Health Law Daily Wrap Up, DURABLE MEDICAL EQUIPMENT—OIG REPORTS: CMS should add measures preventing Medicare advantage fraud among durable medical equipment suppliers, (Sep 16, 2026)
By: K. C. Salcedo
The heightened risk of Medicare Advantage fraud among out-of-network, non-Medicare-enrolled suppliers was due to the lack of proactive measures undertaken by Medicare Advantage Organizations and CMS.
In its analysis of Medicare Advantage data in calendar year 2023, specifically for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS), the OIG found that: (1) Medicare Advantage Organizations (MAOs) conducted fewer checks of out-of-network suppliers in comparison to their in-network suppliers; (2) CMS did not screen some DMEPOS suppliers that billed Medicare Advantage because they were not enrolled in Medicare and therefore were not subject to the same screening requirements applicable to potential in-network providers; (3) as a result of the foregoing, DMEPOS suppliers that billed out of network and not enrolled in Medicare presented a higher risk of fraud to Medicare Advantage; and (4) CMS should: (a) ensure that MAOs strengthen their review of out-of-network DMEPOS suppliers, including those not enrolled in Medicare, (b) allow its Preclusion List to include DMEPOS suppliers not enrolled in Medicare that may present risk to Medicare, and (c) require all DMEPOS suppliers, regardless of network status, to enroll in Medicare prior to billing Medicare Advantage. In response, CMS either concurred or said it would consider these recommendations (OIG Report, No. OEI-02-24-00310 (Sept. 14, 2026)).
MAOs conducted fewer checks of out-of-network DMEPOS suppliers than in-network suppliers. MAOs did not require out-of-network suppliers to meet the same standards as in-network suppliers, such as state licensure requirements or accreditation. In order to pass muster, out-of-network suppliers need only be absent from: (1) the Preclusion List, which identified suppliers that MAOs could not pay, and (2) the OIG exclusion list.
CMS did not screen all DMEPOS suppliers that billed Medicare Advantage because they were not Medicare-enrolled. Unlike those that billed Original Medicare, DMEPOS suppliers that billed Medicare Advantage were not required to enroll in Medicare. MAOs were not legally permitted to deny payments to out-of-network DMEPOS suppliers not enrolled in Medicare. Without enrolling, these out-of-network suppliers bypassed the more rigorous screening requirements CMS imposed on in-network suppliers or those enrolled in Medicare, such as site visits and background checks for felony convictions.
Reliance on Preclusion List Insufficient. CMS was permitted to use the Preclusion List only in response to an identified problem to stop a supplier’s misconduct, while Medicare-enrolled suppliers must be proactively screened prior to billing Medicare. Generally, CMS stated it assessed a non-enrolled supplier’s preclusion only after its attempt to enroll, thereby allowing fraudulent suppliers to avoid the Preclusion List by not enrolling in Medicare.
Another OIG finding was that the Preclusion List did not include some suppliers whose enrollments were revoked under Original Medicare. These suppliers were nonetheless able to bill MAOs. The OIG further identified “suppliers that had their enrollment revoked and were barred from re-enrolling but were not on the Preclusion List.”
Heightened Medicare Advantage fraud risk for out-of-network, non-enrolled DMEPOS suppliers due to less screening. Such suppliers were subject to the least screening requirements compared to in-network and/or enrolled suppliers, thus increasing the risk of fraudulent billing to Medicare Advantage. The OIG noted that the materially higher billing by out-of-network, non-enrolled DMEPOS suppliers might indicate inappropriate billing.
In addition to the OIG, MAOs and CMS had cited concerns about the potential fraud among such suppliers, noting that the fraudsters tended to be out-of-network or non-enrolled. The OIG surmised that such suppliers deliberately evaded screening requirements by assuming out-of-network status and not enrolling in Medicare, thus allowing them to bill fraudulently.
OIG recommendations, CMS responses. The OIG issued three recommendations, to which CMS responded.
The OIG recommended that CMS require MAOs to heighten their screening of out-of-network DMEPOS suppliers, including those not enrolled in Medicare, for example by ensuring they meet licensing and accreditation requirements. CMS concurred.
The OIG recommended that CMS expand its Preclusion List criteria to include non-enrolled DMEPOS suppliers that “have engaged in behavior that is detrimental to Medicare and, therefore, meet the criteria to be precluded” and also revoked suppliers, especially those barred from re-enrolling in Medicare. CMS responded that it would consider this recommendation, noting that it “recently sought feedback in a Request for Information (RFI) on potential improvements to the Preclusion List” after identifying gaps in the List’s effectiveness in preventing fraud.
The OIG recommended that CMS require all DMEPOS suppliers to enroll in Medicare prior to billing Medicare Advantage or seek statutory authority to impose such a requirement. The requirement would subject all DMEPOS suppliers to screening checks, including licensure and accreditation reviews, site visits, and background checks. CMS responded that it would consider this recommendation, noting that its recent RFI posed the question of whether or not this enrollment requirement would improve program integrity.
ReportsLetters: OIGReports CMSNews DMENews FraudNews PartCNews