Citing “fraudulent Medicare billing” by suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS), the Trump administration on Feb. 25 announced a six-month nationwide moratorium on the enrollment of new Medicare DMEPOS suppliers.
The moratorium announcement was one of several made on Feb. 25 to “crack down on fraud in Medicare and Medicaid to protect patients and taxpayers and improve affordability,” the Centers for Medicare & Medicaid Services (CMS) said in a press release.
Present for the announcements made at the White House were Vice President J.D. Vance, Secretary of the Department of Health and Human Services (HHS) Robert F. Kennedy Jr., and CMS Administrator Mehmet Oz, M.D.
CMS’s case for a supplier moratorium
The new supplier moratorium, CMS said in its report due to be published in the Federal Register on Feb. 27, was based on “data analysis that included reviewing both current and historic Medicare enrollment and claims data. We analyzed key metrics pertaining to enrollment volume and trends for the more than 80 types of DMEPOS suppliers in the Medicare FFS [fee for service] program.
“We also analyzed indicators of fraud, waste and abuse, such as the percentages of DMEPOS suppliers within each type that had a revocation of Medicare billing privileges, payment suspension based on a credible allegation of fraud or reliable indication that an overpayment exists, law enforcement referral, investigation or benefit integrity unit (BIU) complaint since 2023.”
The Federal Register report added that the HHS Office of the Inspector General (OIG) “has highlighted the issue of DMEPOS supplier fraud, waste and abuse in numerous reports. In February 2025, for instance, the OIG stated: ‘For over a decade, OIG has raised concerns about fraudulent practices among DME suppliers and has highlighted billions of dollars in potentially improper Medicare payments made to suppliers.’”
The report also said fraud, waste and abuse by DMEPOS suppliers potentially resulted “in patient harm, such as in cases where beneficiaries use unnecessary or substandard items. Indeed, numerous OIG reports since 1998 have outlined payment safeguard issues associated with DMEPOS suppliers as a whole. For example, in 2024 the OIG stated, ‘Although CMS has a number of safeguards in place to prevent bad actors from billing DMEPOS in Medicare, fraudulent billing for DMEPOS continues to be a major concern.’”
The moratorium, CMS said, “could assist in stemming” fraudulent billing schemes and added, “By blocking the initial enrollments of these very high-risk supplier types, we can help prevent the aforementioned problems from worsening. This, in turn, would complement other means we have in place to address program integrity issues involving enrolled medical supply companies (for example, site visits, requiring surety bonds, and annual reaccreditation, etc.).”
The moratorium affects seven types of suppliers:
— Medical supply company
— Medical supply company with orthotics personnel
— Medical supply company with pedorthic personnel
— Medical supply company with prosthetics personnel
— Medical supply company with prosthetic and orthotic personnel
— Medical supply company with registered pharmacist
— Medical supply company with respiratory therapist
The moratorium does not apply to companies that supply DMEPOS but not as their principal function. As examples, CMS said grocery stores, pharmacies, and inpatient/outpatient medical providers whose primary function is not the provision of DMEPOS would not be impacted.
CMS also warned businesses thinking of trying to circumvent the moratorium.
“We emphasize that CMS will very closely screen all DMEPOS supplier applications submitted during the moratorium to ensure that the supplier is not a medical supply company,” the report said. “This will include, but not be limited to, site visits and online research of the business. We also note that we have the authority to deny enrollment and impose a reapplication bar of up to 10 years for a provider’s or supplier’s submission of false or misleading information on (or omission of information from) the enrollment application in order to gain enrollment in the Medicare program.”
In its press release, CMS added that to provide “additional transparency,” it will publish information “on providers/suppliers whose participation in the Medicare program has been revoked, including their National Provider Identifier and the reason for the revocation.”
Minnesota Medicaid funding withheld
The press release also said Minnesota’s Medicaid program would have $259.5 million in federal Medicaid funding deferred, following a CMS notification in January “of its intent to withhold federal funds until it was satisfied with the state’s corrective action plan to address its program integrity shortcomings.”
The agency said the total “includes state expenditures of $243.8 million for unsupported or potentially fraudulent Medicaid claims and $15.4 million related to claims involving individuals lacking a satisfactory immigration status.”
“For decades, Medicare fraud has drained billions from American taxpayers — that ends now,” Kennedy said. “We are replacing the old ‘pay and chase’ model with a real-time ‘detect and deploy’ strategy, using advanced AI [artificial intelligence] tools to identify fraud instantly and stop improper payments before they go out the door.”
“CMS is done trying to catch fraudsters with their hands in the cookie jar,” Oz said. “Instead, we’re padlocking the jar and letting them starve. This proactive approach will help us crush fraud, protect taxpayer dollars, and make sure the vulnerable Americans who depend on our programs get the care they need.”
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