When people think about pharmacy benefit management, prescription drugs are usually the first thing that comes to mind. But an injured worker’s recovery frequently depends on far more than medication. Durable medical equipment (DME), home health services, diagnostic testing, transportation, and interpretation services all play a meaningful role in restoring function and supporting return to work (RTW). These ancillary services deserve the same clinical rigor, documentation standards, and program oversight that pharmacy management has long required.
Recent federal enforcement actions and civil litigation across the country have underscored what happens when that oversight is missing. Claims professionals should expect the same integrity standards from ancillary vendors that they already expect from any pharmacy partner — and understanding where ancillary programs are most vulnerable is the first step toward building a claims strategy that protects both the injured worker and the payor.
Why Ancillary Services Matter to Recovery
Ancillary services fill a critical gap between acute medical treatment and full functional recovery. A back brace, a home health aide, a properly fitted mobility device, or reliable transportation to therapy appointments can be the difference between an injured worker progressing toward RTW and a claim stalling out on preventable logistical barriers. Used appropriately, these services are not incidental to recovery — they are often central to it, supporting the same whole-person philosophy that underlies effective claims management more broadly.
That value, however, depends entirely on whether the service delivered is clinically necessary, properly documented, and appropriately monitored over time. Ancillary spend that is disconnected from a documented functional goal does not just waste claim dollars — it can also signal that no one is actively managing whether the equipment or service is still needed, or whether it was ever needed at all.
When Program Integrity Breaks Down
Ancillary services, and DME in particular, occupy a specific vulnerability in claims administration. Federal oversight bodies have long flagged this exposure: the U.S. Department of Health and Human Services Office of Inspector General has noted that DME claims have historically been more susceptible to billing fraud and abuse than claims from other provider types, in part because of comparatively weaker payment controls.¹
This is not a new or isolated concern. In one federal case, prosecutors charged an attorney and two family members with using injured workers’ identifying information without authorization to bill the U.S. Department of Labor’s Office of Workers’ Compensation Programs for more than $22 million in DME that had neither been requested nor was medically necessary.² Cases like this illustrate recurring patterns that claims professionals and ancillary program managers should watch for, including:
- Equipment supplied, refilled, or billed in quantities that substantially exceed a documented clinical need or typical usage pattern for the diagnosis
- Billing under miscellaneous or non-standard procedure codes rather than the specific code that correctly describes the item or service, which can result in higher reimbursement than the accurate code would allow
- Equipment or services billed without a verifiable, signed proof of delivery or documented evidence that the item was actually used
- Continued shipments, rentals, or billing for a service after a patient has indicated it is no longer needed, or without a current prescription supporting ongoing use
It is important to be precise about what these patterns do and do not indicate. High utilization alone is not evidence of fraud, and most ancillary providers operate in full compliance with clinical and billing standards. The patterns above are best understood as documentation and oversight gaps that create risk — gaps that a well-designed ancillary program is specifically built to close, regardless of whether fraudulent intent is ever present.
What Robust Ancillary Program Integrity Requires
The Centers for Medicare & Medicaid Services (CMS) and its DME Medicare Administrative Contractors maintain detailed documentation standards for DME claims, including requirements that suppliers maintain records supporting medical necessity and, where equipment is repaired or replaced, documentation justifying the specific repair or replacement.³ While these standards were developed for Medicare, the underlying documentation principles translate directly to workers’ compensation ancillary programs. At a minimum, a well-managed ancillary program should include:
- Documented medical necessity at the point of prescription, tied to a specific functional or return-to-work goal rather than a general diagnosis
- Verification that billed procedure codes match the item or service actually provided, consistent with current coding standards
- Signed proof of delivery and periodic reauthorization for equipment provided on an ongoing or rental basis
- Awareness of jurisdiction-specific utilization controls; several state fee schedules, for example, require prior authorization for select DME categories before dispensing
- Independent credentialing and periodic audit of ancillary vendors, separate from the vendor’s own billing and utilization data
New York’s DME fee schedule offers a useful illustration of how jurisdictions build these controls directly into reimbursement rules: certain DME items require a prior authorization request before they may be dispensed and billed under the state’s Workers’ Compensation Board Medical Treatment Guidelines.⁴ Programs that build this kind of jurisdictional awareness into their standard workflow are better positioned to catch documentation gaps before they become disputed bills or, in more serious cases, the basis for a fraud investigation.
What This Means for Claims Professionals
Adjusters, nurse case managers, and TPA staff are often the first line of defense on ancillary integrity, simply because they are closest to the claim file. Questions worth asking on any claim involving significant ancillary spend include: Is there a documented, current prescription tied to a specific functional goal? Does the quantity or duration of service align with what would reasonably be expected for the diagnosis and treatment plan? Is there a signed proof of delivery on file? Has anyone reassessed whether the equipment or service is still needed since it was first authorized?
None of these questions require assuming bad faith on the part of any provider. They simply reflect the same evidence-first standard that claims professionals are increasingly trained to apply across every category of treatment — pharmacy included.
The Preferred Medical Approach
What truly sets Preferred Medical apart is the level of oversight and personal engagement we provide throughout the life of every ancillary order. Rather than simply receiving a referral and placing an order, we begin by personally contacting the claimant to introduce ourselves, verify demographic information, and confirm that they still want and intend to use the requested equipment or service. These conversations often uncover important information that would otherwise be missed. In some cases, claimants choose to consult further with their treating physician or nurse case manager before moving forward, ensuring the recommended equipment or service is still appropriate for their recovery.
Our team also performs a comprehensive review of the supporting clinical documentation before coordination begins. We verify that prescriptions, letters of medical necessity, and medical records are current, complete, and support the requested service. When documentation is outdated, incomplete, or inconsistent, we proactively work with the prescribing provider to obtain the appropriate records before services are authorized.
That same level of oversight continues after equipment has been delivered. For rental items, we don’t simply allow recurring billing to continue indefinitely. We routinely confirm that updated physician orders have been received when extensions are requested and reach back out to claimants to verify the equipment is still medically necessary and actively being used. When a claimant no longer requires a rental item, we coordinate pickup before the next billing cycle whenever possible, preventing unnecessary costs while ensuring the claim continues to support the injured worker’s recovery.
This proactive, relationship-driven approach allows us to identify potential issues before they become unnecessary expenses. By combining clinical diligence, direct claimant communication, and ongoing utilization oversight, Preferred Medical helps ensure ancillary services remain focused on the right outcome — supporting recovery while delivering responsible cost management for our clients.
Looking Ahead
Ancillary program integrity will only become more important as the range of services available to injured workers continues to expand. The goal is not to restrict access to equipment and services that genuinely support recovery — it is to ensure that every ancillary dollar spent on a claim is doing exactly that. Getting that balance right, consistently and early in the life of a claim, is where thoughtful ancillary management creates lasting value for injured workers and payors alike.
References
1. Compliance.com/SMS. DME documentation required for Medicare payment. Citing U.S. Department of Health and Human Services Office of Inspector General semi-annual report to Congress.
2. U.S. Department of Labor, Office of Inspector General. (2015, August 28). Dallas attorney and family members in federal custody for allegedly committing health care fraud, theft of government funds and mail fraud [Press release]. U.S. Attorney’s Office, Northern District of Texas.
3. Centers for Medicare & Medicaid Services. (n.d.). Standard documentation requirements for all claims submitted to DME MACs (Article A55426).
4. New York State Workers’ Compensation Board. (2022). Durable medical equipment fee schedule.