A federal watchdog has identified a screening gap in the part of Medicare Advantage that pays for braces, wound supplies and other durable medical equipment. Plans perform fewer checks on some suppliers outside their networks, while Medicare itself does not screen every seller billing those plans. The combination leaves the least-scrutinized suppliers in a position the inspector general considers especially risky.
Plan Networks Determine How Much Screening Occurs
The HHS Office of Inspector General’s September 9 issue brief says Medicare Advantage organizations conduct some fraud checks on in-network durable medical equipment, prosthetics, orthotics and supplies providers. They perform fewer checks on out-of-network suppliers.
The OIG findings reflect how network contracting gives a plan additional leverage to credential a supplier, inspect records and remove it from the network. Out-of-network claims can arise under plan rules and urgent circumstances without the same contractual relationship. That does not make every out-of-network supplier suspicious, but it reduces one layer of preventive oversight.
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CMS Does Not Enroll Every Medicare Advantage Supplier
Original Medicare generally relies on provider enrollment as a front-end control. OIG found that not all equipment suppliers billing Medicare Advantage are enrolled in Medicare, so CMS does not screen all of them. A seller can therefore sit outside a plan’s network and outside the federal enrollment process while still generating claims.
CMS also uses a Preclusion List to keep certain problematic providers and prescribers from receiving program payments. The watchdog found limitations in that tool for the equipment-supplier risk it studied. Suppliers that are out of network and not enrolled face the fewest checks, which OIG says raises their fraud risk.
Equipment Claims Carry Particular Fraud Exposure
Durable medical equipment fraud can scale rapidly because claims may be submitted for standardized products across thousands of beneficiary records. Braces, wound dressings and other supplies can be billed without the repeated face-to-face encounters that would make a nonexistent service easier for a patient to notice.
OIG cited one recent case alleging more than $10 billion in fraudulent Medicare equipment billing. That case is an allegation, not a finding that Medicare Advantage plans paid that full amount. The figure illustrates the potential volume of claims and the incentive to stop an unqualified supplier before billing begins.
Three Recommendations Would Close Different Gaps
The watchdog recommended that CMS ensure plans strengthen checks on out-of-network suppliers, improve use of the Preclusion List and require all equipment suppliers billing Medicare Advantage to enroll in Medicare. If CMS lacks authority for the enrollment requirement, OIG said the agency should seek it from Congress.
CMS concurred with or said it would consider all of the recommendations. That response is not the same as announcing that every change is already in force. Implementation could involve contract guidance, regulation, system changes or legislation, depending on the recommendation.
Beneficiary Statements Remain a Back-End Signal
Screening is designed to stop bad claims before payment, but beneficiary paperwork can expose claims that make it through. An explanation of benefits showing an unfamiliar brace, dressing or supplier gives a plan a concrete lead. Repeated claims for items never ordered or received are particularly important because equipment schemes often depend on beneficiary data rather than actual delivery.
Reporting an unfamiliar claim does not require a beneficiary to decide that fraud occurred. It allows the plan and government investigators to compare prescriptions, delivery records, supplier enrollment and billing patterns. A claim may reflect an error, identity misuse or a deliberate scheme, and the payer is positioned to make that determination.
The final issue brief identifies a structural weakness rather than blaming beneficiaries for false bills submitted in their names. Its controlling finding remains precise: Medicare Advantage plans apply fewer checks to some out-of-network suppliers, and the federal enrollment system does not cover them all.
Original Medicare controls do not automatically transfer. CMS built much of its supplier enrollment and screening architecture around Original Medicare. Medicare Advantage shifts payment administration to private plans operating under federal contracts. A control that blocks an unenrolled supplier from billing Original Medicare does not necessarily stop the same entity from sending an out-of-network claim to a plan.
That division of responsibility can create assumptions on both sides. A plan may expect federal systems to identify a risky supplier, while CMS may expect the plan’s network and claims controls to do the work. OIG’s recommendations seek to close that seam by strengthening plan checks and expanding federal enrollment coverage.
Enrollment is a preventive gate, not proof of honesty. Requiring enrollment would give CMS identifying information, ownership disclosures and authority to screen and revoke suppliers. It would not guarantee that every enrolled business bills correctly. Fraud can still occur after a provider passes initial checks, so claims analytics, complaint review and post-payment audits remain necessary.
The value of enrollment is that every supplier enters a known universe before receiving program money. Regulators can compare owners across companies, identify exclusions and apply site visits or heightened scrutiny. The least-screened group described by OIG currently avoids part of that preventive framework.
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AI tools assisted in researching and drafting this article, which was reviewed prior to publication.
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.
