

If a supplier accepts Medicare assignment, the patient is only responsible for the 20% coinsurance and any applicable deductible.

If the supplier does not accept the assignment, the patient may need to pay upfront and seek reimbursement from Medicare, which will pay only the Medicare-approved amount (not necessarily the full cost).

If Medicare does not cover the DME item

If an item is not covered (e.g., for convenience rather than medical necessity), the supplier may bill the patient directly. The supplier must issue an Advance Beneficiary Notice of Noncoverage (ABN) informing the patient of their financial responsibility before providing the item.

Rental and maintenance fees

Some DME items (like wheelchairs and oxygen equipment) are capped rental items. After a 13- to 15-month rental period, ownership typically remains with the supplier, but the supplier must continue providing service without charging additional rental fees — except for maintenance and servicing in specific cases.

Deluxe features and upgrades

If a patient chooses a more expensive model than what Medicare covers (e.g., an upgraded wheelchair with additional features not deemed medically necessary), they are responsible for paying the difference in cost out-of-pocket.

What are the biggest challenges of DME billing?

Filing DME claims involves multiple moving parts, and each presents unique challenges. Documentation errors form the most common stumbling block — missing physician signatures, incomplete medical necessity proof, or incorrect delivery documentation can halt the entire billing process.

Medicare compliance adds another layer of complexity. Regular audits require you to prove medical necessity long after equipment delivery. Your facility must maintain detailed records showing the continued need for the equipment, especially for rentals and ongoing supplies. Failing an audit can lead to payment recoupment and increased scrutiny of future claims.

Insurance verification is another challenge, especially with the rise of Medicare Advantage plans. Each plan has unique coverage rules, prior authorization requirements, and documentation standards. Missing a pre-authorization can result in a complete claim denial, leaving your facility to absorb the costs.

What are the top reasons for DME claim denials?

Every denied DME claim hits your facility twice - first in lost revenue, then in staff time spent on appeals and resubmissions. Understanding the most common denial reasons helps you prevent them before they impact your bottom line. Here are the primary culprits behind DME claim denials:

• Medical necessity documentation fails to meet payer requirements, often because physicians' notes lack specific details about why the equipment is needed for the patient's condition.
  
  

• Prior authorization wasn't obtained before equipment delivery, a particularly common issue with Medicare Advantage plans that have strict pre-approval requirements.
  
  

• The prescription lacks required elements such as the physician's NPI number, detailed equipment specifications, or length of need documentation.
  
  

• HCPCS codes and modifiers don't match the equipment provided or fail to reflect whether the item is being rented or purchased outright.

The best practices for efficient DME billing

Successful DME billing requires a systematic approach that catches issues before they become denials. While the initial setup of these systems takes time, they dramatically reduce payment delays and staff frustration. These proven practices help ensure consistent reimbursement for your DME claims.

Create a documentation system

Build a standardized process for gathering and verifying documentation before equipment delivery. Train your staff to use documentation checklists specific to each equipment type.

Set up regular internal audits to identify documentation gaps and retrain staff as needed. Double-check physician signatures, NPI numbers, and medical necessity documentation before submitting claims.

Monitor regulatory changes

Assign a team member to track Medicare and payer policy updates. Review your MAC's newsletters and billing guidelines monthly. Watch for changes in coverage criteria, documentation requirements, and reimbursement rates. Update your billing procedures immediately when new requirements are announced.

Implement proactive claims management

Track every claim from submission through payment. Set up alerts for approaching timely filing deadlines and authorization expirations. Review denied claims weekly to identify patterns and adjust your processes accordingly. Follow up on unpaid claims before they age past payer deadlines.

Use technology effectively

Choose billing software that integrates with your existing systems and offers automated claim scrubbing. Use electronic documentation tools to ensure complete records for each order.

Set up automated eligibility verification to catch coverage issues before delivery. Generate regular reports to monitor your billing performance and identify areas for improvement.

Medicare and private insurance considerations for DME billing

Medicare Part B and private insurance handle DME coverage quite differently. Understanding these differences helps prevent claim denials and ensures proper reimbursement for your facility. Here's what you need to know about navigating both systems:

• Medicare Part B coverage basics: Medicare Part B covers 80% of medically necessary DME after the patient meets their deductible. Your facility must be a Medicare - approved supplier to receive payment.
  
  

• Impact of Medicare's competitive bidding program: If your facility operates in a CBP area, you must be an approved supplier to bill Medicare for certain DME items. The program sets specific prices for covered equipment, and only contracted suppliers can provide these items.
  
  

• Understanding DMEPOS fee schedules: Medicare's fee schedule determines your maximum reimbursement for each piece of equipment. Pay special attention to items designated as capped rentals — Medicare will only rent these items for a set period before transferring ownership to the patient.
  
  

• Private insurance requirements: Private insurance plans often require prior authorization before equipment delivery. Each payer sets their own coverage rules, network requirements, and reimbursement rates. Using out-of-network suppliers can result in higher patient costs or complete claim denials.

Frequently asked questions

Can patients be billed directly for DME services?

Patients may be billed directly if the DME item is not covered by Medicare, if they choose a supplier that doesn’t accept Medicare assignment, or if they upgrade to a deluxe model. If Medicare denies coverage, suppliers must provide an Advance Beneficiary Notice (ABN) before billing the patient.

How often do DME billing codes change?

DME billing codes, set by HCPCS (Healthcare Common Procedure Coding System), are updated quarterly to reflect new, revised, or discontinued items. Medicare’s DMEPOS Fee Schedule is also updated at least once a year or more to adjust pricing.

How do I check if Medicare covers a specific DME item?

You can check Medicare coverage for a DME item by visiting the Medicare website, consulting the DMEPOS Fee Schedule, or asking a Medicare-enrolled supplier. Coverage depends on medical necessity and a doctor’s prescription.

What documentation is required for DME billing?

Medicare requires a doctor’s order and, in some cases, a Certificate of Medical Necessity (CMN) or supporting medical records. Claims must include HCPCS codes, modifiers, and proof of medical necessity to be processed.

What is the difference between DME rental vs. purchase billing?

Some DME items are capped rentals, meaning Medicare pays for monthly rentals up to 13 or 15 months before ownership transfers. Other items can be purchased outright, with Medicare covering 80% of the approved cost after the deductible.

Now that we’ve discussed how DME billing works, let’s look at a helpful tool that makes this process easier for your facility. 

Faster reimbursements, fewer denials: Simplify your DME billing with ExaCare 

Managing DME billing effectively requires more than just understanding codes and regulations — it needs a streamlined admissions process that captures accurate patient information from the start.

When documentation gaps or insurance verification issues slip through during admission, they cascade into billing problems that can take weeks to resolve.

The key to preventing these issues lies in modernizing your facility's approach to admissions and referral management. By catching potential problems before they affect billing, you can protect your revenue while maintaining focus on patient care.

ExaCare transforms your admissions workflow through AI-powered automation. Our platform helps you build a stronger foundation for successful billing outcomes through:

• An AI-powered referral screener that extracts and analyzes critical patient information in minutes, ensuring complete documentation from day one
  
  

• Centralized referral management that eliminates scattered paperwork and reduces missing information
  
  

• Built-in analytics to identify your most reliable referral partners and optimize relationships
  
  

• Automated insurance verification and reimbursement analysis to prevent coverage surprises
  
  

• A unified communication hub that speeds up decision-making when additional documentation is needed

Ready to see how ExaCare can help your skilled nursing facility with marketing, referrals, and admissions? You can read more about things we help with on the ExaCare blog page or talk with our team to learn more.

Schedule a demo.