For pulmonologists, durable medical equipment is part of everyday care. We rely on suppliers to deliver oxygen, PAP devices, nebulizers, ventilators, suction equipment, and the supplies needed to keep those devices working.
The ordering process is already cumbersome:
Document the diagnosis
Enter the order
Attach testing
Send everything to a supplier
The request may still come back because a saturation test was performed under the wrong conditions, a note is missing specific language, or the insurer wants another form.
At the same time, Medicare has a fraud problem within the durable medical equipment, prosthetics, orthotics, and supplies market, commonly called DMEPOS.
According to MedTech Dive, the Trump administration announced a six-month moratorium on new Medicare enrollment for certain DMEPOS suppliers as part of a broader fraud crackdown. A temporary pause gives CMS time to review its controls and keep questionable companies from entering the program.
It may also reduce supplier capacity and slow access for patients if CMS does not pair the crackdown with a more precise way to identify risk.
A 2018 HHS Office of Inspector General audit shows how much of this problem is embedded in the payment process itself:
The OIG reviewed 120,614 Medicare Part B claims for DMEPOS provided while beneficiaries were hospitalized between 2015 and 2017.
Medicare paid suppliers about $34 million for those claims.
The audit concluded that none of the payments should have been made.
During a Medicare Part A-covered inpatient stay, the hospital is generally responsible for providing DMEPOS. Those items are included in the hospital’s inpatient payment. Outside suppliers cannot separately bill Medicare Part B for the same items, except under limited rules for equipment delivered shortly before discharge for use at home.
Medicare’s system still paid the claims. Beneficiaries were also held responsible for $8.7 million in unnecessary deductibles and coinsurance.
The claims edits failed in three different ways:
Missing categories: The system was not designed to catch $30.7 million in claims for prosthetics, orthotics, supplies, and related drugs.
Failed follow-through: The system identified nearly $2 million in DME claims for review, but the claims were still paid or the money was not recovered.
Incorrect rules: Medicare paid another $1.3 million for customized prosthetics because the system applied a skilled nursing facility exception to other inpatient settings.
The OIG estimated that better-designed edits could have saved Medicare $223.1 million from 2008 through 2017. Beneficiaries (our patients) could have avoided another $56.3 million in deductibles and coinsurance.
Improper payment does not automatically mean fraud. Some claims may have resulted from coding mistakes, timing problems, or confusion about Medicare’s billing rules. The audit did not determine the intent behind each claim.
It did identify a clear process failure. Medicare had enough information to know that a beneficiary was hospitalized and that a supplier was separately billing Part B. Its payment system did not consistently connect those facts before releasing the money.
Insights
Root Cause Analysis: 5 Whys
The 5 Whys process in root cause analysis involves repeatedly asking "Why?" five times to drill down into the root cause of a problem by exploring the cause-and-effect relationships underlying the issue.
The problem: Medicare pays improper DMEPOS claims and then relies on audits, recoupments, and broad enrollment restrictions to manage the resulting risk.
Why? Medicare’s claims systems do not consistently reject claims that conflict with inpatient status, place of service, supplier eligibility, or payment rules.
Why? Some edits cover only selected product categories. Others flag a claim without ensuring that it is denied or recovered.
Why? DMEPOS billing is divided across suppliers, hospitals, Medicare contractors, and separate Part A and Part B payment workflows.
Why? CMS has added rules and edits over time without creating one process that verifies the supplier, patient setting, coverage rule, and claim before payment.
Why? Medicare manages much of its DMEPOS risk after the claim enters the system. Weak screening and fragmented data allow improper payments through, leaving audits and recoupments to correct them later.
Impact Analysis
Impact analysis is the assessment of the potential consequences and effects that changes in one part of a system may have on other parts of the system or the whole.
Patient: Improper billing can leave beneficiaries paying deductibles and coinsurance they never owed. Broad supplier restrictions may also shrink capacity in markets that already struggle to deliver equipment quickly. Delays involving oxygen, noninvasive ventilation, or suction equipment can turn a discharge problem into a clinical problem.
Clinician or Provider: We carry much of the administrative burden even though we do not control supplier enrollment or claims payment. When a request stalls, our teams repeat testing, rewrite orders, send more documentation, and search for another supplier. That work takes time away from clinical care without necessarily improving fraud detection.
System: Medicare absorbs the improper payment, pays contractors to investigate it, tries to recover the money, and adds new controls after the fact. Hospitals and clinics then build manual workflows to navigate those controls. The system pays for the original error and for the administrative response.
Solutions
The solutions surrounding this issue largely have to do with CMS screening suppliers earlier, connecting the data it already has, and stopping invalid claims before payment. This approach protects Medicare (and taxpayer) dollars while allowing physicians and legitimate suppliers to get respiratory equipment to patients on time. More specifically…
Screen suppliers continuously: CMS should verify enrollment, accreditation, licensure, ownership, billing location, and exclusion status before the first claim and at regular intervals afterward. Human labor isn’t necessarily needed for this. AI tools can certainly do this type of routine, redundant checking.
Protect access to time-sensitive respiratory equipment: CMS and Medicare contractors should create an expedited pathway for oxygen, home ventilation, suction, and other equipment required for safe discharge. When a supplier loses enrollment, the patient and clinical team need a rapid transfer to a verified alternative.
Validate the complete claim before payment: Medicare should automatically check inpatient status, discharge destination, place of service, duplicate payment risk, supplier eligibility, and applicable exceptions. A claim that fails one of these checks should not move forward without review. Again, human labor isn’t necessarily warranted. AI tools can do this.
Focus oversight on high-risk billing patterns: Sudden spikes in volume, unusual geographic reach, beneficiary complaints, narrow product concentration, and spending far above peers can trigger targeted review. This directs scrutiny toward the suppliers generating the risk.
Measure access alongside fraud prevention: CMS should track order-to-delivery times, discharge delays, supplier availability, and patient complaints along with prevented payments and recoveries. These measures would show whether program-integrity efforts are creating new barriers to care.
In summary, Medicare needs stronger DMEPOS oversight. The current crackdown may keep some questionable suppliers out of the program, but enrollment restrictions alone will not repair the claims process that allowed improper payments for years.
