The Office of the Inspector General (OIG) is urging regulators to crack down on suspect billing in Medicare Advantage, particularly among out-of-network durable medical equipment (DME) suppliers. The OIG found that Medicare Advantage (MA) organizations do not screen for fraudulent medical equipment suppliers as often when they are out of network, compared with in-network suppliers.
Fraud related to DMEPOS, prosthetics, orthotics, and supplies, has been a long-standing issue in Medicare, putting millions of taxpayer dollars at risk each year, according to the OIG. With MA costs now higher than the original Medicare program, fraud could put the program at risk.
Screening Process
The Office of Inspector General (OIG) has urged Medicare Advantage (MA) organizations to enhance their supplier screening processes and recommended that the Centers for Medicare and Medicaid Services (CMS) more frequently utilize its fraud prevention tools. Additionally, the OIG criticized CMS for not fully leveraging its preclusion list, which identifies DMEPOS suppliers previously barred from Medicare enrollment due to revocation.
The OIG reviewed six MA organizations overseeing 21,029 DMEPOS suppliers, nearly 8,000 of which operate out of network. The investigation revealed that, unlike traditional Medicare, which mandates supplier enrollment, MA organizations permit some non-enrolled suppliers to bill them, indicating less stringent oversight.
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Recommendations
The OIG advised MA organizations to strengthen monitoring of out-of-network suppliers, consistently apply the preclusion list, and ensure all suppliers billing MA are enrolled in Medicare. CMS has agreed to consider or implement all of the OIG’s recommendations, according to the report.
In its recent investigation, the OIG found that out-of-network suppliers were responsible for nearly all fraud schemes in MA. For instance, while enrolled DMEPOS suppliers billed an average of $210 monthly for orthotics, out-of-network suppliers charged $1,399 for the same items, a sevenfold difference.
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, CMS reported halting over $1.5 billion in suspected fraudulent billing by medical supply companies.
The OIG has issued multiple reports on medical suppliers, including one revealing Medicare overpaid suppliers by $34 million from 2015 to 2017. The latest report shows the need for heightened scrutiny of DMEPOS suppliers, especially those operating out of network.
