Inside Secrets To DME Billing

By Anthony Poggio, DPM

   Many doctors already dispense supplies and durable medical equipment (DME) from their offices for patient use. Others will simply write a prescription and send the patient to a DME provider. This is potentially a lost source of revenue for the practice. Having DME and supplies available in the office is also a great service to the patient.    Patients love it when they can get X-rays in the office as opposed to going to another facility, waiting for additional services, taking additional time off work, etc. The same applies to dispensing DME. Another benefit of dispensing DME in your practice is you have some level of control over the quality of the items you dispense and can make sure your patient is getting the device you want and not some other company’s version of what you want.    In order to dispense Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS), one must have a Durable Medical Equipment Regional Carrier (DMERC) license to dispense covered items for Medicare patients. In order to begin this process, contact the National Supplier Clearinghouse at (803) 754-3951 or check out the CMS Web site, Also contact your Medicare regional DMERC carrier to obtain guidelines, fee schedules, etc. The process can be quite lengthy so get started early.

Understanding The Subtle Distinctions Between ‘Providers’ And ‘Suppliers’

   There are three parts to the Medicare Program. Part A essentially covers hospital care while Part B covers physician/provider services. The third component is providing medical supplies and equipment for patients. Keep in mind that in the DMERC system, podiatrists/physicians are not considered “doctors” but are classified as “suppliers.” One can act as both the “provider” requesting the item and the “supplier” of the item.    One may be a participating supplier or a non-participating supplier. The preferred designation is not affected by the Medicare part B status. You can be a participating provider in Medicare Part B and a non-participating supplier for DMERC or vice versa.    Being a participating supplier means accepting assignment on all cases. The system pays 80 percent of the allowable fee (after the deductible has been met). One may collect the 20 percent patient portion and any deductible when dispensing the DME item/supply. A non-participating supplier can elect to accept assignment or not on a case-by-case basis. The non-participating supplier may collect the entire fee when they have dispensed the item/supply. The Medicare payment check would then be sent to the patient.

How To Become A DMERC Provider

   At one point, there was a moratorium for issuing new DMERC licenses but that is no longer an issue. There are various requirements to becoming a DMERC provider. These include posting hours of operation on the door of the office, keeping a log of complaints, and having a complaint protocol including a complaint form for the patient to fill out. Suppliers will also get a DMERC Supplier Guidelines binder that they must have available. Suppliers also must contact their malpractice insurance carrier to make sure the DME carrier is listed as a certificate holder on the policy.    The final step in the application process is an in-person inspection of your office prior to you obtaining your DMERC license. The inspector will ask you to present the various forms mentioned in this article. Failure to have the listed forms available, not posting hours of operation or not having a complaint protocol in place may result in denial of the DMERC license even though the rest of the application is in order.    Group practices will get a license for the group as an entity. However, if there is more than one doctor sharing an office space (i.e. two solo practitioners sharing office space), only one may get a license. The other doctor may refer patients to the doctor/supplier holding the DMERC license for dispensing of DME items. Lastly, if you do not use your license for four consecutive quarters, it will expire and you will have to reapply for your DMERC license.    If you dispense and bill a Medicare beneficiary cash for any covered items and you do not have a DMERC license, you are in violation of Medicare policy. This is true even if the patient agrees to pay for the item. If the patient were to complain to Medicare, you must refund the patient the money he or she paid for the item in full and the patient gets to keep the item. This may also prevent you from getting a DMERC license in the future. If you do not have a DMERC license, send the patient to a DME supplier or another podiatrist who has a DMERC license.    For non-Medicare carriers, check with each plan in which you participate to see what regulations the insurer may have regarding the dispensing of DME items from your office. Many HMOs require the use of preferred vendors. Also be aware that charging patients for otherwise covered DME items/supplies may put you in jeopardy of violating your HMO contract.    In addition, check to see what provisions there are for “urgent” situations. Invariably a patient will show up in the office at 4:45 p.m. on a Friday with some trauma that may require dispensing a cam walker. However, the insurance offices may be closed at that time, which would hamper your ability to obtain any authorization. Many companies do not issue retro authorizations or at least make the process very difficult and time consuming. Therefore, one may need to adjust the treatment plan to care for this patient in order to get him or her through the weekend until obtaining a formal authorization for a DME device. This may require the use of an Unna Boot or a formal cast instead of the cam walker. Keep in mind that regardless of the hassles of an authorization process, we still must provide services within the standard of care.

Essential Insights On Chart Documentation

   Be aware of Statistical Analysis DMERC (SADMERC), a department that will tell you the correct HCPCS code to use for a specific item. They may ask you to submit a picture, description, catalog information, etc about the item(s) in question. Do not rely on the manufacturer’s recommendations about which code to use.    The chart note should obviously support the need for any DME item or supply. There must be an order of sorts in the chart indicating the patient’s name, the description of the item ordered (with HCPCS code) and any additional features that may be added on the item. For rented items, list the length of time the patient will need the item. For supplies, list the item, the quantity, frequency of use and the length of need. This requirement applies when sending a patient out for these items or even if you dispense them yourself. Remember, one can be the physician requesting an item and the supplier of that item.    When dispensing DME items, there is a specific dispensing form that one must fill out. This form serves as a receipt of sorts that the patient received the device. This form should list the item(s) dispensed, the HCPCS codes billed (but not necessarily the amount billed), an indication that the item fit well and that you went over the proper care and use of the device with the patient. Keep a copy of the form in the chart and give a copy to the patient.    Some items may require a Certificate of Medical Necessity (CMN), which an MD/DO needs to fill out. Podiatrists and orthopedists cannot fill out this form. For example, this form is required for the MD to certify the patient has diabetes and other coexisting conditions when dispensing and billing for shoes under the diabetic shoe program. (See “What About Coverage Criteria For Diabetic Shoes?” below.)

What About Coverage Criteria For Diabetic Shoes?

   Diabetic shoes are commonly dispensed DME items from podiatric offices. These are covered per calendar year. Patients who qualify may get one custom shoe with two additional inserts per calendar year or one extra-depth shoe with three additional inserts.    One may substitute an insole for other accommodations such as rocker sole, metatarsal bar, heel wedges and Velcro closure to name a few. A podiatrist may prescribe and furnish these shoes but the MD or DO responsible for treating the patient’s diabetes must certify the need (i.e., file a CMN) for them.    Coverage criteria include: neuropathy with evidence of callus formation; history of pre-ulcerative calluses; history of previous ulceration; foot deformity; amputation; and poor circulation. There is no limitation based upon the severity of the diabetes as long as one of the above criteria is met. If the patient is an amputee and only requires one shoe, one should bill for one pair of shoes but only for one insole. One may use the following codes:    • Custom shoe: A5501    • Depth shoe: A5000    • Prefab insole (not heat molded): A5510/K0628    • Prefab insole (heat molded): A5509/K0629    • Custom molded insole: A5511    • Longitudinal insoles with arch and filler for amputated portion foot: L5000

Understanding The Nuances Of Billing For DME

   Billing for DME providers goes directly to the DME carrier, not to the Medicare Part B carrier. The only “exception” is when you bill for covered cast supplies. This would go to the Part B carrier.     (When billing Medicare for cast supplies, use the various Q codes. Do not use A4580/A4590. One should bill the Q code as unit “1,” and not per roll as A codes are billed. Also keep in mind that cast supplies are only payable when one employs a cast for a fracture or dislocation. Cast supplies are not payable separately when you use casts for the treatment of sprains, fasciitis, tendonitis or for the use of a total contact cast for ulcers, etc.)    If you provide both Part B services and DME services on the same date of service (i.e., an office visit, X-ray and a cam walker for an ankle sprain), bill the E/M and X-ray to Medicare Part B and the cam walker on a separate form to the DMERC carrier. One may use the HCFA-1500 form or ECS to bill claims. The standard patient information one would use to bill Medicare Part B is required.    • List each item’s HCPCS code and quantity.    • The date of service is the day you dispense the item, not the day you order the item. You can only collect money from the patient on the day you dispense the item.    • Be aware that the place of service (POS) is not the office. DME equipment is used in the patient’s home, not in the office. Therefore, the allowable sites of service are home (12) and custodial care facility (33). Other allowable POS include hospice (34), ICF/mental retardation facility (54), residential substance abuse treatment facility (55) and psychiatric residential treatment centers (56). Non-covered locations are office (11), skilled nursing facility (31) and nursing home (32).

Other Key Points You Should Know

   One does not need to submit a claim form for non-covered items. Use the –GA, -GY and –GZ modifiers just as you would for Medicare Part B claims. To bill for denial, you would send the claim to the DMERC carrier, not the Medicare Part B carrier. Also be aware of the KX modifier, which is appended on to the HCPCS item code to indicate that certain specific coverage criteria have been met and are documented in the chart. An example of this would be diabetic shoes.    If the patient does not pick up the device because the patient changed his or her mind, does not like it or has died, you may still bill DMERC for the item. Indicate that the patient did not pick up the item. The “date of service” is the date the patient died or said he or she did not want the device or a date that you last tried to contact the patient. You will receive a payment that is based upon the hard cost of the item.    Lastly, check with the state sales tax regulatory board on whether you should collect sales tax on the items you dispense in your office. “Medicines” dispensed by a physician should not be subject to sales tax. Many DME items will fit the definition of a “medicine.” Again check with the state for its policy on what constitutes a “medicine.” If you do need to collect sales taxes, then you will need to obtain a sales tax permit from your state. Keep in mind that you should not have to pay sales tax on “medicines” that you purchase for later resale. Again check with your state as there may be exemption forms you may be able to file.

What DME Items Are Covered?

   Some examples of covered DME items include: pneumatic cam walker (L4360), non-pneumatic cam walker (L4386), ankle stirrup splint (L4350), Richie Brace (L1960), night splints, AFOs (L1930), Arizona Brace (L2880), compression garment (L8110-8120-AW), and primary dressings used in the home (not in the office). Primary dressings go right on the wound as opposed to other materials, which may cover the primary dressing or hold it in place.    Some examples of non-covered items include: Ace bandage, Coban, OTC splints, gauze, tape, Band-Aids, etc.    Functional custom orthotics are not covered by Medicare unless they are part of a shoe that has an attached brace. (For Medicare, many services related to the orthotic, such as casting, dispensing, gait analysis and ROM studies, may also not be covered since they are related to the fabrication of a non-covered service. Check with the carrier/state association for guidelines as to when these services may or may not be covered.)    Post-op shoes (L3260) are never covered by Medicare.    Non-covered items are billable directly to the patient with no Advance Beneficiary Notice (ABN) or limiting charges restrictions.

In Conclusion

Supplying DME items can be a source of revenue for the practice as well as a valuable service for patients. However, be aware of the rules for dispensing DME items and what you will need to do in order to adhere to the entire supplier requirements. If being a DME supplier is not of interest, then send these patients to approved DME suppliers. Dr. Poggio is a California Podiatric Medicine Association Liaison to the National Heritage Insurance Company and a medical consultant to HealthNet Insurance Company. Dr. Poggio is a member of the American College of Podiatric Medical Reviewers and is board-certified by the American Board of Podiatric Medicine and the American Board of Podiatric Orthopedics.


We know how to bill Medicare for Therapeutic Footwear, but we have private insurance patients also. Normally, we have to use NDC numbers to get paid by private insurance companies, PPOs, HMOs, etc. for Diabetic Supplies. How can we bill them for Diabetic Shoes and Insoles?


Frank P. Suess
Diabetic Support Program

what about pharmacist billing for dme? Is this any different from md's or do's?

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