Medicare paid $377 million more for continuous glucose monitors (CGMs) and supplies than suppliers' own acquisition costs in a single year, a Department of Health and Human Services Office of Inspector General report found in November 2025. The same review identified 27 sampled claims billed as a higher-paying Class 3 CGM code when suppliers actually provided a lower-cost Class 2 device, part of $7 million in overpayments tied to improper coding. DME suppliers and the physicians who order CGMs for Medicare beneficiaries are already managing the coverage criteria in the Local Coverage Determination for glucose monitors and the supply allowance's usage-monitoring billing rule; the report adds coding accuracy to what a DME MAC audit now tests.
Medicare's Coverage Criteria for Continuous Glucose Monitors
The Local Coverage Determination for glucose monitors (L33822), administered by the DME MACs, sets five requirements before Medicare covers a CGM. The beneficiary must carry a diabetes mellitus diagnosis, the treating practitioner must have concluded the beneficiary or caregiver received sufficient training evidenced by the prescription itself, and the device must be prescribed consistent with its FDA-labeled indications for use. The beneficiary must also be insulin-treated, or have a documented history of problematic hypoglycemia, including a glucose reading under 54 mg/dL or a qualifying Level 2 or Level 3 event. The final requirement is timing: the treating practitioner must complete an in-person or Medicare-approved telehealth visit within six months before the CGM is ordered, and again every six months after.
CGM Supply Allowance Billing Is Not a Standard DME Refill
CMS's Glucose Monitor Policy Article, A52464, and the DME MAC supplier manuals for CGM supplies exempt the monthly supply allowance from the standard DME refill-contact rule. A supplier may bill the next month's allowance only when the beneficiary has fewer than 30 calendar days of supply left; once that threshold is reached, the supplier must deliver more before billing the next month's allowance. A supplier may bill up to 90 calendar days of the allowance at a time. CMS has confirmed directly that this usage-monitoring rule, not the standard refill-contact process, governs CGM supply billing.
Common Findings in CGM Supplier Audits
The November 2025 OIG report found Medicare payments for CGM supplies exceeded retail market prices by $290 million in one year and exceeded suppliers' own estimated total costs by $61 million, a payment structure that invites claim-level scrutiny. The coding error behind the $7 million in improper-coding overpayments was direct: suppliers billed the higher-paying Class 3 CGM code for a device that was actually a lower-cost Class 2 CGM. Audits built on that finding also test for unbundling, since the non-adjunctive CGM supply allowance code already includes the home blood glucose monitor and its supplies; billing those items separately is denied. A missing KF modifier on the receiver and supply codes, or delivery before a written order is on file, produces the same result: a denial, followed by a recoupment demand calculated through extrapolation across the full audit lookback period, the same method a RAC audit applies to broader DME sampling.
Where CGM Audits Intersect Other Medicare Reviews
A CGM-focused postpayment review is rarely the only Medicare audit defense matter in play. A referral for broader contractor review is the escalation RAC Audits Versus UPIC Audits: Know Which One You Have explains, a deactivated billing number is the scenario Reactivating a Deactivated Medicare Billing Number covers, and shifting CGM billing between affiliated NPIs without matching documentation is the pattern Reassignment of Medicare Benefits: Where Groups Get Exposed addresses.
A single claim billed under the wrong CGM class code, or a supply allowance billed without verifying the beneficiary still needed it, is enough for a DME MAC to carry the finding across the entire sample.
Why early legal counsel is critical: it is critical that DME suppliers and ordering physicians retain experienced healthcare defense counsel promptly after receiving a records request, an audit notice, or a reimbursement adjustment from a DME MAC. Early legal intervention can protect the supplier's rights, shape the documentation response before an extrapolation-based exposure figure is calculated, and allow counsel to communicate with the contractor on the supplier's behalf. Delaying representation narrows the defenses that remain once a recoupment demand is issued.
Health Law Alliance's attorneys have overseen 2,000+ audits and handled 5,000+ matters, with 25+ years of experience.
How Health Law Alliance can help: Health Law Alliance's attorneys defend DME suppliers and ordering physicians through CGM coverage denials, refill documentation disputes, and the extrapolated recoupment demands that follow a sample audit. If your company has received a CGM-related records request or audit notice, contact Health Law Alliance's DME Audit Defense team for a free, confidential consultation to review the notice and the documentation it demands.





