Durable Medical Equipment (DME) Fraud – Unnecessary Equipment

​There are several types of DME fraud; however, the DME fraud we are focused on in this blog is unnecessary equipment fraud.

What is it?

• DME fraud involves companies supplying equipment to consumers that is not necessary or useful – in many cases, the consumer is never treated for the condition that the equipment is associated with.
• The fraudster bills Medicare, Medicaid and/or Medical Supplement insurance for the cost of the equipment.

How is DME Fraud for unnecessary equipment conducted?

• Fictitious entities are created with names similar to legitimate entities, but with a new Employer Identification Number (EIN) and location. The phone numbers and address typically do not match.
• The fictitious entity bills Medicare, Medicaid and/or Medical Supplement insurance for equipment and, sometimes, for services never rendered. Because Medicare statements are sent quarterly, the fraud may not be uncovered by the consumer for months.
• One specific example of a fictitious fraudulent entity is ‘Pretty IN Pink Boutique’ from El Paso, TX, with a disconnected phone number, posing as a legitimate business, Pretty in Pink Boutique from Nashville, TN.

Trending?

• During the pandemic, testing kits were the trending equipment billed fraudulently. Fraudsters were making money on pure volume of claims submissions.
• Following testing kits, the trend shifted to back braces and knee braces. Often, braces were sent to consumers in volumes more than a person could use (how many backs or knees do they think a person has?!)
• Current fraud trends involve catheters and diabetic equipment.
• Fraudsters continue to evolve and find equipment to supply that will gain them the most money.

Why do you care?

• As a taxpayer and future recipient of Medicare or Medicaid benefits, and as a potential consumer of medical supplemental policy, your premiums have and will continue to be impacted by fraudulent claims.
• Fraud drives up the cost of premiums in both the public and private sectors.
• The insurance companies we work for have a duty to detect and deter fraud both to deter costs and because it is the right thing to do.

What to do?
If your company sells medical supplement insurance, act upon the reports of fraudulent equipment.

• Confirm if the client was treated for the condition the equipment is intended to treat, and research the entity making the claim – an invalid telephone number for the provider entity is a common red flag.
• Encourage insureds to report confirmed fraud to Medicare and Medicaid.
• Share confirmations of fraud with peers.

How to detect fraud if you are a Medical Supplement Provider?

• Start a bad actor list to prevent future payments – the equipment may get paid for in the first instance it is provided, but transactions may be stopped prior to payment for subsequent attempts.
• Use the exclusion lists database, which lists bad actors.
• Coordinate with reinsurers to share information regarding bad actors.

Authored by:  Sharon K Minta, CFE CAMS