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Durable Medical Equipment Fraud and Safeguards in Medicare

Announced on  | Last Modified on  | Project Number: OEI-02-24-00310
Status
Completed
Agency
Centers for Medicare and Medicaid Services

OBJECTIVE

Each year, Medicare payments for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) top more than $7 billion in traditional Medicare alone. Although CMS has a number of safeguards in place to prevent bad actors from billing DMEPOS in Medicare, fraudulent billing for DMEPOS continues to be a major concern. Recent cases demonstrate that DMEPOS continues to be a target of fraudulent billing and that new schemes have developed. Our review will provide information about current fraud schemes and the safeguards and monitoring that CMS has to prevent fraud, waste, and abuse. These findings will result in multiple products. The first product will look at billing for DMEPOS in Medicare Advantage, specifically by suppliers that are not enrolled in Medicare fee-for-service.

TIMELINE

REPORT PUBLISHED

Medicare Advantage Organizations and CMS Can Do More To Prevent Durable Medical Equipment Fraud in Medicare Advantage (OEI-02-24-00310)

This issue brief focuses on fraud risks related to DMEPOS suppliers in Medicare Advantage. Medicare Advantage organizations (MAOs) and CMS take steps to screen fraudulent suppliers and prevent them from billing Medicare Advantage. However, gaps exist in this screening that can be exploited by bad actors. Specifically, we found:

Gaps in MAO screening:

  • MAOs conduct some screening checks of in-network suppliers but fewer checks of out-of-network suppliers.

Gaps in CMS screening:

  • CMS does not screen all DMEPOS suppliers before they bill Medicare Advantage because they are not all enrolled in Medicare.
  • CMS uses a fraud prevention tool (known as the Preclusion List) to prevent certain DMEPOS suppliers from billing Medicare Advantage; however, the List has limitations in preventing fraud.

Suppliers with the least screening—those that bill out of network and are not enrolled in Medicare—pose an increased fraud risk to the program.

26-E-02-035.01 to CMS - Open Unimplemented
Update expected on 03/08/2027
CMS should ensure that MAOs strengthen checks of out-of-network DMEPOS suppliers.

26-E-02-035.02 to CMS - Open Unimplemented
Update expected on 03/08/2027
CMS should strengthen the use of the Preclusion List to prevent fraudulent DMEPOS suppliers from billing Medicare Advantage.

26-E-02-035.03 to CMS - Open Unimplemented
Update expected on 03/08/2027
CMS should require that all DMEPOS suppliers that bill Medicare Advantage be enrolled in Medicare, or seek statutory authority to do so if necessary.

View in Recommendation Tracker
Work Plan Type
Office of Evaluation and Inspections
HHS Agencies
Centers for Medicare and Medicaid Services
Issue Areas
Financial Stewardship Managed Care Medical Supplies and Equipment Physician and Healthcare Practitioners
Target Groups
Elderly
Financial Groups
Medicare B