Medicare forces contractors to pay legal fees for wrongful DME denials
S. 5062 — FAIR DME Appeals Act · Filed by Bill Cassidy (R-LA) · Introduced Jul 22, 2026 · Referred to committee
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What it does
This bill requires Medicare contractors (administrative contractors, program integrity contractors, and independent contractors) to pay the legal fees and litigation costs of small durable medical equipment (DME) suppliers when those suppliers win appeals proving their initial payment denials were clearly erroneous, unsupported by evidence, or violated applicable law. The contractors must pay these fees even if they were not the original decision-maker, though they can split costs if multiple contractors were involved. Suppliers must apply within 30 days of a favorable appeal decision, and an administrative law judge determines the amount owed within 60 days.
Why we flagged it
The bill's core mechanism is a fee-shifting rule that makes Medicare contractors liable for attorney fees when they wrongfully deny DME supplier claims. It is fundamentally an accountability measure, not a subsidy or deregulation, though its scope and carve-outs narrow its reach.
What the text implies
- The bill excludes denials based on supplier documentation failures or billing errors—the most common grounds for initial denials—meaning most wrongful denials may still fall outside the fee-shifting rule, limiting practical impact.
- Contractors may respond to fee liability by raising their own administrative costs, which could be passed to Medicare or beneficiaries through higher premiums, deductibles, or reduced contractor service capacity.
The full analysis lists 5 implications of this text.
Who stands to gain
small durable medical equipment suppliers (those winning appeals); law firms and paralegals representing DME suppliers in Medicare appeals