Before the Claim is Paid: OIG's New Strategy to Combat DME Fraud in Medicare

Medicare has been fighting durable medical equipment (DMEPOS) fraud for decades. But a new white paper from the HHS Office of Inspector General (OIG) suggests that the government increasingly wants to stop fraud before Medicare pays the claim, rather than relying primarily on recovering money after the fact. That shift is really worth paying attention not only for DME suppliers, but for anyone interested in where Medicare program integrity may be heading.

In its August 2026 white paper, The Nation’s Challenge to Combat Durable Medical Equipment Fraud in Medicare, OIG organizes the problem around three things a fraudster generally needs:

1. A Medicare-enrolled DMEPOS supplier;

2. A physician order; and

3. A Medicare enrollee identification number.

OIG's proposed strategy is essentially to make each of those three things harder to exploit.

Strengthen the “front door” to Medicare

Among the changes OIG suggests are:

• More rigorous, and potentially more frequent and unannounced, site inspections for higher-risk suppliers;

• Better detection of unreported ownership changes and straw owners, including the use of AI and other technologies;

• Eliminating paper enrollment applications;

• Enhanced oversight of newly enrolled suppliers and suppliers that recently changed ownership;

• Reassessing DMEPOS surety bond requirements; and

• Requiring DMEPOS suppliers that bill only Medicare Advantage to enroll in Medicare and undergo CMS screening.

CMS has already moved in this direction. In February 2026, it imposed a six-month nationwide moratorium on new Medicare enrollment for certain DMEPOS suppliers, including certain changes in majority ownership, while it considers additional safeguards.

Catch fraudulent orders and claims before payment

One particularly interesting recommendation here is to involve physicians more directly in fraud detection. OIG suggests CMS could create an electronic mechanism allowing physicians to verify certain DMEPOS orders before claims are paid or provide physicians with reports showing equipment ordered under their names so they can identify fraudulent activity.

Technology will also play a significant role. OIG specifically recommends that CMS continue developing analytic tools, including AI, to detect suspicious claims and potentially identify AI-generated physician orders and supporting documentation. It also recommends greater use of payment suspensions and expanded medical review, including prepayment review of newly enrolled suppliers.

Perhaps even more significant is CMS's increasing emphasis on stopping payment in the first place. CMS describes the broader strategy as moving away from traditional “pay and chase” recovery efforts and toward prevention and cost avoidance.

Make stolen Medicare identification numbers harder to use

OIG’s proposed countermeasures include restricting or potentially eliminating certain enrollee lookup tools, expanding restrictions on unsolicited beneficiary contact beyond telephone calls to text, email, and other digital communications, working with social media companies to prevent the sale of stolen identifiers, and developing ways for beneficiaries to verify that they actually received DMEPOS billed on their behalf.

OIG goes even further, suggesting Medicare reconsider how beneficiary identification numbers are protected altogether and potentially borrow fraud-prevention approaches from industries such as the credit card industry.

What happens next?

Not everything in the white paper is currently a CMS requirement. Some items are OIG recommendations, some would require statutory or regulatory changes, and others are already being implemented. But CMS's response makes clear that more changes are likely coming.

This White Paper suggests enrollment information, ownership records, physician orders, proof of delivery, medical necessity documentation, beneficiary information, and billing patterns are likely to receive increasing attention.

For compliance teams, this is an area worth watching closely.

The full HHS-OIG white paper, The Nation’s Challenge to Combat Durable Medical Equipment Fraud in Medicare (OEI-02-24-00311), is available from the HHS Office of Inspector General.