Fraud in durable medical equipment (DME) supply has been identified by CMS and the Department of Justice as a pervasive and rapidly growing problem. According to a 2005 report by the Government Accountability Office, fraudulent payments accounted for over $900 million of the $8.8 billion spent by the United States on durable medical devices in 2004. Medicare and Medicaid cover at least part of the cost of medically necessary equipment. In order to qualify for Medicare reimbursement a patient must have a physician-signed Certificate of Medical Necessity and must meet any applicable Medicare clinical guidelines for medical necessity of certain equipment (such as home oxygen or insulin pumps).
Many DME suppliers act merely as "middle-men," purchasing equipment from DME manufacturers, shipping it to patients, and billing insurance, including Medicare and Medicaid. As such, regulation is difficult and patients are at risk of fraud. Common fraudulent schemes developed and perpetrated by DME fraudsters, and identified and prosecuted by the DOJ and qui tam whistleblowers, include:
(a) shipping DME to patients prior to obtaining a physician's order, a Certificate of Medical Necessity, or a patient Assignment of Benefits;
(b) billing Medicare for duplicate orders of DME, or deliberately "overshipping" DME that is never ordered and exceeds utilization guidelines and lifespan of the DME;
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