DME Billing Denial Trends on What Suppliers Should Know

It is seen that DMEPOS had the highest improper-payment rate among the major Medicare fee-for-service claim types, which has also been reported by CMS for FY2025. CMS estimated this rate at approximately 24.1%, representing about $2.27 billion in projected improper payments. For comparison, the overall Medicare FFS rate was 6.55%, Part B claims came in at 8.44%, and Part A hospital IPPS claims sat at approximately 3.1%.

If a supplier’s denial rate feels this high, this data not only confirms the underlying pressure is real but the real risk can be far more arduous.

Improper Payments vs. Denials: A Distinction Worth Getting Right

CMS uses the Comprehensive Error Rate Testing (CERT) program to review a statistically valid sample of Medicare FFS claims and supporting documentation, and to estimate improper payments from that sample. An improper payment can result from several different issues, including overpayments, underpayments, missing or insufficient documentation, medical-necessity concerns, incorrect coding, or other payment errors. Some of these claims were paid but should not have been. Others were underpaid relative to what the documentation actually supported. The CERT rate, in fact, captures all of these outcomes in a single figure.

This is a different measurement from a claim denial rate, which reflects a payer’s decision on a specific claim during adjudication, made in real time as claims move through the billing cycle.

A supplier’s internal denial percentage should not be compared directly against the 24.1% CERT improper-payment rate. The two metrics measure different parts of the reimbursement process: one is a retrospective, sample-based estimate produced by CMS well after payment; the other is an operational figure a supplier can see and act on immediately. Treating them as interchangeable can lead a billing team toward the wrong fix, since a documentation issue that shows up in a CERT sample may never surface as a denial at all, and a denial a supplier sees daily may never appear in a CERT sample.

It is also worth separating denials from rejections. An initial denial rate measures claims a payer denies during adjudication, after the claim has been reviewed against coverage and documentation requirements. Claims rejected by a clearinghouse or caught by internal claim edits before they ever reach the payer are a separate category altogether and should be tracked separately. This is mostly because the causes and corrections differ here. A rejection usually points to a formatting, eligibility, or coding error caught early. A denial points to a coverage or documentation issue found later, once the payer has actually reviewed the claim.

Related Reading: How To Meet Customer Expectations with Streamlined DME Billing

What CMS Data Reveals About DME Billing Risk

Risk is not distributed evenly across DMEPOS categories. While these figures do not indicate fraud, they indicate that, based on the documentation available during CERT review, the applicable Medicare payment requirements were not fully established for a meaningful share of sampled claims in those categories.

The gap between categories is worth sitting with. A CPAP claim carries roughly one-seventh the improper-payment risk of a urological supply claim under this data. That is a substantial difference, and it suggests the two categories likely fail for different reasons. Urological supplies and surgical dressings tend to involve recurring, high-volume orders where documentation can lapse between shipments. CPAP claims, by contrast, typically involve a single qualifying sleep study and a defined compliance-monitoring period, which may explain the comparatively lower error rate once that initial documentation is in place.

For a supplier, this data is most useful as a prioritization tool rather than a verdict. Categories with a documented history of higher improper-payment rates are reasonable candidates for stronger pre-billing documentation review, regardless of how a supplier’s own claims happen to be performing today. A DME provider billing primarily CPAP equipment faces a different risk profile than one billing primarily urological or wound care supplies, and documentation review resources should be allocated accordingly rather than spread evenly across every category by default.

Why Documentation Drives Most DME Billing Risk

Several structural features of DME billing make documentation the central risk factor, more so than in most other areas of medical billing:

Incomplete or inaccurate clinical documentation — A treating practitioner must see the patient, document the encounter and sign the order before a supplier can submit a claim. A gap anywhere in that chain affects the claim, regardless of how well the supplier’s own billing process is run. This is a structural dependency unique to DME billing: the party responsible for the claim’s outcome is not the party responsible for creating the documentation it depends on.

Coding depends on precise modifier use — Rental versus purchase status, new versus replacement items, and medical-necessity attestations all rely on correct modifier application. A single incorrect modifier can move a compliant claim into the improper-payment category even when every other element of the claim is accurate. We cover this in more detail in our guide on how to bill DME claims.

Prior authorization requirements change over time — CMS updates the DMEPOS Master List at least annually and may select specific items for required prior authorization. A claim may be denied when required prior authorization has not been obtained for an applicable item. Recent changes are covered in our post on DME prior authorization in 2026.

The same-or-similar rule requires advance verification — Medicare may deny an item when records indicate that a beneficiary previously received the same or similar equipment and the applicable reasonable useful lifetime has not expired. This is checkable before delivery, though it is often only discovered after a denial, at which point the claim has already been submitted and the equipment already delivered.

What DME Providers Can Do

• Track improper-payment risk and denial rate as separate metrics, as they point to different root causes and require different corrective steps. A dashboard that blends the two into a single “billing risk” number obscures which problem actually needs solving.
• Prioritize documentation review for higher-risk categories. Other specialties too, like urological supplies and surgical dressings, which show elevated CERT findings, warrant additional scrutiny before submission, particularly for high-volume recurring orders where documentation is more likely to lapse between shipments.
• Verify same-or-similar equipment history before delivery, not after a denial has already occurred. This check takes a fraction of the time that reworking a denied claim does.
• Track denial reasons by category, not only by volume. A recurring documentation gap in one equipment category points to a process fix, not a series of individual appeals. If the same missing element shows up across a dozen CPAP claims, for example, the fix belongs in the intake process, not in a dozen separate corrections.
• Recertify coverage at appropriate intervals for rentals and recurring supplies, including before billing a new service period and after a known plan change. Medicare Advantage requirements can also differ by plan, which makes payer-specific eligibility, authorization, and documentation verification an ongoing task rather than a one-time check performed at the start of a rental period.

Related Reading: Enhance Your DME Billing for Quicker Reimbursements

Strengthen Your DME Billing Process

CMS’s FY2025 findings show that documentation and compliance issues remain significant risks in Medicare DME billing. Thus, DME providers should not use the 24.1% CERT improper-payment rate as a direct benchmark for an internal denial rate, since each metric measures a different outcome. What the data does offer is a reliable map of where documentation risk concentrates by category, and that map is useful regardless of how a given supplier’s own numbers currently look.

This is where DME providers with the right support, like us, can reduce preventable denials by verifying eligibility, reviewing payer-specific authorization requirements, checking same-or-similar equipment history, validating orders and medical records, applying correct HCPCS codes and modifiers, and confirming proof of delivery before claim submission.

Known for providing end-to-end DME billing services, we cater to all your billing needs. With a dedicated account manager and buffer resources ensuring your billing operation runs smoothly, our experts constantly make an effort to ease your DME claims. If your organization is experiencing recurring DME claim denials, contact SunKnowledge to identify the workflow issues affecting reimbursement.