Written and maintained by CASRAI Editorial Board
Last updated
General information about published government findings; not legal, billing or medical advice. This page names no individuals or companies.
Short answer
DME fraud schemes are ways of billing Medicare or Medicaid for durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) that was never delivered, was not needed, was a cheaper item than the one billed, or was backed by falsified medical-necessity paperwork. The HHS Office of Inspector General (OIG) says Medicare DMEPOS payments top more than $7 billion in original Medicare alone, and that bad actors keep devising new schemes (OIG white paper work plan page, checked 2026-10-31).
Definition and scope
DMEPOS covers items such as wheelchairs, glucose monitors, orthotic braces and catheters, which OIG describes as vital for millions of Medicare and Medicaid beneficiaries. OIG calls the sector a frequent target for fraud, waste and abuse. This page covers the scheme types OIG publishes and where Medicare safeguards sit; coverage and payment rules are in the Medicare DME coverage guide.
The four scheme types OIG lists
| Scheme (OIG wording) | What OIG says |
|---|---|
| Billing for equipment not delivered | Suppliers bill for equipment beneficiaries never receive; in some cases using stolen beneficiary identification numbers. |
| Providing unnecessary equipment | Suppliers bill for items beneficiaries do not need; some beneficiaries receive unsolicited telemarketing calls offering “free” items. |
| Upcoding | Suppliers bill for a more expensive version of an item than the one actually provided. |
| Falsifying medical necessity | Fake documentation, or documentation obtained through deceptive or illegal practices, is used to justify billing. |
Source: OIG, Durable Medical Equipment: Protecting Medicare and Medicaid from Fraud, Waste, and Abuse, last updated 2026-08-20, checked 2026-10-31.
The three things every scheme needs
In its white paper The Nation’s Challenge to Combat Durable Medical Equipment Fraud in Medicare (OEI-02-24-00311, completed 2026-08-17), OIG focuses on three things bad actors need: a Medicare-enrolled supplier, a physician order and an enrollee identification number. Read against the scheme table, that gives a simple way to see where a safeguard can act (this mapping is editorial, built on OIG’s framing):
- Supplier enrollment. Without an enrolled supplier there is no billing channel. CMS created a Fraud Defense Operations Center to identify suspect billing and suspend payments.
- Physician order. Unnecessary-equipment and falsified-necessity schemes depend on an order or documentation that appears to justify the item.
- Enrollee identification number. Not-delivered schemes can rely on stolen numbers, which is why OIG tells beneficiaries to check their statements.
OIG’s conclusion is that bold action is needed. Its work plan page for the white paper is the primary reference; the OIG Work Plan entry explains how such projects are listed.
Original Medicare vs Medicare Advantage: the screening gap
OIG’s issue brief Medicare Advantage Organizations and CMS Can Do More To Prevent Durable Medical Equipment Fraud in Medicare Advantage (OEI-02-24-00310, issued 2026-09-09) notes that Medicare Advantage now accounts for more spending than original Medicare and that similar schemes affect both. It reports that Medicare Advantage organizations run some checks on in-network suppliers and fewer checks on out-of-network suppliers. CMS does not screen all DMEPOS suppliers before they bill Medicare Advantage, because not all are enrolled in Medicare, and the Preclusion List has limitations. OIG identifies out-of-network, non-enrolled suppliers as receiving the least screening and carrying the greatest risk.
| OIG recommendation to CMS | Status in OIG’s record |
|---|---|
| Strengthen Medicare Advantage organizations’ out-of-network checks (26-E-02-035.01) | Open; update expected 2027-03-08 |
| Strengthen use of the Preclusion List (26-E-02-035.02) | Open; update expected 2027-03-08 |
| Require all DMEPOS suppliers billing Medicare Advantage to enroll in Medicare, or seek statutory authority (26-E-02-035.03) | Open; update expected 2027-03-08 |
Source: OIG report page, OEI-02-24-00310, checked 2026-10-31.
Where it matters for clinics and suppliers
Each point below restates a safeguard OIG names; none is a legal standard.
- Be wary of unsolicited offers. OIG’s guidance to beneficiaries is to be cautious of unsolicited offers for medical supplies. OIG also publishes a Special Fraud Alert on telemarketing by DME suppliers and Compliance Program Guidance for providers of medical equipment and supplies, both linked from its DME page.
- Match what is delivered to the order. OIG advises verifying that equipment received matches the prescription, which is the check that surfaces substitution and upcoding.
- Review statements. OIG advises checking the Medicare Summary Notice or Explanation of Benefits for unauthorized charges.
- Screen who you work with. Exclusion and enrollment status are the supplier-side control point; see debarment and exclusion screening for vendors and the related Anti-Kickback Statute guide.
Common misunderstandings
- “It only involves fake suppliers.” OIG’s four scheme types include documentation and billing practices, not only items never delivered.
- “Only original Medicare is affected.” OIG says similar schemes affect Medicare Advantage, which now has more spending.
- “Any DME billing problem is fraud.” OIG’s own titles separate fraud from waste and abuse; this page does not decide whether any specific claim is fraudulent.
FAQ
What is DME fraud?
OIG describes it as billing for equipment never delivered, unnecessary items, a more expensive item than was provided, or falsified medical necessity, as in the table above.
What is Medicare DME fraud?
It is the same set of schemes aimed at Medicare, where OIG reports DMEPOS payments above $7 billion in original Medicare alone, plus a separate Medicare Advantage exposure.
What does OIG say about DMEPOS fraud?
OIG says fraudulent DMEPOS billing continues to be a major concern, and has published a white paper (OEI-02-24-00311) and a Medicare Advantage issue brief (OEI-02-24-00310).
How is suspected DME fraud reported?
OIG lists its fraud hotline, 1-800-HHS-TIPS, and an online complaint form on its DME page.
Sources
- HHS-OIG, DME featured topic, updated 2026-08-20, checked 2026-10-31.
- HHS-OIG, White paper work plan page, OEI-02-24-00311, checked 2026-10-31.
- HHS-OIG, OEI-02-24-00310, issued 2026-09-09, checked 2026-10-31.
- HHS-OIG, Work plan project, DME fraud and safeguards in Medicare, checked 2026-10-31.
