Dive Brief:
- The federal government is once again targeting fraud in durable medical equipment suppliers, publishing a report Monday through the HHS’ Office of the Inspector General that urges regulators to crack down on suspect billing in Medicare Advantage.
- The OIG found that, in addition to other issues, MA organizations don’t screen for fraudulent medical equipment suppliers as often when they’re out of network, compared to in-network suppliers.
- MA organizations should tighten the screening process for suppliers and the CMS should use its fraud prevention tool more regularly, the OIG said.
Dive Insight:
Fraud related to DMEPOS – prosthetics, robotics, orthotics and supplies – “has been a long-standing issue in Medicare, putting millions of taxpayer dollars at risk each year,” according to the OIG. And with MA costs now higher than the original Medicare program, fraud could put the program at risk.
The area has also been a target of reform from the Trump administration. This year, the CMS imposed a six-month moratorium on DMEPOS enrollment in Medicare after officials said they needed more time to go after fraud in the program. In 2025, the CMS said it stopped more than $1.5 billion in suspected fraudulent billing by medical supply companies.
Medical suppliers have also been the subject of multiple reports from the OIG, including one that found Medicare overpaid suppliers by $34 million from 2015 to 2017.
In its most recent investigation, the OIG took a closer look at six MA organizations who collectively manage 21,029 DMEPOS suppliers, of which almost 8,000 are out of network.
The agency found that, while the original Medicare program requires that all suppliers be enrolled, MA isn’t as stringent, and MA companies allow some suppliers that aren’t signed up in Medicare to bill them. MA organizations can be particularly lax about checking whether out-of-network suppliers are accredited and meet state licensure requirements.
The CMS caught some flack too, with the OIG accusing the agency of not fully using its preclusion list, a screening tool that identifies DMEPOS suppliers who’d had their Medicare enrollment revoked in the past and were barred from re-enrollment. It criticized CMS for only using the list retroactively to stop suppliers after a problem has been identified.
In addition, the OIG report found that CMS doesn’t screen all DMEPOS suppliers before they bill MA, particularly the out-of-network suppliers. Current law prohibits MA organizations from requiring that DMEPOS providers be enrolled in Medicare to service MA members, so those providers aren’t subject to screening and pose an increased risk of cheating the program through fraudulent bills.
As an example, OIG noted that while the average amount billed per month for orthotics supplies was $210 among DMEPOS suppliers enrolled in Medicare, the monthly amount billed by out-of-network suppliers for the same supplies totaled $1,399, seven times higher. Two MA organizations interviewed by the OIG said out-of-network providers accounted for “nearly all” fraud schemes in MA.
The OIG recommended that MA organizations better monitor out-of-network suppliers, ensure the preclusion list is used regularly and require that suppliers who bill MA are enrolled in Medicare.
According to the report, CMS has concurred with or will take into consideration all of the OIG’s recommendations.
