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NICB Report On Durable Medical Equipment Fraud
Date:1/30/2013

In addition to meeting the above criteria, a licensed physician must prescribe the DME and prepare a Certificate of Medical Necessity (CMN), also referred to as a Letter of Medical Necessity. The type of medical personnel allowed to order DME will vary from state to state.  In some instances, physician assistants, nurse practitioners, and clinical nurse specialists may order DME.

In the 2011 report on National Health Expenditures (NHE), DME spending for 2010 comprised of $37.7 billion or 1.5 percent of total health expenditures (CMS, Office of the Actuary, National Health Statistics Group, 2011).  In the 2011-2021 NHE Projections, DME is projected to increase consistently at an average rate of 6 percent.  If these projections prove accurate, spending for DME could exceed $50 billion by the end of 2015 (CMS, 2011).  For both public and private health care programs, the FBI in 2011 estimated fraudulent billing to be between 3 percent and 10 percent of total health care expenditures.  If those percentages are applied to DME spending, estimates of the cost of DME fraud could fall between $1.5 billion and $5 billion in a single year.

The consistent growth of the DME industry, combined with a general lack of required credentials or training in order to distribute DME, provides ample opportunity for unscrupulous individuals and entities intent on defrauding the insurance industry.

Although DME fraud is but a small part of the overall medical fraud perpetrated against insurers and the government, it is most insidious, as evidenced by the conviction noted previously when patients who have been properly prescribed for DME never receive it. Somewhere in the DME processing chain between doctor and patient, the device never gets delivered.  Whether it's diverted to others, lost in bureaucracy or simply pilfered to be sold on the black market, it is an expensive loss to patients, insurers and the government—a loss that all
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SOURCE National Insurance Crime Bureau
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