Starting a durable medical equipment (DME) business is a smart move in a growing market, but billing is where many new suppliers struggle. Payers have strict rules, and small mistakes lead to denials and cash flow gaps. This guide explains how to bill medical supplies and equipment the right way from day one.
How to Start a DME Company: The Billing Basics
Before you can bill Medicare, you need to set up the right foundation:
- An NPI (National Provider Identifier) for your business
- Accreditation from a CMS-approved accrediting organization, which becomes an annual requirement starting in 2026
- A surety bond, required for Medicare DMEPOS suppliers
- Medicare enrollment through the CMS-855S application, after which you receive a PTAN (Provider Transaction Access Number)
Once you’re enrolled, you’ll also want contracts with NC Medicaid plans and the commercial payers your patients use.
How Billing Insurance for Medical Supplies Works
Every DME claim follows the same basic path:
- Verify eligibility and benefits, including deductibles and prior authorization requirements.
- Collect the order and records. You need a Standard Written Order and medical records that support medical necessity.
- Get prior authorization if the item requires it.
- Deliver the item and collect signed proof of delivery.
- Submit the claim electronically to the right payer. For Medicare, that means your region’s DME MAC.
- Post payments and work denials quickly.
Skipping any step, especially documentation, is the number one cause of DME denials.
Codes and Modifiers You Need to Know
DME and supplies are billed with HCPCS Level II codes. Modifiers tell the payer important details about the claim. Common ones include:
- NU: New equipment purchase
- RR: Rental
- KX: Coverage requirements in the medical policy have been met
- RT/LT: Right or left side
Many items are rented rather than purchased. Under Medicare’s capped rental rules, the patient typically owns the item after 13 months of rental payments.
Example: How to Bill a Pneumatic Compression Device
Pneumatic compression devices (PCDs) treat lymphedema and chronic venous insufficiency. They are billed with codes E0650–E0652, plus appliance codes for the garment sleeves.
Medicare’s PCD policy requires proof that conservative treatment was tried first. For lymphedema, that means a documented four-week trial of compression garments, exercise, and elevation that didn’t work. E0652, the most advanced device, needs extra documentation explaining why simpler devices won’t meet the patient’s needs. Missing trial documentation is the most common reason PCD claims get denied.
Medicare Billing Rules Every New Supplier Should Know
Medicare billing for DME comes with extra requirements, including medical policies (LCDs) for many items, prior authorization for certain high-cost items, and frequent audits. Always check the policy for each item before you deliver it, not after.
In-House Billing vs. Outsourcing
Many new suppliers try to handle billing themselves to save money, then lose more to denials and slow payments. Working with an experienced DME billing company gives you trained coders, claim scrubbing, and denial management from the start.
QHS Health provides DME medical billing services across the USA, from eligibility verification to AR follow-up. Whether you’re launching a new company or looking to outsource DME billing services, [contact us today] to see how we can help you get paid faster.
FAQs
How do I bill Medicare for medical supplies?
Enroll through the CMS-855S, then submit claims with HCPCS codes, modifiers, and supporting documentation to your region’s DME MAC.
Do I need accreditation to bill Medicare for DME?
Yes. Most DMEPOS suppliers must be accredited by a CMS-approved accrediting organization.
