Home oxygen therapy is a common medical intervention for individuals with chronic respiratory conditions, but its classification for billing and insurance purposes often leads to confusion. Patients frequently question whether the entire system—the machine, the supplies, and the oxygen itself—is considered Durable Medical Equipment (DME). Understanding the regulatory definitions clarifies that the delivery hardware is classified as DME, while the oxygen contents are treated differently under coverage rules. This distinction is important for navigating coverage requirements and establishing medical necessity.
Defining Durable Medical Equipment (DME)
Durable Medical Equipment (DME) is a regulatory classification used by health insurers for items intended for repeated use in a patient’s home. To qualify as DME, an item must satisfy several specific criteria that distinguish it from single-use supplies. The equipment must be durable, meaning it can withstand repeated use and is expected to last for a minimum of three years. The item must also be used primarily to serve a medical purpose and must not be generally useful to someone who is not sick or injured. Finally, it must be appropriate for use in the patient’s home.
Categorization of Oxygen Delivery Devices
The physical components of the oxygen system necessary to generate, store, or deliver the gas are categorized as Durable Medical Equipment. This includes stationary oxygen concentrators, compressed gas tanks, and liquid oxygen systems, along with the regulators and conservers attached to them. Related accessories, such as the tubing, masks, and nasal cannulas, are also included in the DME category. These devices meet the durability criteria because they are designed for extended, repeated use by the patient.
Coverage Rules for Oxygen Gas and Related Supplies
The oxygen gas or liquid itself is classified as a therapeutic agent or consumable supply, not DME. However, the cost of the oxygen contents and the supplies is typically bundled with the payment for the delivery equipment. Most insurance plans structure coverage for oxygen equipment as a rental agreement rather than a purchase. The initial rental period often lasts for 36 months, and the monthly rental payment covers the cost of the hardware, necessary supplies, and the oxygen contents required for the prescribed flow rate. Even after the initial rental period ends, the supplier is required to provide the gas and supplies for an additional 24 months, ensuring uninterrupted therapy.
Establishing Medical Necessity for Home Oxygen Therapy
For the home oxygen system to be covered, a physician must first establish medical necessity, which requires specific diagnostic testing. The patient must have a documented chronic stable state condition that results in low blood oxygen levels (hypoxemia). This is typically proven through a physician-ordered blood gas study or pulse oximetry test while the patient is breathing room air. To qualify for coverage, the test results must demonstrate an arterial partial pressure of oxygen (PaO2) at or below 55 mm Hg, or an oxygen saturation (SpO2) level at or below 88%. This qualifying level must be met while the patient is at rest, during exercise, or during sleep, and the physician must certify that alternative treatment measures have been considered.