The Office of Inspector General of the U.S. Department of Health and Human Services (OIG) called for stricter oversight of suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) that provide services to Medicare Advantage enrollees, warning that current verification procedures do not adequately identify fraud risks.
The call came in a report examining six organizations that administer Medicare Advantage plans and collectively manage 21,029 DMEPOS suppliers, including approximately 8,000 out-of-network suppliers. OIG found that the plans screen out-of-network suppliers less frequently than in-network suppliers, and that some plans allow suppliers not enrolled in Medicare to submit claims to them.
Gap in Enrollment and Screening Requirements
Original Medicare requires all DMEPOS suppliers to enroll, but current rules do not give Medicare Advantage organizations the same authority to require every supplier serving their members to enroll in Medicare. As a result, some out-of-network suppliers may not be subject to the required enrollment, accreditation, and licensing checks adequately.
The report noted that Medicare Advantage organizations may be particularly lax in verifying out-of-network suppliers’ accreditation and compliance with state licensing requirements. Two of the organizations interviewed by OIG said that out-of-network suppliers were responsible for “nearly all” of the fraud schemes they had identified in Medicare Advantage.
Large Difference in Claim Amounts
OIG provided a financial indicator of the scale of the risks: the average monthly claims for orthotic supplies from suppliers enrolled in Medicare were approximately $210, while the total monthly amounts claimed by out-of-network suppliers for the same supplies were $1,399, or nearly seven times as much.
The report links these risks to broader pressure on the Medicare Advantage budget, which has become more expensive than the original Medicare program. It also noted that fraud in this area has posed a risk to taxpayer funds for years, and that the Centers for Medicare & Medicaid Services (CMS) said in 2025 that it had stopped more than $1.5 billion in suspicious billing by medical supply companies.
Criticism of the Use of the Preclusion List
OIG also criticized how CMS uses the preclusion list, a tool that identifies DMEPOS suppliers whose Medicare enrollment has been revoked and who have been barred from reenrolling. According to the report, CMS does not use the list proactively enough, instead relying on it in some cases only after a problem has already emerged.
What Does This Mean in Practice?
The report recommended that Medicare Advantage organizations improve their monitoring of out-of-network suppliers, that CMS use the preclusion list regularly, and that all suppliers billing Medicare Advantage plans be required to enroll in Medicare. OIG said that CMS agreed with the recommendations or would take them into consideration.
The actual change proposed by the report is not the launch of a new tool, but raising the level of screening before claims are allowed, particularly for out-of-network suppliers. However, implementing the recommendations may require addressing the current legal constraint that prevents Medicare Advantage plans from requiring all DMEPOS suppliers to enroll in Medicare; therefore, the scope of practical implementation remains tied to the regulatory or legislative measures that CMS and the organizations may take later.