Durable Medical Equipment
Durable medical equipment (DME) is generally defined as equipment that can withstand repeated use, serves primarily a medical purpose, is not generally useful to a person in the absence of an illness or injury, and is appropriate for use in an enrollee’s home. Examples of DME items are oxygen and respiratory equipment and supplies, wheelchairs, and walkers.
Prosthetics and Orthotics
Prosthetics are devices that replace all or part of: (1) an internal body organ or (2) the function of a permanently inoperative or malfunctioning internal body organ. Examples of prosthetics are artificial limbs, parenteral and enteral nutrition supply kits, breast prostheses for postmastectomy patients, and devices that replace all or part of the ear or nose.
Orthotics are rigid and semirigid devices, often called braces, which are used to support a weak or deformed body member or to restrict or eliminate motion in a diseased or injured part of the body. Examples of orthotics are leg, arm, back, and neck braces.
Supplies and Related Drugs
Supplies include those items that are necessary for the effective use of DME. Wound-care supplies or fillers are used for openings on the body caused by surgical procedures, wounds, ulcers, or burns. Examples of wound-care supplies or fillers are adhesive tape, roll gauze, and bandages. Related drugs may be drugs and biologicals that can be: (1) put directly into the DME to achieve the therapeutic benefit of the DME or to assure the proper functioning of the equipment or (2) prescribed to be taken orally or through injections. Examples of drugs include inhalation drugs and tumor chemotherapy agents used with an infusion pump.
Medicare Payments to Suppliers for DMEPOS Items Provided During Inpatient Stays
Medicare Part A pays inpatient facilities, such as acute-care hospitals (ACHs), long-term care hospitals (LTCHs), inpatient rehabilitation facilities (IRFs), inpatient psychiatric facilities (IPFs), and critical access hospitals (CAHs) using a Prospective Payment System (PPS) rate specific to each type of facility. Critical access hospitals are reimbursed on a reasonable cost basis. Under each payment method, Part A payments made to a facility are payments in full for all
inpatient hospital services provided, including DMEPOS items.
The DME benefit is limited to items that are furnished for use in an enrollee’s home. Because an institution that is used as a home may not be an inpatient facility (i.e., ACHs, LTCHs, IRFs, IPFs, and CAHs), Medicare does not make a separate payment for DME when an enrollee is in one of these institutions. Therefore, Medicare Part B should not pay a supplier for items furnished to an enrollee when the enrollee is still an inpatient (i.e., has not been formally discharged to home). Instead, the supplier, under arrangements with the inpatient facility, can look to the inpatient facility for payment for the item it provided to the enrollee who was an inpatient.
A prior OIG audit found that Medicare improperly paid suppliers $34 million for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) items provided to enrollees during inpatient stays from 2015 through 2017.
Because of the large overpayment amount identified in the OIG’s prior audit, the OIG conducted a follow-up audit to determine whether Medicare payments to suppliers for DMEPOS items provided to enrollees during inpatient stays with dates of service from 2018 through 2024 complied with Medicare requirements.
On October 28, 2025, the OIG issued a report entitled “Medicare Improperly Paid Suppliers $22.7 Million Over 7 Years for Durable Medical Equipment, Prosthetics, Orthotics, and Supplies Provided to Enrollees During Inpatient Stays” in which it stated:
Medicare payments to suppliers for DMEPOS items provided to enrollees during inpatient stays did not comply with Medicare requirements:
- None of the $22.7 million in payments for DMEPOS items covered by this audit should have been paid. In addition, suppliers may have incorrectly collected up to $5.9 million in deductible and coinsurance amounts from enrollees or from someone on their behalf.
- Prior to January 2020, the system edits were not working properly. However, after CMS modified the edits in January 2020, improper payments substantially decreased. From January 2020 through December 2024, $4.5 million was improperly paid (about 20 percent of the $22.7 million). Because improper payments continue to be made, further review of the edits may be necessary to determine whether refinements are needed.
The OIG recommended that the Centers for Medicare & Medicaid Services:
- direct the DME MACs to recover from suppliers up to $22,671,778 in identified improper payments for our audit period that are within the 4-year reopening period in accordance with CMS’s policies and procedures;
- direct the DME MACs to recommend that the suppliers refund to enrollees up to $5,853,922 in deductible and coinsurance amounts that may have been incorrectly collected from them or from someone on their behalf;
- instruct the DME MACs to notify, as CMS deems appropriate, suppliers that received an overpayment or overpayments to consider conducting one or more internal audits or investigations based on the risks identified by this audit to identify any similar overpayments the supplier might have received and return any identified overpayments to the Medicare program;
- identify any DMEPOS claims after our audit period for items provided to enrollees during inpatient stays and direct the DME MACs to recover any improper payments; and
- review system edits to determine whether any refinements are necessary to prevent improper payments to suppliers for DMEPOS items provided to enrollees during inpatient stays.
If you have information regarding false claims having been submitted to Medicare and the information is not publicly known and no actions have been taken by the government with regard to recovering the false claims, you should promptly consult with a False Claims Act attorney (also known as qui tam attorneys) in your U.S. state who may investigate the basis of your False Claims Act allegations and who may also assist you in bringing a qui tam lawsuit on behalf of the United States, if appropriate, for which you may be entitled to receive a portion of the recovery received by the U.S. government.
Visit our website or call us toll-free in the United States at 800-295-3959 to be connected with qui tam lawyers (False Claims Act lawyers) in your U.S. state who may assist you with a False Claims Act lawsuit.
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