There are three types of durable medical equipment (DME) suppliers under Original Medicare. The one you choose affects how much your costs will be.

Starting January 1, 2011, if you live in (or are visiting when you need DME) certain regions in North Carolina, South Carolina, Ohio, Kentucky, Indiana, Texas, Missouri, Kansas, Florida Pennsylvania and California, you must use contract providers for certain durable medical equipment. You can call 800-MEDICARE to find out what kinds of equipment you must buy from contract suppliers and who the contract providers are in your state.

Contract suppliers have contracts with Medicare that permit them to provide DME services in their area. Contract suppliers are not allowed to charge you more than the amount Medicare approved in their contract.

Before you buy your equipment from a supplier that is not a contract supplier, the supplier must let you know that they are not a contract supplier and that Medicare will not pay if you purchase your DME from them.  They should also have you sign an Advanced Beneficiary Notice (ABN). This notice states that you are aware that Medicare will not cover the DME and you will be responsible for the full cost. If the supplier does not have you sign an ABN, you are not responsible for the full cost of the DME.

If you live in a state where the contracted provider system is not in place then the following applies.

1. To save the most, choose suppliers who are approved by and enrolled in participating in Medicare. They must bill Medicare and take assignment. This means they must accept the Medicare-approved amount as payment in full. You or your supplemental insurance will pay 20 percent of that amount (plus any unmet portion of your Part B deductible).
2. DME suppliers who are approved by Medicare but are not participating in Medicare do not have to accept Medicare’s rates as payment in full. They can charge you above Medicare’s rates and ask for payment up front. However, they must still submit the bill to Medicare. Then, Medicare repays you up to the Medicare-approved rate and you pay the rest. This is called balance billing. Medigap plans that cover excess charges do not cover overcharges from DME suppliers.
   • Non-participating suppliers can choose to take Medicare assignment on a case-by-case basis. It is worth asking the supplier to take assignment for your equipment.
3. You will need to pay the full cost yourself if you choose a DME supplier who is not Medicare enrolled or approved. They are generally not authorized to receive Medicare payment for DME. These non-approved or enrolled suppliers are not limited in how much they can charge you and can ask for payment up front.

Note: You should not have to pay for the DME yourself if the supplier did not notify you in writing (and having you sign an Advance Beneficiary Notice or ABN) before you got the DME that Medicare may not pay because the supplier is not approved by Medicare.

To save money, it is best to go to a Medicare-approved supplier who also accepts Medicare’s assignment.

All Medicare-enrolled suppliers are required to bill Medicare on your behalf (without any charge to you for doing so). If a Medicare-enrolled supplier refuses to bill Medicare, call 800-MEDICARE to report the problem.