CMS Pub. 100-02, ch. 15, § 110

B3-2100, A3-3113, HO-235, HHA-220

Expenses incurred by a beneficiary for the rental or purchases of durable medical equipment (DME) are

reimbursable if the following three requirements are met:

• The equipment meets the definition of DME (§110.1);

• The equipment is necessary and reasonable for the treatment of the patient’s illness or injury or to

improve the functioning of his or her malformed body member (§110.1); and

• The equipment is used in the patient’s home.

The decision whether to rent or purchase an item of equipment generally resides with the beneficiary, but the

decision on how to pay rests with CMS. For some DME, program payment policy calls for lump sum

payments and in others for periodic payment. Where covered DME is furnished to a beneficiary by a

supplier of services other than a provider of services, the DME MAC makes the reimbursement. If a

provider of services furnishes the equipment, the A/B MAC (A) or (HHH) makes the reimbursement. The

payment method is identified in the annual fee schedule update furnished by CMS.

The CMS issues quarterly updates to a fee schedule file that contains rates by HCPCS code and also

identifies the classification of the HCPCS code within the following categories.

Category Code Definition

IN Inexpensive and Other Routinely Purchased Items

FS Frequently Serviced Items

CR Capped Rental Items

OX Oxygen and Oxygen Equipment

OS Ostomy, Tracheostomy & Urological Items

SD Surgical Dressings

PO Prosthetics & Orthotics

SU Supplies

TE Transcutaneous Electrical Nerve Stimulators

The A/B MACs (A), (B), and (HHH), and DME MACs, where appropriate, use the CMS files to determine

payment rules. See the Medicare Claims Processing Manual, Chapter 20, “Durable Medical Equipment,

Surgical Dressings and Casts, Orthotics and Artificial Limbs, and Prosthetic Devices,” for a detailed

description of payment rules for each classification.

Payment may also be made for repairs, maintenance, and delivery of equipment and for expendable and

nonreusable items essential to the effective use of the equipment subject to the conditions in §110.2.

See the Medicare Benefit Policy Manual, Chapter 11, “End Stage Renal Disease,” for hemodialysis

equipment and supplies.