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Durable Medical Equipment (DME): Key Medicare Rules and Why Legal Compliance Matters

Durable Medical Equipment (DME) plays a vital role in patient care, but for healthcare providers and suppliers, it also comes with complex and often misunderstood regulations. From Medicare coverage rules to federal and state-level compliance requirements, staying up-to-date with DME regulations is crucial for avoiding costly penalties, audits, or even allegations of fraud.

What Is Durable Medical Equipment (DME)?

According to the CMS guidelines, an item qualifies as DME if it meets five criteria:

  • Can withstand repeated use
  • Has an expected life of at least 3 years
  • Is primarily used to serve a medical purpose
  • Is not generally valuable for someone without an illness or injury
  • Is appropriate for use in the home

Examples include wheelchairs, hospital beds, oxygen equipment, and CPAP machines. But classification isn’t always straightforward, especially for multi-component systems like insulin pumps or neuromodulation devices. CMS only classifies the component performing the medically necessary function as DME.

What Medicare Covers and What It Doesn’t

Medicare Part B covers medically necessary DME for use in the home when prescribed by a physician. Coverage may include essential accessories and supplies, such as tubing, mouthpieces, or power sources, but only under specific conditions. As clarified by CMS, items like oxygen-related supplies are typically covered through bundled monthly rental payments.

Billing separately for components or accessories that don’t qualify as DME can trigger Medicare audits or overpayment demands, which is why understanding coverage criteria and recent legal interpretations, such as those related to the Stark Law, is essential for complete compliance.

Key DME Compliance Rules for Providers and Suppliers

Whether you’re a supplier, clinic, or healthcare organization, you’ll need to follow a range of federal and California-specific regulations:

  • Comply with DMEPOS supplier standards (e.g., proper enrollment, physician orders, documentation)
  • Understand multi-component device classification rules
  • Maintain appropriate licensure and accreditation, especially in California
  • Implement strong internal policies to avoid risk exposure

Suppose your operations touch on referral relationships, ownership structures, or incentives. In that case, you should also be aware of anti-kickback regulations, many of which are explained in detail in our guide to defending against kickback allegations.

Hipaa compliance

Legal Risks: Fraud, Billing Mistakes, and Audits

Improper billing or failing to meet DME definitions could lead to: 

  • Medicare audits
  • Allegations under the False Claims Act
  • Civil or criminal fraud investigations
  • Loss of Medicare billing privileges

DME businesses are especially vulnerable to fraud scrutiny if billing involves high-cost or high-volume equipment. For providers under review, legal support is essential: see how we assist in defending against healthcare fraud allegations, often before they escalate.

When it comes to protecting patient data, don’t overlook HIPAA. DME suppliers who store or transmit patient information can still run afoul of privacy laws. To reduce your exposure, regular internal audits are strongly advised.

Connect with a Healthcare Law Attorney

Durable Medical Equipment (DME) regulations are detailed, evolving, and prone to misinterpretation, particularly when it comes to Medicare billing, documentation requirements, and supplier relationships. If you’re unsure how these rules apply to your practice or business, it’s important to consult with a healthcare law attorney who understands the nuances of DME compliance.

At Fenton Jurkowitz Law Group, we work with providers and suppliers to navigate DME regulations, reduce audit risk, and stay aligned with Medicare and CMS expectations. Reach out through our website today to connect with a healthcare attorney who can help keep your practice fully compliant.