DME Referral Process: Why Suppliers Compete for the Order

The DME referral process connects a clinician’s order with supplier intake, payer coverage review, delivery, billing and continuing supplies. Suppliers compete for that referral because it can bring them both the equipment business and the patient’s future supply orders. If you work in intake, sales or billing, the order arriving on your screen may be the end of another company’s sales effort and the beginning of your company’s revenue. Who brought in the patient, who chose the product and who gets paid can be different people in different businesses.

Why Suppliers Compete for the Referral

Payer-set reimbursement makes product features and service central to competition for insured patients. A supplier needs the clinician or patient to choose its business at the price the payer allows.

Inogen, which manufactures oxygen equipment and also supplies patients directly, explains the economics in its annual filing for 2025. Respiratory therapy providers compete primarily on product features and service because Medicare, Medicaid and private payers establish reimbursement. Inogen separately describes manufacturers competing to sell equipment to suppliers on price, reliability, financing and service.

The practical competition happens close to the referral. In its annual filing for 2021, Hanger described clinicians choosing orthotic and prosthetic providers locally based on their assessment of care. It said national scale might confer no advantage in a particular market. A large supplier still has to win the confidence of the practice sending the next patient.

Inogen’s own operation shows what that requires. Its intake teams check benefits, review medical records and process physician paperwork before deploying equipment. The company also describes shipping, instruction, clinical setup and patient support. These are the services surrounding the machine that the referring practice and patient experience.

The Businesses Behind One Order

Patient acquisition, clinical judgment, fulfillment and payment can sit in separate organizations. An advertising-led referral chain makes those divisions particularly visible.

An advertiser uses television, mail, radio or online advertising to bring potential patients into the chain through calls, web forms or clicks.

A lead generator or call center captures the patient’s contact and insurance information. Its customer may pay for a lead or a transferred call. The clinical decision comes later.

A practitioner network or telemedicine staffing company supplies access to clinical labor and technology. The practitioner evaluates the patient and produces the order. The commercial arrangements can pay for clinician time, a consultation, a chart review or a platform. The encounter, the signed order and the invoice for the work are different records.

The durable medical equipment supplier receives the order, obtains the supporting documentation, fulfills it and bills the payer. Its economics combine reimbursement with the costs of acquiring the patient, buying the product and providing service.

The payer decides coverage and payment. Medicare enrollment and applicable accreditation requirements govern the supplier’s access to that payment system. The Centers for Medicare & Medicaid Services’ accreditation guidance distinguishes the organization accrediting a supplier from the contractor processing its enrollment.

One company can occupy several positions. Inogen describes advertising directly to consumers, processing physician paperwork and renting equipment to patients while billing insurance. Other arrangements spread that work across contracts.

What the Supplier Is Paying to Acquire

The supplier is acquiring access to a patient relationship that can produce reimbursable orders. That helps explain the investment in prescriber sales teams, consumer advertising and contracted referral services.

The industry’s billing activity is concentrated among a relatively small group of supplier names, while ordering clinicians are widely dispersed across ordinary medical practice. Hanger’s account of local referral decisions explains the commercial difficulty: owning more locations does not automatically bring the next prescription. The supplier still needs a route to the clinician or the patient.

The business behind a telemedicine order matters for the same reason. A health care practice can bill a payer for the professional service its clinician delivers. A staffing or technology company can instead sell services to a marketer or supplier, receiving a contracted fee without billing Medicare for the encounter. In that arrangement, the equipment claim can reach Medicare while the payment for producing the order sits in a separate company’s accounts.

The question is what the payment bought. Was it clinician time, a completed consultation, access to a platform or the production of an equipment order? We examine that question with the encounter record and the actual work beside the contract. A billing employee may see the resulting claim while someone at the practitioner network sees how the clinician was recruited and paid.

Where the Referral Leaves a Record

The referral leaves records at each handoff, from the patient’s first response through the supplier’s claim. The records can answer different questions about the same order.

The lead and intake information identify the patient and insurance. The clinical record explains why the patient needs the equipment. Medicare’s written-order requirements identify the patient, item, applicable quantity, order date and treating practitioner, along with the practitioner’s signature. Where a face-to-face encounter or an order before delivery is required, timing becomes part of the documentation too.

Prior authorization adds another review for selected items. The supplier’s request and the payer’s decision sit alongside the clinical support for the order. Inogen’s account of checking reimbursement eligibility before shipment shows how those decisions affect fulfillment inside a supplier.

Delivery adds another set of records. The Medicare supplier standards require proof of delivery and documentation that the patient received instructions for using the equipment. They also identify maintenance records, beneficiary communications and ordering documentation among the supplier’s business records.

Healthcare software can connect the encounter to billing. ResMed describes Brightree’s clinical workflow, billing and patient-engagement functions in its annual filing for 2026. Those functions point to records that can connect an order to a claim.

Cardinal Health describes Edgepark supplying patients at home and its at-Home business distributing supplies to home medical equipment providers. We connect the purchase, delivery and claim rather than expecting one invoice to explain all of them.

When Producing the Order Becomes the Business

A referral scheme can make the signed order the product being sold, with the patient’s actual need pushed aside. The HHS Office of Inspector General’s telemedicine alert of July 2022 describes schemes in which companies paid practitioners to order unnecessary equipment for people they barely interacted with, then sold the orders to businesses that billed for the items.

The alert describes practitioners receiving little clinical information and instructions to order a preselected product. Payments described as chart reviews or consultations accompanied orders made without meaningful assessment. The person approving those payments and the person processing the equipment claim may each see only part of what happened. Taxpayers pay for unnecessary equipment while the patient’s needs come second to selling the order.

Orbit Medical shows the documentation side. In a case brought by former employees and joined by the government, the Justice Department alleged that sales representatives altered prescriptions and chart notes, forged signatures and added fax stamps to make documents appear to have come from physicians’ offices. The alleged objective was to get power wheelchair claims paid. The Justice Department explained that reimbursement required documentation of medical necessity as well as a prescription stating the patient’s diagnoses and length of need. The paperwork presented a clinical decision that the government said sales staff had manufactured.

An insider’s account can connect those separate views. The Office of Inspector General’s Medicaid Fraud Control Units Fiscal Year 2023 Annual Report, published in 2024, describes external referrals and internal data mining as common starting points for cases. Claims analysis and knowledge from inside a business offer different ways into the same transaction. We work with the lead, encounter, order versions, compensation records, delivery and claim to establish who made each decision.

Why the First Order Keeps Paying

The first equipment order can establish a continuing supply relationship. Masks, tubing and other consumables give suppliers and manufacturers a reason to care about the patient’s next order as well as the initial device.

For supplies subject to Medicare’s refill requirements, the supplier must contact the patient and document an affirmative response before dispensing the refill. The documentation requirements require the refill request before shipment; a statement added afterward does not replace it.

ResMed’s civil settlement announced in January 2020 exceeded $37.5 million over alleged kickbacks, including free call-center and patient-outreach services that enabled suppliers to order sleep-apnea resupplies. The alleged benefit was the work of bringing patients back for another order.

A whistleblower’s complaint described how the proposed incentive reached beyond patients already using the manufacturer’s products:

The complaint also alleged that quarterly reports showed suppliers their patient numbers, market share and savings from the arrangement. Those reports connect the alleged inducement to the business result it was meant to produce.

Rotech’s oxygen case shows what can happen after the equipment rental payments end. In its civil settlement announced in April 2018, Rotech agreed to pay $9.68 million and admitted billing Medicare for portable oxygen contents that patients did not use or need, regardless of delivery. The company automatically billed after the 36-month rental period without verifying use or obtaining the required delivery proof.

The bills kept going out without anyone checking whether the oxygen was needed or delivered. Taxpayers were paying for the repeat charge, not the patient’s need.

A former billing employee brought the whistleblower case. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know What Happened Before the Claim

If you know how your business acquired the patient, obtained the order or kept the resupplies moving, speak with our whistleblower experts about that referral chain. We build the case with you around the decisions and payments that connect those businesses, and bring in durable medical equipment fraud whistleblower lawyers who understand referral and billing schemes. We stay beside you from that first account through the pursuit of your case.