Fraud tied to durable (DME) or home medical equipment (HME), of course, is not a victimless crime. The Medicare trust fund is harmed by fraud, and as a result, so are the beneficiaries who rely on it — seniors, people with disabilities, and indirectly, their caregivers.
But others are harmed as well, whether the fraud is carried out intentionally by bad actors or committed accidentally by suppliers making billing or documentation mistakes.
“Fraud, even when unintentional, can have a very real impact on the people we seek to serve,” said Michelle Martin, vice president of growth, policy and partnership strategy for TenderHeart Health Outcomes, based in Austin, Texas. “If fraud results in a person not getting the items they need, their health and dignity can be easily compromised. Consumers/caregivers/family members get stuck in a morass of trying to sort through paperwork/getting new referrals from busy physician offices while trying to get needed items delivered.”
Professional partners can also be impacted.
“Payers can lose trust in vendors, which can complicate business for the good actors, which is the majority of providers),” Martin added. “When fraud is a concern, regulators look for solutions that typically result in additional oversight requirements. Compliance with requirements is time consuming and costly for providers, which can circle back to consumers in the form of shipment delays. In short, fraudulent practices impact all parts of the healthcare ecosystem — with consumers, the people we are here to help, paying the highest cost in the form of their good health, dignity and time.”
Ryan Bullock, chief strategy officer for Aeroflow Health, based in Asheville, North Carolina, noted the “ripple effects across the entire DME/HME ecosystem, whether in the form of intentional abuse or unintentional non-compliance.”
For patients, Bullock explained, “this can mean delayed or denied access to medically necessary equipment, which directly impacts quality of life and health outcomes. For caregivers and referral sources, fraud introduces friction and uncertainty into what should be a streamlined care process, eroding trust in suppliers and slowing down coordination of care.”
Even HME providers doing everything correctly can be hurt.
“For compliant suppliers, fraud distorts the competitive landscape,” Bullock noted. “Bad actors can undercut pricing or bypass requirements, while well-intentioned providers face increased administrative burden, audits and reimbursement delays. This diverts resources away from patient care and innovation. At the system level, fraud drives up costs for taxpayers and funding sources like, CMS [Centers for Medicare & Medicaid Services], ultimately leading to stricter regulations and oversight mechanisms that affect all providers, regardless of compliance history.
“In short, fraud penalizes the very stakeholders who are trying to do things the right way.”
Echoes for the industry
The results can turn a harsh, glaring light onto the entire industry.
“Fraud causes significant harm to the DME industry’s reputation,” Bullock said. “Patients who can’t access their medically necessary products due to fraud interventions have their health at risk. When fraud tactics are investigated in a moratorium, potential disruptions to the larger supply chain for these critical medical devices are possible. DME companies have a responsibility to ensure real patients get access to the supplies they need. Consistent fraud activity puts patients at risk and compromises DME’s companies’ ability to serve those patients.”
“Providers get painted with a broad brush, unfortunately,” Martin said. “CMS has been very outspoken about the elevated risk in DMEPOS [durable medical equipment, prosthetics, orthotics and supplies], and that certainly shapes how health systems, health plans, medical professionals, etc., view the HME/DME providers. Even when most suppliers are ethical, widely publicized schemes make ‘DME’ synonymous with questionable billing, and it becomes harder for reputable suppliers to be seen as clinical partners.”
And that’s why, she added, “Addressing fraud should be as important as service quality and creating positive outcomes — they are all major impacts to our business and should be treated as such.”
The power of an informed patient
Martin described TenderHeart’s working process as “inherently anti-fraud.”
“We reach out to every consumer to have a conversation on the products they’re using, in what amount and the efficacy of those products,” she explained. “It’s more work than shipping the amount a state allows for any given product — but our goal is to be sure we’re getting people what they need and what will work best for them. We want people to enjoy their lives, not worrying about whether their supplies will perform as needed to maintain good health and dignity.”
Additionally, TenderHeart’s team tracks “our outreach, orders, deliveries” and then reports that information to customers “in addition to ad hoc calls to report potentially negative findings — i.e., when we spoke to Mr. Smith, he said he hasn’t eaten in three days.”
By taking those steps, “We are combating fraud through transparency and communication,” Martin said.
Bullock said Aeroflow prioritizes “patient education to help individuals recognize and report potential fraud, including unsolicited outreach or misuse of insurance information. We continue to strengthen these efforts through ongoing investment in internal controls, staff training and clear channels for patient feedback and timely resolution.”
As for what industry stakeholders as a whole can do to fight fraud, Martin said, “A few important things: Make the consumer’s need for supplies and evidence of a successful delivery non-negotiable. Target hotspots for fraud instead of broad moratoriums. Second, target actual fraud versus administrative errors that need to be corrected. Focus on quality and ethical practices as table stakes that are essential to the core function.”
Bullock’s suggestions include standardizing audits with “gold-standard supplier pathways”: “CMS should adopt a risk-based audit framework that provides relief for demonstrably compliant suppliers. As an alternative to audits, CMS should allow ‘gold-standard providers’ to build direct API [application programming interface] pipelines.”
In that example, when a claim is billed, the system is “automatically transmitting the electronic signature, date/time stamp, and tracking number directly to CMS [to] provide necessary data upfront, allowing the supplier to effectively pre-clear their own claims, dropping the government’s audit burden to zero for those transactions. This would save CMS millions of dollars in Recovery Audit Contractor (RAC) and Medicare Administrative Contractor (MAC) administrative fees, allowing the agency to reallocate those funds toward investigating unverified, high-risk actors.”
Bullock also suggested using technology, including artificial intelligence: “CMS should shift program integrity efforts to the front end of the claims process. Leveraging artificial intelligence and predictive analytics to flag irregular incoming claims prior to payment would enable CMS to proactively identify suspicious activity and prevent improper payments. CMS should accelerate the transition to fully electronic documentation by promoting, and ultimately requiring, the adoption of electronic orders.”
Moving the needle
How will the industry know if suppliers’ actions against fraud are working and making a difference?
“Most importantly, we would see fewer consumer complaints/frustration/confusion over receiving items they did not request, confusing physician orders and bills they should not receive,” Martin said. “We would see lower improper payments made for DME/HME. And, the good actors would be viewed as better referral sources due to lower documentation/billing/error issues.”
Just as fraud causes ripples of harm throughout the industry, all stakeholders should similarly benefit as fraud is reduced, Bullock said.
“We will know progress is being made when enforcement becomes more targeted and less burdensome for compliant providers,” he said. “From CMS, that should mean faster action against fraudulent suppliers, stronger cross-program enforcement, and greater use of real-time data to stop improper claims before payment.
“At the same time, high-performing suppliers should see fewer unnecessary audits, less redundant documentation, and faster claim processing.”
He added that patients and caregivers will act as key signals. “Success should lead to fewer confusing or unsolicited contacts, more consistent experiences, and quicker access to needed equipment. Referral sources should also see fewer delays and less administrative friction. Ultimately, effective fraud prevention should be proactive and largely invisible to compliant providers and patients, powered by data, identity verification and intelligent automation.”
Editor’s note: This story was originally published in the June 2026 digital edition of HME Business. Register to view the read the entire issue.
