Office of Inspector General Urges CMS to Take ‘Bold Action’ on DME Fraud

CMS/Medicare

WASHINGTON—In a recently published report, the Department of Health and Human Services Office of Inspector General (OIG) said the Centers for Medicare & Medicaid Services (CMS) should take “bold action” to prevent durable medical equipment (DME) fraud, making recommendations that include tightening Medicaid enrollment for providers, collaborating with physicians and using new technologies like AI. 

The OIG said CMS has recently taken several steps to prevent “bad actors” from becoming durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) providers, and while the OIG lauded the organization for some steps it has taken—including this year’s temporary moratorium on new enrollment in Medicare—it said further actions should be taken to address several key issues. 

The American Association for Homecare said it was interviewed for the report and continues to work with the agencies to curb fraud, waste and abuse in the DMEPOS sector. 

The 21-page white paper, titled “The Nation’s Challenge to Combat Durable Medical Equipment Fraud in Medicare,” divided its proposed anti-fraud efforts into three categories and made the following recommendations. 

1. Medicare Enrollment

  • Strengthen onsite inspections to prevent bad actors from enrolling in Medicare: OIG said to make the inspections more effective, CMS should strengthen the criteria for onsite inspections, adding it should also target its approach by conducting more thorough or frequent onsite inspections of high-risk suppliers.
  • Improve detection of unreported changes of ownership and straw owners: The report said CMS should work with its federal partners to find data that could improve its ability to track ownership, better use state-level data and also use AI and other technologies to find unreported changes of ownership. 
  • Ban suppliers from using paper applications: OIG said CMS should require all DMEPOS suppliers to enroll using CMS’s electronic application system.
  • Increase oversight of newly enrolled DMEPOS suppliers: OIG suggested CMS should implement a period of enhanced oversight of newly enrolled DMEPOS suppliers and those that recently changed ownership.
  • Reassess surety bond requirements: OIG said updating these requirements may better deter fraud and said it has additional work on surety bonds underway that will provide more information. 
  • Require all DMEPOS suppliers that bill Medicare Advantage (MA) to enroll in Medicare: This action may require statutory change. 

2. Physician Orders & Fraudulent Claims

  • Engage ordering physicians in fraud-fighting efforts: OIG advised that CMS should pursue different ways to further engage physicians in the fight against fraud. CMS could develop an electronic verification method for physicians to confirm their orders before certain claims are paid, or CMS could issue reports to physicians detailing DMEPOS ordered for review. 
  • Harness new technologies and analytic tools to better detect and stop payments for fraudulent DMEPOS claims.
  • Enhance the use of payment suspensions: OIG said CMS recently increased its use of payment suspensions and should continue these efforts and identify opportunities to streamline their usage. 
  • Expand medical reviews: The report said broadening the types of reviews contractors conduct would more effectively prevent fraudulent billing. 
  • Work with secondary payers to stop fraudulent billing.
  • Require MA organizations to submit the identification number for the physicians who order DMEPOS: OIG said it has previously recommended that CMS require MA organizations to report ordering provider national provider identifiers on encounter data.

3. Obtaining & Using Enrollee Identification Numbers for Fraudulent Billing

  • Discontinue or better protect enrollee lookup tools: OIG said CMS should assess whether the lookup tools are needed and determine whether they can be discontinued and taken offline. If not, immediate action to further restrict access to the tools is needed. 
  • Prohibit DMEPOS suppliers from unsolicited contact with enrollees: The report said to help fight emerging DMEPOS fraud schemes, CMS should seek statutory changes to expressly extend the prohibition on unsolicited telephone contacts to other types of contact such as text and email and to marketing agencies and call centers.
  • Partner with social media companies to prevent the sale of enrollee identification numbers on their platforms.
  • Engage Medicare enrollees in the fight against fraud: OIG recommended that CMS continue to educate enrollees about fraud so they stay vigilant about protecting their identification number. In addition, CMS should explore ways to further engage enrollees in stopping fraud. 

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