How we stopped $64 million in durable medical equipment fraud

Durable medical equipment (DME) includes important equipment and supplies, from braces, crutches and casts to glucose monitors, respirators and hospital beds. The vast majority of providers handle claims for these products appropriately. But this area of the health care industry has been targeted by fraudulent providers, criminals backed by organized crime to steal member data, impersonate legitimate providers, forge documentation, and bill bogus claims to insurers.

It’s a growing problem, and members often call BlueCross to ask about a piece of equipment they never asked for or needed.

Last year, a team of BlueCross employees across three departments put a plan together to better protect member dollars and cut off DME fraud at the source – and helped members save $64 million in a single year alone.

A growing and sophisticated threat

DME claims have increased 300% since 2021,  which raised flags for Terry Reed, manager of the BlueCross Special Investigations Unit (SIU). His team is charged with tracking down instances of fraud, waste and abuse affecting members.

Terry’s team often follows up on tips from members themselves, who call in to report receiving items like glucose monitors or catheters they neither needed nor requested.

“The majority of even erroneous claims are the result of a minor error or oversight, just an honest mistake that’s easy to resolve after a short investigation,” Terry explains. “So providers, most of whom are in network and trusted health care professionals, get the benefit of the doubt.”

Getting those payments back from a fraudulent provider, even if they were caught and arrested, is difficult. And criminals who see that their claims are getting paid start charging more, exponentially increasing the size of claims to get as much out of the insurer as possible before getting caught.

A simple change with a huge impact

Nicholas Bonham, supervisor in Provider Information Administration, recognized the same trends in DME fraud as Terry’s team and reached out to work together.

When claims are pending due to missing or inaccurate provider data, Nic’s team steps in to validate and load that information correctly, helping providers get paid the right amount on time. Nic’s team can also intercept and stop payment on claims from outside our network that contains red flags, while the SIU moves those suspicious claims to the front of the line for investigation.

The impact was felt almost immediately.

“We had one company bill $33 million over a few weeks,” says Laura Bell, senior investigator with the SIU. “Nic’s team stopped payments before they went out.”

While other teams monitored the claims and  investigated suspicious activity, Sneha Battin of provider data reporting built the data foundation needed to support faster decisions.

“We focused on understanding what information would help validate and support more effective actions,” Sneha says. “What began as an effort to enhance one report grew into something much larger that created long-term value.”

Sneha developed multiple reports to improve visibility, track effectiveness, and make the information easier to access with guidance from Angela Lanier, Provider Data Consultant.

“We talk to agencies and law enforcement and hear that other companies just aren’t doing anything like this,” says senior investigator Jessica Harrell. “It really puts into perspective how much faith BlueCross has put into us making a proactive change.”

Protection and peace of mind

After implementing the new procedures, the team saw immediate results: tens of millions saved in 2024; in 2025, the number was even higher at $64 million. More than 100 fraudulent DME companies were stopped, without a single legitimate provider affected. 

The financial impact is significant, since those fraudulent claims would have ultimately been paid for by BlueCross customers and members.

Beating fraud also brings peace of mind. Fraud schemes often target vulnerable populations, especially seniors, using call centers, phishing tactics and even stolen data to enroll them without their knowledge.

“We’ve had members grateful that we called,” Laura says. “They’re getting these packages and don’t understand why.” 

Fraudulent schemes like these don’t just annoy our members; they siphon off resources that deserve to be spent on people who need them. Thanks to this team’s smart thinking and collaboration, those resources are put back to work helping our members have peace of mind.

Help BlueCross fight fraud

Have you received a piece of medical equipment you never asked for, or that your doctor never prescribed? Reach out to the fraud hotline at BlueCross. Visit online here or call 1(888) 343-4221.