Medicare Advantage insurers routinely pay out-of-network suppliers of wheelchairs, braces, glucose-monitor supplies and other durable medical equipment that are not enrolled in Medicare at all, according to a September 2026 report from the HHS Office of Inspector General (HHS-OIG). Because those suppliers never enroll, Medicare itself has never screened them, and the inspector general says they pose an increased fraud risk. The report, numbered OEI-02-24-00310, was issued September 9 and posted September 14.
The finding matters to roughly half of all beneficiaries. Under the report’s own count, about 34 million people are in Medicare Advantage, and the plans they rely on are required by law to pay for covered equipment even when the supplier sits outside the plan’s network.
Suppliers outside the network, and outside Medicare’s enrollment gate
HHS-OIG’s report page states the core problem in one sentence: 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. Enrollment is where Medicare vets a supplier’s identity and eligibility, so a supplier that never enrolls skips that step.
The scope is narrow, and the report keeps it that way. It does not say every equipment supplier paid by a Medicare Advantage plan escapes review. Insurers run some checks on suppliers in their networks, and the inspector general found they run fewer on out-of-network ones. The gap sits with the suppliers that are both outside the network and outside Medicare enrollment.
What the full report counted
The full report examined six selected Medicare Advantage organizations. A total of 21,029 suppliers billed them. Of those, 7,980 billed in network at least once, and the other 13,049 always billed out of network. Among all 21,029, 1,342 were not enrolled in Medicare, and 1,151 were both always out of network and not enrolled.
Those 1,151 suppliers also billed differently. For orthotics, out-of-network suppliers not enrolled in Medicare billed about seven times more per enrollee than the comparison group, $1,399 against $210. For glucose monitor supplies and urinary catheters, they billed about one and a half times more.
Three of the six insurers interviewed told investigators that the equipment fraud schemes hitting their plans often involved out-of-network suppliers. Almost 40 percent of Medicare Advantage enrollees, the report notes, belong to plans with broad coverage of out-of-network suppliers.
A blacklist that works only after the fact
Medicare keeps a Preclusion List of suppliers that Medicare Advantage plans are not supposed to pay. It covers suppliers whose Original Medicare enrollment was revoked for conduct CMS judged detrimental to Medicare and who are under an active re-enrollment bar. The report says CMS can use the list only reactively, to stop suppliers after a problem has been identified.
The inspector general also identified 50 suppliers that had their enrollment revoked and were barred from re-enrolling but were not on the list. CMS reviewed those 50 and responded that, at the time of revocation, the criteria for placement on the Preclusion List had not been met.
The recommendations and the CMS answer
The report makes three recommendations to CMS: ensure that Medicare Advantage organizations strengthen checks of out-of-network equipment suppliers; strengthen use of the Preclusion List; and require that all equipment suppliers billing Medicare Advantage be enrolled in Medicare, or seek statutory authority to do so if necessary. CMS concurred with or said it would take into consideration all of them. Its response letter in Appendix A is addressed to Ann Maxwell, the Deputy Inspector General for Evaluation and Inspections, whose office carries out reviews of this kind. The report itself lists no individual author.
No enrollment requirement exists yet. The third recommendation would change that, and it may need Congress to act, which is why the report phrases it as a request to seek statutory authority if necessary.
Why the Original Medicare case is not a Medicare Advantage loss
The report opens its argument with a large number: in one recent case, bad actors are accused of fraudulently billing Medicare for over $10 billion in durable medical equipment, prosthetics, orthotics and supplies. That is an allegation, made in a case involving Original Medicare. It is not a finding of loss to Medicare Advantage, and the report offers no dollar total for fraud inside Medicare Advantage plans. The figure shows the scale of equipment fraud in the wider program, not what these plans have lost.
What the gap means for a member’s own costs
Federal law requires insurers to pay covered equipment from out-of-network suppliers and requires those suppliers to accept the plan’s payment as payment in full, the report says in a footnote. For a member, the practical question is the cost-sharing, which each plan sets. Under Original Medicare, Part B coinsurance is generally 20 percent of the cost of covered items, and a padded or fraudulent bill raises that share along with the program’s total.
CMS has projected that 34 million people, or 47.4 percent of those with Medicare, will be in a Medicare Advantage plan in 2027, according to its September 28 announcement on the coming plan year. The population exposed to the gap is large and growing, and the inspector general’s report is the agency’s own account of where screening stops.
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This article was produced with AI assistance and checked against the primary sources linked above.
David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
