Notice2026-03971
Medicare, Medicaid, and Children's Health Insurance Programs: Announcement of Nationwide Temporary Moratoria on Enrollment of Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Supplier Medical Supply Companies
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
February 27, 2026
Effective
February 27, 2026
Issuing agencies
Health and Human Services DepartmentCenters for Medicare & Medicaid Services
Abstract
This notice announces the imposition of a 6-month nationwide moratorium on the Medicare enrollment of DMEPOS supplier medical supply companies.
Full Text
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<title>Federal Register, Volume 91 Issue 39 (Friday, February 27, 2026)</title>
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[Federal Register Volume 91, Number 39 (Friday, February 27, 2026)]
[Notices]
[Pages 9855-9862]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-03971]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
[CMS-6099-N]
Medicare, Medicaid, and Children's Health Insurance Programs:
Announcement of Nationwide Temporary Moratoria on Enrollment of Durable
Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS)
Supplier Medical Supply Companies
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Notice.
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SUMMARY: This notice announces the imposition of a 6-month nationwide
moratorium on the Medicare enrollment of DMEPOS supplier medical supply
companies.
DATES: The moratorium takes effect February 27, 2026.
FOR FURTHER INFORMATION CONTACT: Frank Whelan, (410) 786-1302.
SUPPLEMENTARY INFORMATION:
I. Background
A. CMS' Authority To Impose Temporary Enrollment Moratoria
Under the Patient Protection and Affordable Care Act (Pub. L. 111-
148), as amended by the Health Care and Education Reconciliation Act of
2010 (Pub. L. 111-152) (collectively known as the Affordable Care Act),
Congress provided the Secretary with new tools and resources to combat
fraud, waste, and abuse in Medicare, Medicaid, and the Children's
Health Insurance Program (CHIP). One of these was section 6401(a) of
the Affordable Care Act, which added a new section 1866(j)(7) to the
Social Security Act (the Act). It provided the Secretary with authority
to impose a temporary moratorium on the enrollment of new fee-for-
service (FFS) Medicare, Medicaid or CHIP providers and suppliers,
including categories of providers and suppliers, if the Secretary
determines that a moratorium is necessary to prevent or combat fraud,
waste, or abuse under these programs.
Section 6401(b) of the Affordable Care Act added specific
moratorium language applicable to Medicaid at section 1902(kk)(4) of
the Act, requiring States to comply with any moratorium imposed by the
Secretary unless the state determines that the imposition of such
moratorium would adversely impact Medicaid beneficiaries' access to
care. Section 6401(c) of the Affordable Care Act amended section
2107(e)(1) of the Act to provide that all the Medicaid provisions in
sections 1902(a)(77) and 1902(kk) are also applicable to CHIP.
In February 2011, in accordance with the aforementioned authority,
CMS published a final rule with comment period titled, ``Medicare,
Medicaid, and Children's Health Insurance Programs; Additional
Screening Requirements, Application Fees, Temporary Enrollment
Moratoria, Payment Suspensions and Compliance Plans for Providers and
Suppliers'' (76 FR 5862). This final rule implemented section
1866(j)(7) of the Act by establishing new regulations at 42 CFR
424.570. Under Sec. 424.570(a)(2)(i) and (iv), CMS, or CMS in
consultation with the Department of Health and Human Services Office of
Inspector General (HHS-OIG) or the Department of Justice (DOJ) or both,
may impose a temporary moratorium on newly enrolling Medicare providers
and suppliers if CMS determines that there is a significant potential
for fraud, waste, or abuse with respect to a particular provider or
supplier type or particular geographic areas or both. At Sec.
424.570(a)(1)(ii), CMS stated that it would announce a temporary
moratorium in a Federal Register notice that includes the rationale for
the imposition of the temporary enrollment moratorium. This notice
fulfills that requirement.
B. CMS' Previous Temporary Enrollment Moratoria
We first used our moratorium authority to prevent enrollment of new
home health agencies, subunits, and branch locations (hereafter
collectively referred to as HHAs) in Miami-Dade County, Florida and
Cook County,
[[Page 9856]]
Illinois, as well as surrounding counties, and Part B ambulance
suppliers in Harris County, Texas and surrounding counties, in a notice
issued on July 31, 2013 (78 FR 46339). We exercised the moratorium
authority again in a notice published on February 4, 2014 (79 FR 6475),
when we extended the existing moratoria for an additional 6 months and
expanded it to include enrollment of HHAs in Broward County, Florida;
Dallas County, Texas; Harris County, Texas; and Wayne County, Michigan
and surrounding counties, and enrollment of ground ambulance suppliers
in Philadelphia, Pennsylvania and surrounding counties.
We extended these moratoria for an additional 6 months on August 1,
2014 (79 FR 44702), February 2, 2015 (80 FR 5551), July 28, 2015 (80 FR
44967), and February 2, 2016 (81 FR 5444). On August 3, 2016 (81 FR
51120), we extended the current moratoria for an additional 6 months
and expanded them to statewide for the enrollment of new HHAs in
Florida, Illinois, Michigan, and Texas, and Part B non-emergency
ambulance suppliers in New Jersey, Pennsylvania, and Texas. On August
3, 2016, we announced the lifting of temporary moratoria for all Part B
emergency ambulance suppliers. Ultimately, the original 2013
moratorium, after being extended and revised several times,\1\ expired
on January 30, 2019.
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\1\ On January 9, 2017, CMS issued another notice to extend the
temporary moratoria for a period of 6 months (82 FR 2363). On
January 9, 2017 (82 FR 2363) and July 28, 2017 (82 FR 35122), CMS
again issued a notice to extend the temporary moratoria for a period
of 6 months. On September 1, 2017, CMS lifted the statewide
temporary moratorium on the enrollment of new Medicare Part B non-
emergency ground ambulance suppliers in Texas under the authority of
Sec. 424.570(d). This lifting of the moratorium also applied to
Medicaid and CHIP in Texas. This decision was a result of the
Presidential Disaster Declaration signed on August 25, 2017, for
several counties in the State of Texas due to Hurricane Harvey. Upon
declaration of the disaster, CMS carefully reviewed the potential
impact of continued moratoria in Texas and decided to lift the
temporary enrollment moratorium on non-emergency ground ambulance
suppliers in Texas in order to aid in the disaster response. CMS
published a formal announcement of this decision on November 3, 2017
(82 FR 51274). On January 30, 2018 (83 FR 4147), CMS announced the
extension of the temporary moratoria for an additional 6 months. In
August 2018, CMS announced the extension of the temporary moratoria
for an additional 6 months. CMS allowed the temporary moratoria to
expire on January 30, 2019.
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C. Determination of the Need for Moratoria
In determining whether to establish an enrollment moratorium, CMS
considers whether a high risk of fraud, waste, or abuse exists. CMS
relies on its and law enforcement's longstanding experience with
ongoing and emerging fraud trends and activities gained through civil,
criminal, and administrative investigations and prosecutions.
1. Consultation With Law Enforcement
The HHS-OIG over the years 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.'' \2\ We will discuss in more detail the
OIG's longstanding concerns about DMEPOS fraud, waste, and abuse in
section II. of this notice.
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\2\ <a href="https://www.oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000908.asp">https://www.oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000908.asp</a>.
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2. Data Analysis
In evaluating the need for the subject moratorium, we also used
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 program.\3\ 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 Medicare Data Analysis section of this notice details our Medicare
FFS data analysis.
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\3\ These types are listed on the Form CMS-855S (Medicare
Enrollment Application--Durable Medical Equipment, Prosthetics,
Orthotics, and Supplies (DMEPOS) Suppliers; OMB Control No. 0938-
1056) (<a href="https://www.cms.gov/medicare/cms-forms/cms-forms/cms-forms-items/cms019480">https://www.cms.gov/medicare/cms-forms/cms-forms/cms-forms-items/cms019480</a>)). DMEPOS suppliers enroll in Medicare via the Form
CMS-855S.
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3. Beneficiary Access to Care
Beneficiary access to care in Medicare, Medicaid and CHIP is of
critical importance to CMS and our state partners. CMS carefully
evaluated access to care for Medicare beneficiaries nationwide. We
discuss our findings for Medicare beneficiaries in the Beneficiary
Access to Care section later in this notice. We also discuss the issue
of Medicaid and CHIP beneficiary access in the Application to Medicaid
and Children's Health Insurance Program (CHIP) section of this notice.
4. When a Temporary Moratorium Does Not Apply
Under Sec. 424.570(a)(1)(iii), a temporary moratorium does not
apply to any of the following:
<bullet> Changes in practice location (except if the location is
changing from a location outside the moratorium area to a location
inside the moratorium area).
<bullet> Changes in provider or supplier information, such as phone
number or address.
<bullet> Changes in ownership (except changes in ownership of home
health agencies that would require an initial enrollment).
Also, in accordance with Sec. 424.570(a)(1)(iv), a temporary
moratorium does not apply to any enrollment application that has been
received by the Medicare contractor prior to the date the moratorium is
imposed.
5. Lifting a Temporary Moratorium
In accordance with Sec. 424.570(b), a temporary enrollment
moratorium imposed by CMS remains in effect for 6 months. If CMS deems
it necessary, the moratorium may be extended in 6-month increments. CMS
evaluates whether to extend or lift the moratorium before the end of
the initial 6-month period and, if applicable, before the expiration of
any subsequent moratorium periods. If the moratorium announced in this
notice is extended, CMS will publish a document regarding such
extension(s) in the Federal Register.
As provided in Sec. 424.570(d), CMS may lift a moratorium at any
time if: (1) the President declares an area a disaster under the Robert
T. Stafford Disaster Relief and Emergency Assistance Act; (2)
circumstances warranting the imposition of a moratorium have abated or
CMS has implemented program safeguards to address the program
vulnerability; (3) the Secretary has declared a public health
emergency; or (4) in the judgment of the Secretary, the moratorium is
no longer needed. Once a moratorium is lifted, the provider or supplier
types that were unable to enroll because of the moratorium will be
assigned to the ``high'' screening level in accordance with Sec. Sec.
424.518(c)(3)(iii) and 455.450(e)(2) if such provider or supplier
applies for enrollment at any time within 6 months from the date the
moratorium was lifted.
[[Page 9857]]
II. National DMEPOS Medical Supply Company Moratorium
Under its authority at Sec. 424.570(a)(2)(i) and (a)(2)(iv), CMS
is implementing a nationwide temporary moratorium on the Medicare
enrollment of medical supply company DMEPOS suppliers nationwide. In
this section, we explain the rationale for and scope of this
moratorium.
A. Longstanding Program Integrity Problems Within the Overall DMEPOS
Supplier Sphere
As we explained at length in the Calendar Year (CY) 2026 Home
Health Prospective Payment System (HH PPS) proposed rule \4\ (published
in the July 2, 2025, Federal Register (90 FR 29108)), DMEPOS fraud,
waste, and abuse has been a very serious problem for many years,
putting hundreds of millions (even billions) of taxpayer dollars at
risk and potentially resulting 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. Recent cases demonstrate
that DMEPOS continues to be a target of fraudulent billing and that new
schemes have developed.'' \5\ In fact, the OIG has several pending
DMEPOS-focused studies based on concerning trends and the high risk of
fraud, waste, and abuse historically associated with this supplier
type:
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\4\ ``Medicare and Medicaid Programs; Calendar Year 2026 Home
Health Prospective Payment System (HH PPS) Rate Update; Requirements
for the HH Quality Reporting Program and the HH Value-Based
Purchasing Expanded Model; Durable Medical Equipment, Prosthetics,
Orthotics, and Supplies (DMEPOS) Competitive Bidding Program
Updates; DMEPOS Accreditation Requirements; Provider Enrollment; and
Other Medicare and Medicaid Policies. The CY 2026 HH PPS rule
contained a number of DMEPOS related provisions'' (90 FR 29199
through 29201).
\5\ <a href="https://oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000867.asp">https://oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000867.asp</a>.
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<bullet> OEI-02-24-00311: White Paper: Fraud, Waste, and Abuse
Related to Durable Medical Equipment in Medicare (Expected FY 2026).\6\
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\6\ <a href="https://www.oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000939.asp">https://www.oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000939.asp</a>.
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<bullet> OEI-03-25-00080: CMS's Use of Surety Bonds To Protect
Medicare Part B From Overpayments to Durable Medical Equipment
Suppliers (expected FY 2026).\7\
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\7\ <a href="https://oig.hhs.gov/reports/work-plan/browse-work-plan-projects/cmss-use-of-surety-bonds-to-protect-medicare-part-b-from-overpayments-to-durable-medical-equipment-suppliers/">https://oig.hhs.gov/reports/work-plan/browse-work-plan-projects/cmss-use-of-surety-bonds-to-protect-medicare-part-b-from-overpayments-to-durable-medical-equipment-suppliers/</a>.
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<bullet> OEI-02-24-00310: Durable Medical Equipment Fraud and
Safeguards in Medicare (expected FY 2026).\8\
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\8\ <a href="https://www.oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000867.asp">https://www.oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000867.asp</a>.
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<bullet> SRS-A-25-030: Audits of the Medicare Enrollment Screening
Process for Suppliers of Durable Medical Equipment, Prosthetics,
Orthotics, and Supplies (expected FY 2027).\9\
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\9\ <a href="https://oig.hhs.gov/reports/work-plan/browse-work-plan-projects/srs-a-25-030/">https://oig.hhs.gov/reports/work-plan/browse-work-plan-projects/srs-a-25-030/</a>.
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Considering the wide and ever-changing range of payment safeguard
risks associated with DMEPOS suppliers, we have taken and will continue
to take measures to address them.
B. Specific Concerns About Medical Supply Companies and Certain Types
of Supplies
DMEPOS fraud schemes do not necessarily follow a consistent pattern
but can vary widely in their particular facts. Too, DMEPOS fraud,
waste, and abuse is not restricted to certain types of items or
particular areas of the country but occurs with numerous different
product types and in many geographic areas. Both CMS and the OIG have,
though, seen particular issues with certain types of DMEPOS suppliers
and supplies.
As an illustration, the OIG in May 2024 issued a report titled
``Medicare Remains Vulnerable to Fraud, Waste, and Abuse Related to
Off-the-Shelf Orthotic Braces, Which May Result in Improper Payments
and Impact the Health of Enrollees'' (A-09-21-03019). The report noted
that prior OIG reviews identified vulnerabilities associated with
orthotic braces, such as: (1) questionable DMEPOS supplier billing
practices; (2) improper payments made for braces that were not
medically necessary or were not documented; and (3) fraud related to
off-the shelf (OTS) braces.\10\ The May 2024 report also cited issues
related to Medicare's oversight of OTS braces, including the following:
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\10\ https://oig.hhs.gov/reports/all/2024/medicare-remains-
vulnerable-to-fraud-waste-and-abuse-related-to-off-the-shelf-
orthotic-braces-which-may-result-in-improper-payments-and-impact-
the-health-of-enrollees/#:~:.
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<bullet> Medicare paid for OTS braces that were--
++ Ordered by suppliers that did not have treating relationships
with beneficiaries; and
++ Marketed to beneficiaries by telemarketers using prohibited
direct solicitation.
<bullet> Payments to suppliers for fraudulently billed OTS braces
have cost Medicare millions of dollars.\11\
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\11\ Ibid. pp. 7-12.
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Given these issues, the OIG recommended that CMS analyze DMEPOS
supplier billing patterns, identify emerging fraud schemes related to
OTS braces, and use CMS's authority to prevent further losses to the
Medicare program.\12\ Significantly, for purposes of this CMS notice,
this included using DMEPOS billing patterns to determine, in part,
whether to impose a temporary moratorium on enrolling new DMEPOS
suppliers of OTS braces.\13\
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\12\ Ibid., p. 13.
\13\ HHS-OIG report A-09-21-03019: ``Medicare Remains Vulnerable
to Fraud, Waste, and Abuse Related to Off-the-Shelf Orthotic Braces,
Which May Result in Improper Payments and Impact the Health of
Enrollees'' (page 15) May 2024. <a href="https://oig.hhs.gov/documents/audit/9902/A-09-21-03019.pdf">https://oig.hhs.gov/documents/audit/9902/A-09-21-03019.pdf</a>.
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Another OIG report cited in the CY 2026 HH PPS proposed rule (90 FR
29108), titled ``Medicare Improperly Paid Suppliers for Intermittent
Urinary Catheters'' (A-09-22-03019), was released in February 2025.
Citing the ongoing risk of improper payments, the OIG performed a
nationwide audit to determine whether Medicare paid suppliers for
catheters consistent with Medicare requirements for catheters furnished
to beneficiaries between July 2021 through June 2022.\14\ The OIG found
that payments for 15 sample items did not comply with Medicare
requirements, in some cases because suppliers were non-compliant with
requirements for catheter refills, proof of delivery, or a standard
written order; this resulted in approximately $35.1 million in improper
payments.\15\ Even before this report, though, CMS in early 2023 had
identified a concerning rise in urinary catheter billings attributed to
a fraud scheme involving 15 DMEPOS companies that had recently changed
ownership. CMS' own investigation of this matter determined that: (1)
Medicare beneficiaries did not receive catheters from these DMEPOS
companies and were not billed directly; (2) physicians did not order
these supplies; and (3) the supplies were not needed.\16\ Although CMS
took prompt action to address this matter, including stopping payments
from being made to these suppliers and revoking the Medicare
enrollments of all 15
[[Page 9858]]
suppliers, both the OIG report and our investigation underscored the
program integrity issues in the DMEPOS arena.\17\
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\14\ <a href="https://oig.hhs.gov/reports/all/2025/medicare-improperly-paid-suppliers-for-intermittent-urinary-catheters/">https://oig.hhs.gov/reports/all/2025/medicare-improperly-paid-suppliers-for-intermittent-urinary-catheters/</a>.
\15\ Ibid.
\16\ Ibid.
\17\ Ibid.
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There have also been a considerable number of criminal convictions
and other findings over the last several years involving DMEPOS
suppliers. We included a non-exhaustive list of such recent cases in
the CY 2026 HH PPS proposed rule (90 FR 29199-29201). We restate
several here, each of which involved medical supply company
specialties:
<bullet> A California woman was sentenced in December 2023 to 15
years in prison for billing Medicare for over $24 million by submitting
fraudulent claims for medically unnecessary DME--mostly power
wheelchairs (PWC)--and PWC repairs. As the de facto owner of two DMEPOS
supplier companies (both of which were Medicare-enrolled in the names
of her out-of-state relatives), the individual orchestrated a scheme in
which she paid marketers for patient referrals and then directed them
to take patients to physicians, who prescribed medically unnecessary
DMEPOS (including PWCs) that her companies used to submit fraudulent
claims to Medicare. Two other defendants were convicted in this case,
including one who worked at both DMEPOS companies as a repair
technician.\18\
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\18\ <a href="https://www.justice.gov/usao-cdca/pr/redondo-beach-woman-sentenced-15-years-prison-leading-24-million-scam-billed-medicare">https://www.justice.gov/usao-cdca/pr/redondo-beach-woman-sentenced-15-years-prison-leading-24-million-scam-billed-medicare</a>.
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<bullet> In September 2023, a federal district court entered a
judgment against a Virginia DMEPOS supplier for damages and penalties
under the False Claims Act for over $12 million. In its complaint filed
in district court, the United States alleged that over a nearly 6-year
period, Medicare paid the supplier over $600,000 for medical braces
furnished to Medicare beneficiaries related to DMEPOS prescriptions
that the supplier illegally purchased from marketing companies. The
DMEPOS supplier paid a fee for each prescription that it purchased and
then used these prescriptions (along with personal and medical data
provided by the marketing companies) to submit 923 fraudulent Medicare
claims.\19\
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\19\ <a href="https://www.justice.gov/usao-edva/pr/virginia-medical-equipment-provider-ordered-pay-12-m-medicare-fraud-scheme-civil">https://www.justice.gov/usao-edva/pr/virginia-medical-equipment-provider-ordered-pay-12-m-medicare-fraud-scheme-civil</a>.
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<bullet> A California father and son in March 2024 were sentenced
to prison for their roles in fraudulently receiving over $21 million in
Medicare payments. The pair, along with others, conspired to commit
Medicare fraud by billing for medically unnecessary DME, such as knee,
ankle, shoulder, wrist and back braces. They had established two DMEPOS
supplier companies; to find customers, they entered into sham
agreements with ``marketing'' companies that, instead of marketing,
provided information about Medicare beneficiaries for $125 to $350
each. The packets included, among other things, a signed prescription
from a physician (obtained via telemedicine) claiming that the brace
was medically necessary for the beneficiary. Yet, in almost all cases,
the physician signing the prescription had no previous doctor-patient
relationship with the beneficiary. The two men then billed Medicare
through their DMEPOS companies for the unnecessary items.\20\
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\20\ <a href="https://www.justice.gov/usao-sdca/pr/father-and-son-duo-sentenced-prison-21-million-dollar-medicare-scheme">https://www.justice.gov/usao-sdca/pr/father-and-son-duo-sentenced-prison-21-million-dollar-medicare-scheme</a>.
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<bullet> A Texas man was sentenced to prison in February 2024 for
conspiring to pay health care kickback payments for unnecessary DME,
resulting in over $20 million in claims to--and $13 million in payments
from--the Medicare program. The individual owned and operated two
DMEPOS suppliers. Through another entity, the individual secured access
to thousands of Medicare beneficiaries' information by paying, on a
weekly basis, kickbacks in exchange for signed physician orders for the
braces.\21\
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\21\ <a href="https://www.justice.gov/usao-ndga/pr/operator-durable-medical-equipment-companies-sentenced-healthcare-kickback-scheme">https://www.justice.gov/usao-ndga/pr/operator-durable-medical-equipment-companies-sentenced-healthcare-kickback-scheme</a>.
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<bullet> In August 2023, a Florida man was sentenced to prison for
conspiring to defraud the Medicare program. The individual and another
person illegally paid kickbacks of over $565,000 to buy fraudulent
DMEPOS orders, including orders purportedly ``signed'' by physicians
who, in fact, never signed or authorized these orders and did not know
their names and identities were being used in this manner. They also
resold some of the fraudulent orders to other DMEPOS suppliers--
receiving more than $425,000 in proceeds--so that those suppliers, in
turn, could fraudulently bill Medicare for DMEPOS items. Furthermore,
the two individuals acquired five of their own fraudulent DMEPOS supply
companies and themselves used fraudulent DMEPOS orders to file more
than $11 million in fraudulent Medicare claims.\22\
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\22\ <a href="https://www.justice.gov/usao-sdny/pr/florida-business-owner-sentenced-five-years-prison-defrauding-medicare-more-11-million">https://www.justice.gov/usao-sdny/pr/florida-business-owner-sentenced-five-years-prison-defrauding-medicare-more-11-million</a>.
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<bullet> Several DMEPOS suppliers in January 2024 agreed to pay
$2.1 million to resolve allegations that they violated the False Claims
Act by submitting false claims for payment to Medicare and other
federal health care programs. The settlement resolved allegations that
over a 9-year period, the companies:
++ Sold used beds but billed federal health care programs as if
they were new beds.
++ Sold various hospital beds and pressure support surfaces to
beneficiaries of federal health care programs under a miscellaneous
code, which sometimes resulted in the federal program paying a higher
price.
++ Presented claims to the federal government and its contractors
that mischaracterized travel time as DMEPOS repair time in order for it
to be reimbursable by federal health care programs.\23\
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\23\ <a href="https://www.justice.gov/usao-sc/pr/durable-medical-equipment-companies-pay-millions-false-claims-settlement">https://www.justice.gov/usao-sc/pr/durable-medical-equipment-companies-pay-millions-false-claims-settlement</a>.
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<bullet> A Florida man was sentenced to 87 months in prison in
September 2022 for his role in using a DMEPOS company to commit
Medicare and Medicaid fraud. Having established the company, he sought
to conceal his role as its true owner who exercised control over the
company (and the fraud) by listing a nominee or ``straw'' owner as the
owner on its corporate records and bank account. The individual
admitted that he--and not a straw owner--bought lists of Medicare
``patients'' and then directed a ``biller'' to submit fraudulent claims
to Medicare for DMEPOS that a physician did not prescribe, that were
not medically necessary, and that were not being supplied to any
Medicare beneficiary or Medicaid recipient. During a 3-month period--
and under the individual's direction--the supplier submitted over $2.3
million in fraudulent claims to Medicare and Medicaid and was paid over
$1.6 million. The proceeds of the fraud were transferred from the
supplier's account to accounts held in the names of shell companies.
Those proceeds were then withdrawn from the shell company accounts by
others so they could not be traced to the individual.\24\
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\24\ <a href="https://www.justice.gov/usao-sdfl/pr/miami-man-who-used-durable-medical-equipment-company-front-health-care-fraud-sentenced">https://www.justice.gov/usao-sdfl/pr/miami-man-who-used-durable-medical-equipment-company-front-health-care-fraud-sentenced</a>.
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<bullet> A South Carolina man was sentenced to 9 years in prison in
March 2024 for his role in a nearly $100 million healthcare fraud
scheme. The individual controlled and operated at least 10 DMEPOS
companies located throughout the United States. The person and his
conspirators used these companies to submit false and fraudulent claims
to Medicare for braces that were not medically necessary and/or were
obtained through the payment of kickbacks and bribes. Specifically, the
companies entered into agreements with an offshore, advertised call
center
[[Page 9859]]
to purchase physicians' orders so the DMEPOS companies could bill
Medicare. When a Medicare beneficiary called the applicable 1-800
number, the beneficiary would be screened for eligibility and then
convinced that the beneficiary needed a brace and oftentimes upsold on
other braces. The call center would then contact a telemedicine company
whose physician or nurse practitioner would issue a prescription
without regard to the medical necessity. Beneficiaries were prescribed
braces without ever being examined by, seeing, or, in some instances,
even speaking to a medical professional.\25\
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\25\ <a href="https://www.justice.gov/usao-sc/pr/mt-pleasant-man-sentenced-nine-years-federal-prison-role-one-largest-medicare-fraud">https://www.justice.gov/usao-sc/pr/mt-pleasant-man-sentenced-nine-years-federal-prison-role-one-largest-medicare-fraud</a>.
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Elderly diabetics have also been a target for DMEPOS suppliers. For
example, a Florida diabetic shoe company and its president agreed in
January 2022 to pay over $5.5 million to settle claims brought under
the False Claims Act that it sold custom diabetic shoe inserts that
were not actually custom-fabricated in accordance with Medicare
standards. The company billed Medicare for the custom version or sold
the inserts to other providers who then billed Medicare, which allowed
the company to produce and sell more inserts and increase profits by
``cutting corners.'' \26\
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\26\ <a href="https://www.justice.gov/usao-sdfl/pr/diabetic-shoe-company-agrees-pay-55-million-resolve-false-claims-act-allegations">https://www.justice.gov/usao-sdfl/pr/diabetic-shoe-company-agrees-pay-55-million-resolve-false-claims-act-allegations</a>.
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C. Consultation With Law Enforcement and Moratorium Determination
In light of these concerns, pursuant to our consultations with both
the OIG and the Department of Justice under Sec. 424.570(a)(2)(iv)
regarding a DMEPOS moratorium, and as outlined in greater detail in the
Data Analysis section of this notice, CMS has determined that medical
supply companies have significant potential for fraud, waste or abuse.
Accordingly, and also given the recent nationwide trends of OIG and DOJ
investigating and charging owners of DMEPOS suppliers across the
country for fraudulent billing schemes, we believe that a moratorium on
the enrollment of medical supply companies into Medicare could assist
in stemming this activity.
We recognize that a moratorium under Sec. 424.570 only applies to
newly enrolling providers and suppliers, and that currently enrolled
medical supply companies under our initiative will be largely
unaffected unless they are opening a new location in the moratorium
area. (As each DMEPOS supplier location must be separately and
individually enrolled in accordance with Sec. 424.57(b)(1), enrolling
a new location is considered an initial enrollment.) Yet preventing
medical supply company fraud, waste, and abuse requires a wide-ranging
and comprehensive approach involving multiple components, not merely
one or two. 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.)
D. Scope of DMEPOS Medical Supply Company Moratorium
Beginning on the effective date of this notice, no new DMEPOS
suppliers of the following seven types (as well as no new practice
locations of these seven types) will be enrolled into Medicare unless
the supplier's enrollment application was received by the applicable
Medicare contractor prior to this notice's effective date;
geographically, the moratorium applies to suppliers of these seven
types seeking to enroll anywhere in the United States, including all
states, territories, and the District of Columbia. Said types are
included in the moratorium due to a significant potential for fraud,
waste, and abuse. The seven supplier types are as follows:
<bullet> Medical supply company.
<bullet> Medical supply company with orthotics personnel.
<bullet> Medical supply company with pedorthic personnel.
<bullet> Medical supply company with prosthetics personnel.
<bullet> Medical supply company with prosthetic and orthotic
personnel.
<bullet> Medical supply company with registered pharmacist.
<bullet> Medical supply company with respiratory therapist.
Exclusively for purposes of the moratorium's applicability, a
medical supply company is considered a business whose principal
function is to furnish DMEPOS supplies (regardless of supply type)
directly to another party, such as, but not limited to: (1)
beneficiaries with a medical order (for example, via mail order); (2)
medical providers and suppliers; or (3) both. As an illustration, a
grocery store's, pharmacy's, or inpatient or outpatient medical
provider's principal function is typically not the provision of DMEPOS.
It is instead, for instance, the selling of food or toiletries, the
dispensing of medicines, the direct provision of medical care (such as
a hospital, HHA, physician's office), etc. Hence, the moratorium would
generally not apply to these DMEPOS suppliers.
For those previously referenced medical supply types requiring
specific personnel (for example, prosthetics personnel), the supplier--
again, for moratorium purposes only--has at least one such individual
serving in an employment, advisory, contractual, or other role; thus, a
``medical supply company with orthotics personnel'' would be a medical
supply company with at least one orthotic professional in one of the
roles noted previously (such as advisory).
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. This will include, but not be
limited to, site visits and online research of the business. We also
note that under Sec. 424.530(a)(4) and (f), 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. We have similar
grounds for revoking a provider's enrollment for the submission of
false or misleading information, and under Sec. 424.535(a) we can
impose a reenrollment bar of up to 10 years. We thus caution medical
supply companies that any attempt to circumvent the moratorium by
enrolling as another DMEPOS supplier type could lead to the supplier
being: (1) effectively banned from Medicare for many years; and (2) as
indicated in Sec. 424.530(a)(4) and on the Form CMS-855S certification
statement, subject to referral to the OIG for investigation and
possible criminal, civil, or administrative penalties.
Furthermore, we note that under Sec. 424.551, a DMEPOS supplier
that undergoes a non-exempt change in majority ownership (CIMO) within
36 months of its initial enrollment (or within 36 months of its most
recent CIMO) must enroll in Medicare as a brand new supplier, undergo a
survey, and become newly accredited. The supplier's current enrollment
is terminated. This means that the supplier's new enrollment is an
initial enrollment no less than if the supplier had never enrolled in
Medicare before. Hence, our moratorium would prohibit the supplier in
this Sec. 424.551 situation from reenrolling in Medicare because,
again, it would constitute an initial
[[Page 9860]]
enrollment; the supplier is ``new.'' The aforementioned moratorium
exemption under Sec. 424.570 for changes of ownership does not apply
to such a scenario.
E. Application to Medicaid and CHIP
Section 1866(j)(7) of the Act authorizes imposition of a temporary
enrollment moratorium for Medicare, Medicaid or CHIP if the Secretary
determines such moratorium is necessary to prevent or combat fraud,
waste, or abuse under either program. The Secretary is not required to
impose a particular moratorium on all three programs. The statutory
discretion noted previously affords the Secretary the opportunity to
impose a moratorium on any combination of the three programs or one
program alone.\27\
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\27\ The aforementioned February 2, 2011, final rule also
established new Medicaid regulations at 42 CFR part 455, subpart E,
including Sec. 455.470, which implements the moratoria authority
under section 1902(kk)(4) of the Act. In a similar vein, that final
rule implemented Sec. 457.990, providing that part 455, subpart E
applies to CHIP in the same manner as it applies to Medicaid. Under
Sec. 455.470(a)(1) through (3), the Secretary may impose a
temporary moratorium, in accordance with Sec. 424.570, on the
enrollment of new providers or provider types after consulting with
any affected State Medicaid agencies. The State Medicaid agency will
impose a temporary moratorium on the enrollment of new providers or
provider types identified by the Secretary as posing an increased
risk to the Medicaid program unless the state later determines that
the imposition of a moratorium would adversely affect Medicaid
beneficiaries' access to medical assistance and so notifies the
Secretary in writing.
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At this time, we believe it is in the best interest of Medicaid and
CHIP beneficiaries across the country to allow each state to decide
whether some form of a DME moratorium is appropriate for their
respective Medicaid and CHIP programs, and the scope of any such
moratorium. Each state has greater expertise and experience with their
pool of DME provider types--including the requirements for each type of
DME provider--than CMS. Nevertheless, CMS encourages each state to, as
appropriate, implement a DME provider moratorium tailored to the
specifics of their beneficiary population as well as any geographic
considerations. Additionally, CMS is offering every state and territory
the opportunity to consult with CMS on the prospect of implementing a
Medicaid- or CHIP-based (or both) DME moratorium in their
jurisdictions.
F. Data Analysis
1. Medicare
Our review of Medicare payment and enrollment data supports the
need for a national moratorium on medical supply companies. As
background, CMS data indicates that small DMEPOS suppliers drive
overall Medicare DMEPOS payments despite serving roughly the same
number of beneficiaries as large suppliers.\28\ In fact, data from 2023
to 2025 reflects that about 85 percent of DMEPOS supplier payments from
2023 to present went to small DMEPOS suppliers. Further, within the
category of small DMEPOS suppliers, `medical supply company' suppliers
account for the majority of Medicare FFS payments from 2023 to October
2025. During that same period, medical supply company specialties
(medical supply company, medical supply company with orthotics
personnel, etc.) had a 17 percent revocation rate, meaning that 17
percent of these suppliers eventually had their Medicare enrollments
revoked. This is nearly triple the rate for other DMEPOS supplier
types. Yet the higher prevalence of program integrity issues associated
with medical supply companies compared to other DMEPOS supplier types
is not limited to revocation rates. Medical supply companies also had
higher payment suspension, law enforcement referral, and BIU complaint
rates from 2023 through late October 2025 than other DMEPOS supplier
types. Consider the following:
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\28\ Within the context of CMS's data review, large DMEPOS
suppliers are those with a tax identification number (TIN) that is
associated with 25 or more Medicare FFS enrollments. All other
DMEPOS suppliers are small suppliers.
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<bullet> The 7 types of medical supply companies listed in section
II.D. of this notice were all in the top 20 out of over 80 DMEPOS
supplier specialty types when looking at the highest percentage of
DMEPOS suppliers of a specific specialty type that were revoked at
least once since 2023.
<bullet> Five of the 7 types of medical supply companies were in
the top 10 when reviewing the highest percentage of DMEPOS suppliers
with a payment suspension since 2023.
<bullet> Six of the 7 types of medical supply companies were in the
top 10 when examining the highest percentages of law enforcement
referrals since 2023.
<bullet> All 7 types were in the top 15 when looking at the highest
percentage of BIU complaints for each DMEPOS supplier type since 2023.
Of the nearly 80,000 DMEPOS suppliers enrolled in Medicare as of
October 2025, medical supply companies are one of the largest
categories with more than 6,000 enrollments, or 7.5 percent of the
national DMEPOS supplier universe. (Though the number varies by year,
approximately 600 medical supply companies enroll in Medicare each year
(or 300 over a 6-month period)). Establishing a moratorium on medical
supply companies will simultaneously help address the heart of DMEPOS
fraud while still maintaining a large pool of--
<bullet> Medical supply companies (that is, over 6,000 that are
currently enrolled); and
<bullet> Non-medical supply company DMEPOS suppliers (for example,
pharmacies) that are either presently enrolled or can newly enroll/open
new practice locations.
Explained otherwise, the moratorium will only impact prospective
newly enrolling medical supply companies in one of the aforementioned
seven categories. As discussed in more detail later in this section,
there is already an adequate nationwide quantity of such suppliers.
Therefore, we do not foresee shortages or access to care issues arising
from the moratorium. In addition, beneficiaries who do not receive
supplies directly from a medical supply company (for example, the
patient receives supplies from the hospital at which the individual is
an inpatient) will not be impacted; again, the ability of a variety of
DMEPOS supplier types to continue to open new locations (for example,
pharmacies) minimizes any concerns pertaining to limiting beneficiary
access-to-care. Moreover, because many DMEPOS items are delivered
across state borders via mail orders, we have less concern with a
medical supply company/DMEPOS moratorium than other provider or
supplier types.
2. Orthotic Brace Codes on the Master List of DMEPOS Items
CMS publishes a ``Master List of DMEPOS Items Potentially Subject
to Face-to-Face Encounter and Written Orders Prior to Delivery and/or
Prior Authorization Requirements'' (the ``Master List'').\29\ The
Master List is a library of items that have been identified as
potential vulnerabilities to the Trust Funds based on criteria outlined
in 42 CFR 414.234(b), from which items may be selected to be placed on
either the Required Face-to-
[[Page 9861]]
Face Encounter and Written Orders Prior to Delivery List (the ``F2F/
WOPD List'') and/or Required Prior Authorization List under the
authority provided under sections 1834(a)(1)(E)(iv), 1834(a)(11)(B),
and 1834(a)(15) of the Act. In general, some of this criteria include
that the DMEPOS item has--
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\29\ See the November 18, 2019, final rule titled ``Medicare
Program; End-Stage Renal Disease Prospective Payment System, Payment
for Renal Dialysis Services Furnished to Individuals with Acute
Kidney Injury, End-Stage Renal Disease Quality Incentive Program,
Durable Medical Equipment, Prosthetics, Orthotics and Supplies
(DMEPOS) Fee Schedule Amounts, DMEPOS Competitive Bidding Program
(CBP) Amendments, Standard Elements for a DMEPOS Order, and Master
List of DMEPOS Items Potentially Subject to a Face-to-Face Encounter
and Written Order Prior to Delivery and/or Prior Authorization
Requirements'' (84 FR 60648) and also 42 CFR 410.38.
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<bullet> An average purchase fee of $500 in the DMEPOS fee schedule
or a $50 monthly rental cost, subject to annual adjustments; and
<bullet> Been identified as having a high rate of potential fraud
or unnecessary utilization in an OIG or Government Accountability
Office report that is national in scope and published in 2015 or
later--or listed in the 2018 or later Comprehensive Error Rate Testing
(CERT) Medicare Fee-for-Service (FFS) Supplemental Improper Payment
Data report as having a high improper payment rate.
The DMEPOS Master List also includes any items with at least 1,000
claims and $1 million in payments during a recent 12-month period that
are determined to have aberrant billing patterns \30\ and lack
explanatory contributing factors (for example, new technology or
coverage policies).
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\30\ Items with aberrant billing patterns would be identified as
those items with payments during a 12-month timeframe that exceed
payments made during the preceding 12-months, by the greater of:(A)
Double the percent change of all DMEPOS claim payments for items
that meet the aformentioned claim and payment criteria, from the
preceding 12-month period; or (B) Exceeding a 30 percent increase in
payment.
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The orthotic braces on the Master List are items that are
susceptible to fraud, waste, and abuse based on multiple factors. There
are currently 32 braces that fall into the category of prefabricated
braces. Nine of those 32 braces also fall into the category of OTS
braces, the same class of braces highlighted as a major risk for fraud,
waste, and abuse in the OIG's 2024 report on OTS orthotics fraud,
waste, and abuse.\31\ Per CMS billing data from CY 2023 through late
October 2025 for the 32 Healthcare Common Procedure Coding System
(HCPCS) Level II codes at issue, medical supply companies submitted
more than 70 percent of the more than 2.1 million claim lines for the
32 prefabricated orthotic brace codes on the Master List. With respect
to the most problematic category of braces--the OTS variety--medical
supply companies submitted more than 80 percent of the more than 1.5
million claim lines submitted by DMEPOS suppliers between 2023 and late
October 2025. This data regarding the highest risk orthotic braces--
namely those on the Master List--complemented our other fact gathering
that pointed toward a nationwide medical supply company DMEPOS
moratorium.
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\31\ HHS-OIG report A-09-21-03019: ``Medicare Remains Vulnerable
to Fraud, Waste, and Abuse Related to Off-the-Shelf Orthotic Braces,
Which May Result in Improper Payments and Impact the Health of
Enrollees'') May 2024. A-09-21-03019.pdf.
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3. Medicaid and CHIP
As previously discussed, at this time we believe it is in the best
interests of Medicaid and CHIP beneficiaries and the states to delegate
to each state the decision as to whether a DME moratorium is
appropriate for that state. CMS encourages states to, where
appropriate, implement a DME provider moratorium tailored to the
specifics of their beneficiary population, as well as any geographic
considerations. Accordingly, we did not perform a Medicaid and CHIP
data analysis as part of this moratorium initiative.
G. Beneficiary Access to Care
With more than 79,000 DMEPOS suppliers of all types currently
approved nationwide, CMS data analysis indicates that the current
supplier network adequately supports beneficiary needs without
compromising access or the quality of care. Indeed, access to care
appears strong on state and local levels. Two other considerations
indicate that our moratorium will not negatively impact Medicare
beneficiary access-to-care. First, only seven medical supply company
types of DMEPOS suppliers will be subject to the moratorium.
Pharmacies, physicians, hospitals, physical therapists, and other
DMEPOS supplier types will remain able to open new practice locations
throughout the country. If a need arises in a particular geographic
location, a variety of DMEPOS supplier types can potentially fill the
gap. Second, many categories of DMEPOS supplies can be shipped via mail
order, even across the country. Mail order DMEPOS services are common
today and can help alleviate limitations on medical supply companies
not being able to open new locations during the moratorium.
Given all the foregoing, we do not believe a nationwide medical
supply company moratorium will substantially limit Medicare beneficiary
access to care.
III. No Judicial Review of CMS's Decision To Impose an Enrollment
Moratorium
In accordance with section 1866(j)(7)(B) of the Act, there is no
judicial review under sections 1869 and 1878 of the Act, or otherwise,
of the decision to impose a temporary enrollment moratorium. CMS under
Sec. Sec. 424.530(a)(10) and 424.570(c) denies the enrollment
application of a provider or supplier if the provider or supplier is
subject to a moratorium. However, Sec. 424.514(d)(2)(v)(C)) states
that if the provider or supplier was required to pay an application
fee, the fee will be refunded if the application is denied because of
the imposition of a moratorium. A provider or supplier that is impacted
by a moratorium also may use the existing procedures at 42 CFR part 498
to administratively appeal such denial based on the moratorium; under
42 CFR 498.5(l)(4), though, the scope of any such appeal would be
limited solely to assessing whether the temporary moratorium applies to
the provider or supplier appealing the denial.
IV. Collection of Information Requirements
This document does not impose information collection and
recordkeeping requirements. Consequently, it need not be reviewed by
the Office of Management and Budget under the authority of the
Paperwork Reduction Act of 1995 (44 U.S.C. 35).
V. Regulatory Impact Statement
A. Statement of Need
This notice is necessary to help reduce the prevalence of Medicare
fraud, waste, and abuse among DMEPOS medical supply companies.
B. Overall Impact
We have examined the impacts of this notice as required by E.O.
12866, ``Regulatory Planning and Review''; E.O. 13132, ``Federalism;
E.O. 13563, ``Improving Regulation and Regulatory Review''; E.O. 14192,
``Unleashing Prosperity Through Deregulation''; and the Regulatory
Flexibility Act (RFA), 5 U.S.C. 601 through 612; section 1102(b) of the
Social Security Act; section 202 of the Unfunded Mandates Reform Act of
1995; and the Congressional Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select those regulatory approaches that
maximize net benefits (including potential economic, environmental,
public health and safety, and other advantages; and distributive
impacts). Based on our analysis, the Office of Information and
Regulatory Affairs (OIRA) has determined that this
[[Page 9862]]
notice is not significant pursuant to section 3(f)(1) of Executive
Order 12866. In accordance with the provisions of Executive Order
12866, this notice was reviewed by the Office of Management and Budget.
In accordance with Subtitle E of the Small Business Regulatory
Enforcement Fairness Act of 1996 (also known as the Congressional
Review Act)), OIRA has also determined that this notice does not meet
the criteria for a major rule as defined in 5 U.S.C. 804(2).
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the RFA provisions at 5 U.S.C. 604. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a metropolitan
statistical area and has fewer than 100 beds. This notice is primarily
applicable to DMEPOS suppliers, not rural hospitals. Therefore, the
Secretary has certified that this notice will not have a significant
economic impact on the operations of small rural hospitals.
We expect savings to the Medicare program from the reduction in the
number of newly enrolling medical supply companies. However, we do not
have data upon which to base an estimate of the amount of savings.
C. Regulatory Flexibility Analysis (RFA)
1. Small Business Impact
The RFA requires agencies to analyze options for regulatory relief
of small businesses. For purposes of the RFA, small entities include
small businesses, nonprofit organization, and small governmental
jurisdictions. Most entities and most other providers and suppliers are
small entities, either by nonprofit status or by having revenues less
than $37.5 million to $41 million in any 1 year. Individuals and states
are not included in the definition of a small entity. For several
reasons, we do not believe that our DMEPOS moratorium will have a
significant economic impact on a substantial number of small
businesses.
First, in 2025 there were 79,360 approved DMEPOS supplier Medicare
enrollments, representing an 8.3 percent decrease since 2023. This
reflects a consolidating but mature market. The consolidation of the
DMEPOS marketplace reflects a certain level of saturation, whereby the
number of currently enrolled DMEPOS suppliers can meet the demand for
items/supplies from the Medicare beneficiary population. As of October
2025, over 6,000 of the nearly 80,000 approved DMEPOS suppliers are
medical supply companies. We believe that most small medical supply
companies in this sector are already enrolled. Hence, the moratorium
would not directly harm their ongoing operations. All currently
enrolled medical supply companies could continue billing Medicare and
operating normally. Once the medical supply company moratorium is in
effect, we anticipate that small businesses hoping to establish
themselves as medical supply companies will be able to pivot to other
sectors.
Second, even though some small businesses hoping to enroll in
Medicare as medical supply companies will be impacted, many other small
businesses can still enroll as a different type of DMEPOS supplier; for
example, over 30 percent of all retail pharmacies in the United States
are believed to be independent community pharmacies. While not
necessarily purely equivalent to small businesses, independent
pharmacies stand as a sound proxy for the concept of a small business
in the pharmacy space. Moreover, the number of potentially impacted
medical supply companies is miniscule--very far from substantial--when
compared to the well over 2 million Medicare providers and suppliers,
many of which are small businesses.
Third, even though some small businesses will be impacted by the
moratorium, the risk to the Medicare Trust Funds and Medicare
beneficiaries by nefarious medical supply companies, small or large, is
too great to warrant refraining from this moratorium. The negative
effect on some small businesses that seek to enter the program as a
medical supply company is outweighed by the benefit of protecting the
Trust Funds, beneficiaries, and the taxpayers from substantial fraud,
waste, and abuse.
2. Alternatives Considered
There are three principal alternatives we considered in preparing
this notice. First, we considered forgoing a moratorium entirely. Yet
the ongoing, serious problem of DMEPOS fraud, waste, and abuse requires
measures beyond those that CMS currently utilizes; indeed, while these
measures have certainly been helpful, the issue of DMEPOS program
integrity remains. Second, we contemplated a moratorium on all DMEPOS
supplier types. We chose not to because this could unnecessarily impact
certain DMEPOS supplier types that are not typically among the highest
risk sub-types. Third, we considered limiting the moratorium to certain
states. We believe, though, that the problems the moratorium seeks to
address are nationwide rather than restricted to particular geographic
areas.
D. Unfunded Mandates Reform Act (UMRA)
Section 202 of UMRA of 1995 UMRA also requires that agencies assess
anticipated costs and benefits before issuing any rule whose mandates
require spending in any 1 year of $100 million in 1995 dollars, updated
annually for inflation. In 2026, that threshold is approximately $187
million. This notice will not impose a mandate that will result in the
expenditure by State, local, and Tribal governments, in the aggregate,
or by the private sector, of more than $187 million in any one year.
E. State and Local Costs
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed regulatory action (and
subsequent final action) that imposes substantial direct requirement
costs on state and local governments, preempts state law, or otherwise
has Federalism implications. Since this notice does not impose any
costs on state or local governments, the requirements of Executive
Order 13132 are not applicable.
The Administrator of the Centers for Medicare & Medicaid Services
(CMS), Dr. Mehmet Oz, having reviewed and approved this document,
authorizes Chyana Woodyard, who is the Federal Register Liaison, to
electronically sign this document for purposes of publication in the
Federal Register.
Chyana Woodyard,
Federal Register Liaison, Centers for Medicare & Medicaid Services.
[FR Doc. 2026-03971 Filed 2-25-26; 4:15 pm]
BILLING CODE 4120-01-P
</pre></body>
</html>Indexed from Federal Register on February 27, 2026.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.