DME Copay Waivers and Free Durable Medical Equipment: A Free Meter, a Recurring Medicare Bill

DME copay waiver fraud can turn a promise of free equipment into a way to recruit Medicare patients and bill for their supplies. For a sales or billing employee, the telling connection is between what the customer was promised and what happened to the copay afterward. The sales pitch starts the relationship. The account policy keeps it going.

How Does Medicare DME Payment Work?

For durable medical equipment paid under the fee schedule, Medicare generally pays 80% of the lower of the actual charge or fee-schedule amount. The beneficiary is responsible for 20% after the yearly Part B deductible. The same order leaves a balance for the patient and a claim for Medicare.

A supplier accepting assignment agrees to take the Medicare-allowed amount as payment in full, with the patient’s obligation limited to the applicable deductible and cost sharing. The collection policy determines what happens to that patient balance. In Arriva’s case, the government alleged that routine copay waivers bought the patient’s business and made the resulting Medicare claims false. The alleged kickback was the forgiven balance itself.

Arriva’s Free Meter Came With a Continuing Supply Business

Arriva Medical and its parent Alere agreed to pay $160 million in August 2021 to resolve False Claims Act allegations involving free meters, routine copay waivers, ineligible replacement meters and claims for deceased beneficiaries. The government alleged that Alere approved Arriva’s use of free or no-cost meters and waived or uncollected copayments to induce Medicare business.

For scale, the government’s complaint described what Arriva earned from the business behind the settlement. In 2015, Arriva generated approximately $78.5 million in net revenue from testing strips and lancets, compared with approximately $2.5 million from meters. An operations executive’s email quoted in the complaint explained that the company wanted to serve patients whose insurance paid for strips and lancets, and should ship the necessary meters and lancing devices at no charge if those items were not covered.

The meter could be given away because the continuing supplies were the more valuable business. The complaint quoted instructions circulated to the sales team:

That promise reached beyond the first conversation. The government alleged that Arriva kept one customer supplied for years, collected no copayments and wrote off his obligations. In the government’s account, the account history showed how the acquisition offer became a continuing billing practice.

Financial Hardship Forms and Routine Copay Waivers

In Arriva’s case, the government alleged that a form intended to establish financial need became a pretext for waiving copayments when a customer simply did not want to pay.

One employee note quoted in the complaint linked approval of financial assistance to exclusive purchasing:

The proposed benefit to Arriva was explicit: keep the patient buying from this supplier. For an employee reviewing the accounts, the form, the approval and the sales promise belong together.

The complaint also alleged that Arriva erased small balances before sending an invoice or letting successive orders accumulate into a larger balance. It also alleged that a separate policy erased more than $2.2 million in copayments in a single mass write-off in December 2015. In the government’s account, the issue ran through the company’s account policies, well beyond any individual conversation about a bill.

According to the complaint, collection practices also depended on who paid the rest. A patient responsible for the full cost could lose service. A patient whose supplies Medicare paid for would continue receiving them despite billing problems. The government alleged that the company protected the stream of Medicare payments while repeatedly forgiving the patient’s share.

A Free Replacement Still Became a Medicare Claim

Arriva’s settlement also covered allegations that it billed Medicare for replacement meters inside the five-year replacement window, including patients for whom Arriva itself had already billed a meter. The company had the earlier sale in its own history.

A sales supervisor’s email quoted in the government’s complaint anticipated that Medicare would reject a meter billed too soon. The instruction was to bill it anyway, absorb the equipment cost and write off the amount Medicare would have paid after the denial. The promise to the patient and the claim sent to Medicare were separate parts of the same transaction.

The complaint described another break between eligibility records and billing: Arriva ran a check showing a patient had died, then later shipped supplies and billed Medicare. The acquisition records explain why a customer entered the system. The replacement history, eligibility check and shipment records show what the supplier knew when it sent the next claim.

When a Billing Supervisor Is Told to Waive All Copays

For a DME billing supervisor told to waive all copays, the important connection is between the instruction, the repeated account adjustments and the claims the company continued sending. Who chose the policy matters as much as who clicked the adjustment.

The Arriva case reached an outside billing business too. In its 2022 announcement concerning Grapevine Billing and Consulting Services, the Justice Department described sworn testimony from Arriva’s reimbursement consultant. He admitted directing customer copay write-offs, probably every week, making mass write-offs of Medicare denials for ineligible meters, creating a policy against billing small balances, and developing courtesy adjustments in response to customer complaints about coinsurance.

The government alleged that the consultant effectively headed Arriva’s reimbursement department, developed its collection policies and submitted Medicare claims on its behalf. That puts the decision inside the billing operation, even though the person making it worked through an outside company.

Billing supervisors, accounts-receivable staff and reimbursement employees see different parts of the same policy. We connect those views to the patient accounts and claims so the case explains the policy that produced the transactions.

Free Diabetes Meters, Waived Copays and the Sales Script

A free diabetes meter offer, waived copays and a sales script can give a whistleblower the beginning of the story. The later account records show whether the company carried out the promise. Arriva’s whistleblower worked in its call center, where the offer reached the customer.

The government’s complaint quoted a sales supervisor telling staff to send a meter with every order and to tell customers who did not want one that new orders came with everything. The script and the order history therefore answer a specific question: did the equipment follow the customer’s request, or a standing sales instruction?

Someone working in one department may recognize the instruction that explains a pattern visible in another. We work with that insider to connect the sales promise to the later billing decisions.

Free Offers and Referral Payments

In Arriva, the government alleged that the free meters and copay waivers themselves were kickbacks to beneficiaries. In other durable medical equipment arrangements, the benefit can go to a referring clinician or another business in the supply chain.

The Office of Inspector General’s durable medical equipment fraud guidance identifies unsolicited calls offering free items as one way beneficiaries receive unnecessary equipment. It also identifies false medical-necessity documentation and billing for undelivered equipment.

Free Supplies Alleged to Open Nursing-Home Doors

A historical nursing-home case shows how a free item can open the door to a different Medicare bill. In testimony published in the House Committee on Ways and Means’ 2003 hearing, Waste, Fraud, and Abuse, the Justice Department described allegations involving Specialized Healthcare Products.

The government alleged that the supplier provided free adult diapers and undergarments to gain access to Chicago-area nursing homes, then billed Medicare for unnecessary incontinence supplies, including irrigation syringes and sterile saline solutions. The allegations also included false medical-necessity certificates.

In that alleged scheme, the free goods secured access to the patients. The billed goods supplied the revenue. The same commercial question runs through the Arriva allegations: what business did the supplier expect the free offer to bring in?

What Is the Reward for a Medicare Fraud Whistleblower?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. The Justice Department announced a $28.5 million share of the Arriva recovery for the former call-center employee who brought the case.

We assess how the sales instructions and account decisions you know connect to the Medicare claims. That connection can put an employee’s daily knowledge at the center of a healthcare whistleblower case.

You Know What the Customer Was Promised

If you know how a free-equipment pitch became a routine copay write-off, speak with our whistleblower experts about the sales and billing decisions behind it. We work beside you to build your strongest durable medical equipment whistleblower case around that connection and bring in durable medical equipment fraud whistleblower lawyers who understand patient inducements and Medicare billing. From the first account you recognize through the case itself, we stay your partners.