A Durable Medical Equipment (DME) company is a specialized provider that supplies medically necessary equipment designed for extended use in a patient’s home. These companies ensure patients can manage conditions, recover from procedures, or maintain independence outside of a hospital setting. DME companies handle the logistics of procurement, delivery, setup, and billing, allowing patients to receive continuous care within their personal residence.
The Scope of Durable Medical Equipment
The products classified as Durable Medical Equipment must satisfy four core requirements to qualify for coverage by most payors.
- The item must be durable, able to withstand repeated use, and expected to last for a minimum of three years.
- It must be used for a medical reason, serving a therapeutic purpose to aid in an illness or injury.
- The equipment must be appropriate for use within the home setting.
- The item must generally not be useful to someone who is not sick or injured, differentiating it from common household items.
This classification includes a wide array of devices that support various medical needs. Common examples of DME are mobility aids, such as manual and power wheelchairs, crutches, and walkers. Respiratory devices, including oxygen concentrators, nebulizers, and Continuous Positive Airway Pressure (CPAP) machines, also fall under this category. Specialized items like hospital beds and patient lifts are also considered DME, enabling safer and more comfortable caregiving at home.
The Patient Journey for Obtaining Equipment
The process of acquiring DME begins when a patient’s physician determines a specific device is medically necessary for treatment or recovery. The physician must issue a detailed written order (DWO) or prescription, specifying the equipment needed, the patient’s diagnosis, and the estimated length of the need. This prescription is often paired with a face-to-face encounter note confirming the medical necessity. The DME company uses this initial order to complete a Certificate of Medical Necessity (CMN), which justifies the need for the equipment to the insurance company.
Before delivery, the DME company contacts the patient’s insurer to verify eligibility and confirm coverage for the prescribed item. For high-cost items, this step includes submitting a request for prior authorization, where the insurer reviews the CMN and supporting medical records to approve the service. Once authorization is secured, the company coordinates the delivery and setup of the equipment at the patient’s home. A representative provides thorough instruction and training to the patient and their caregivers on the safe and proper use, cleaning, and maintenance of the device.
Navigating Healthcare Coverage and Payment
The financial structure for DME is complex, often differing significantly from standard medical services. Payors will only cover equipment that is directly related to a patient’s diagnosed condition and prescribed by a qualified professional. Without this detailed documentation, a claim for coverage will be denied.
Medicare Part B coverage rules heavily influence the industry, establishing the primary payment model for many items. After a patient meets their annual Part B deductible, Medicare typically covers 80% of the Medicare-approved amount for the equipment, leaving the patient responsible for a 20% coinsurance payment.
For many high-cost items, such as manual wheelchairs and hospital beds, Medicare utilizes a “capped rental” arrangement. The patient rents the equipment for 13 continuous months, during which the insurer makes monthly rental payments to the DME company. After the 13th month, the supplier must transfer ownership of the equipment to the patient, and no further rental payments are made. Other items, such as canes or blood glucose monitors, are generally purchased outright.
Some equipment, such as oxygen supplies, follow different payment timelines, often spanning 36 months of rental payments before the supplier must continue providing the item and related services without further rental fees. Patients with Medicare Advantage plans must ensure the DME company is within their plan’s network, as out-of-network costs can be substantially higher than the standard 20% coinsurance.
Licensing and Operational Standards
DME companies operate within a highly regulated framework designed to ensure patient safety and prevent fraudulent billing practices. To qualify for reimbursement from government payors like Medicare, companies must adhere to stringent federal and state requirements. Every company must first obtain state-specific business and professional licenses to legally operate within its service area.
Beyond state licensure, DME companies that bill Medicare must meet the 30 Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Supplier Standards. These standards cover proper billing, record-keeping, having a physical business location, and maintaining liability insurance.
A mandatory requirement for billing Medicare is securing national accreditation from a Centers for Medicare & Medicaid Services (CMS)-approved organization. These third-party accreditors, such as CHAP or ACHC, audit the company’s operations to verify compliance with quality and safety benchmarks.