DME Billing Guide

DME Billing Types

DME is not billed one way. Purchase, capped rental, continuous rental and rent-to-purchase each have their own modifiers, month counts and traps. Bill the wrong type and the claim dies.

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The Four Types

How DME Gets Billed

Every DME item falls into one of these payment methods.

Purchase

One-time payment for inexpensive items like canes, crutches, commodes and nebulizers. Billed with NU (new equipment) or UE (used) modifiers.

Capped Rental: 13 Months

Expensive equipment like wheelchairs and hospital beds. Medicare rents it for up to 13 months, then ownership transfers to the patient. Modifiers KH (month 1), KI (months 2-3), KJ (months 4-13) track the sequence.

Continuous Rental: Oxygen

Oxygen equipment rents month after month for as long as it is medically necessary. No 13-month cap - but continued need must be documented or payments stop.

Rent-to-Purchase

Monthly rental payments count toward the purchase price. Common for items the patient will eventually own but cannot buy outright on day one.

DME Categories and Example Codes

The major DME families and where the billing risk sits in each.

Category	Example codes	Billing watch-out
Mobility	K0001-K0009 wheelchairs, E0100-E0159 canes, crutches, walkers	Capped rental modifier sequencing across 13 months. One wrong KH/KI/KJ and the month denies.
Oxygen / Respiratory	E0430-E0444, E1390 concentrator, E0601 CPAP	Continuous rental needs ongoing medical-necessity documentation. CPAP compliance data is frequently requested.
Diabetic Supplies	A4253 test strips, E0607 glucose monitor, E0784 insulin pump	Quantity limits are strict. Refill timing rules trigger denials when supplies ship too early.
Prosthetics / Orthotics	L codes: L4360 walking boot, L1900 AFO	L codes need detailed functional documentation. Off-the-shelf vs custom-fitted changes everything.
Urological / Ostomy	A4351-A4353 ostomy pouches, A4338 catheters	Monthly quantity caps. Exceeding the cap without KX and records means denial.
Wound Care	A6196-A6406 dressings by size and type	Dressing size must match wound size in the notes. Mismatches are a top audit target.
Enteral Nutrition	B4034-B4162 formulas and pump supplies	Coverage requires documented inability to maintain weight with oral intake.

Jurisdictions

DME MAC Jurisdictions A, B, C and D

Medicare DME claims go to one of four regional contractors. Sending to the wrong MAC means instant rejection.

Jurisdiction	Contractor	States covered
A	Noridian	CT, DE, MA, ME, NH, NJ, NY, PA, RI, VT
B	CGS Administrators	IL, IN, KY, MI, MN, OH, WI
C	CGS Administrators	AL, AR, CO, FL, GA, LA, MS, NC, NM, OK, SC, TN, TX, VA, WV, plus Puerto Rico and the US Virgin Islands
D	Noridian	AK, AZ, CA, HI, IA, ID, KS, MO, MT, NE, NV, ND, OR, SD, UT, WA, WY, plus American Samoa, Guam and the Northern Mariana Islands

Modifiers That Matter

DME Modifiers You Cannot Get Wrong

DME lives and dies on modifiers.

RR - rental, KH - capped rental month 1, KI - months 2-3, KJ - months 4-13
NU - new equipment purchase, UE - used equipment purchase
KX - documentation on file, required when exceeding quantity limits or policy thresholds
GA / GX / GY / GZ - ABN modifiers controlling whether liability can shift to the patient
EY - no physician order on file, a red flag that usually means the claim should not go out yet

FAQ

Questions, Answered

Straight answers, no jargon.

What is capped rental in DME billing?

For expensive equipment like wheelchairs and hospital beds, Medicare pays a monthly rental for up to 13 months. After month 13, ownership transfers to the patient and rental payments stop. The KH, KI and KJ modifiers track which rental phase each month falls in.

Which DME MAC covers my state?

Four jurisdictions: A (Noridian) covers the Northeast, B (CGS) the Great Lakes, C (CGS) the Southeast and South Central, D (Noridian) the West. Claims must go to the MAC for the beneficiary's state.

What is the KX modifier?

KX certifies that documentation supporting medical necessity is on file. It is required when billing past quantity limits or policy thresholds - without it, the claim denies automatically.

Why do oxygen claims stop paying?

Oxygen is continuous rental, paid only while medical necessity continues. If follow-up documentation does not show ongoing need, usually through repeat testing, the MAC cuts payments off.

What is the difference between NU and RR?

NU means the item was purchased new - one payment, done. RR means the item is rented - monthly payments under capped or continuous rental rules. Mixing them up is an instant denial.

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