Crack Down on DME Fraud and Abuse

27 Tips for Compliance Officers

The Durable Medical Equipment (DME) supplier sector is undergoing heightened scrutiny from the Centers for Medicare & Medicaid (CMS), the Office of Inspector General (OIG), and the Department of Justice (DOJ). This sector has long been considered a high‑risk, high‑reward avenue for fraudulent billing and abusive practices, making it easier to exploit compared to many other provider types. CMS recently announced new measures to combat DME fraud, including a nationwide temporary six‑month moratorium on enrollment for defined suppliers. This action is intended to allow regulators time to identify repeat abusive patterns within the medical‑supply sector. Providers can expect stricter enrollment screening, increased audits, and temporary moratoria on new enrollments or ownership changes.

The following tips are recommended for DME Compliance Officers to consider at this time:

1. Ensure Durable Medical Equipment, Prosthetic Devices, Prosthetics, Orthotics, and Supplies (DMEPOS) accreditation and revalidation requirements.
2. Confirm accurate location, signage, hours, and licensure.
3. Verify Standard Written Orders (SWO) are completed before delivery.
4. Ensure medical necessity documentation supports coverage criteria.
5. Assure beneficiary identity with two forms of identification at point of sale or delivery.
6. Confirm face-to-face requirements where applicable.
7. Conduct pre-billing documentation review.
8. Implement ongoing compliance monitoring for the proper use of modifiers.
9. Validate correct rental vs. purchase billing practices.
10. Tighten documentation, ordering practices, and beneficiary verification.
11. Ensure Proof of Delivery (POD) is signed by the beneficiary and includes date, time, and delivery address.
12. Verify physician-patient relationships.
13. Review high-dollar and recurring claims (e.g., power wheelchairs, oxygen, CPAPs, prosthetics).
14. Conduct HIPAA risk assessments.
15. Verify Business Associate Agreements (BAAs) for related parties.
16. Maintain documentation evidencing orders and medical necessity with written prescription.
17. Ensure orders include clinician credentials, prescriptions, and clinical justification.
18. Keep a documented checklist demonstrating how the device meets coverage criteria.
19. Implement a process for pre-claim audits on high-risk items.
20. Document sources of referrals and ensure no payments or remuneration are provided for referrals.
21. Run due diligence on third‑party vendors and contractors.
22. Train staff on new verification procedures, documentation standards, and POD requirements.
23. Maintain logs documenting compliance training activity.
24. Ensure the compliance hotline is functioning properly to receive reports of suspicious activity.
25. Establish ongoing monitoring of claims and document corrective actions when issues are identified.
26. Consider mock government audits to test compliance readiness.
27. Obtain an independent compliance evaluation to evidence compliance, identify gaps, and strengthen controls.

For more information on this topic, contact [email protected].

About the Author

Richard P. Kusserow established Strategic Management Services, LLC, after retiring from being the DHHS Inspector General, and has assisted over 3,000 health care organizations and entities in developing, implementing and assessing compliance programs.