CMS bars 11 suppliers over suspected $3.4B fraud

The Centers for Medicare & Medicaid Services (CMS) has barred 11 medical equipment suppliers from future payments. These suppliers are linked to over $3.4 billion in potentially fraudulent billing during 2025 and 2026. The ban applies to Medicare Advantage and Part D plans.

CMS stated that these suppliers submitted claims for services provided to deceased beneficiaries. They also billed for equipment that was never requested or received by beneficiaries.

Four of the barred companies had lost their billing privileges under Original Medicare before. They then began billing Medicare Advantage plans instead. CMS added them to its Preclusion List due to their harmful actions against the Medicare program.

As a result, Medicare Advantage plans are required to deny payments for items and services provided by these entities, while Part D sponsors must reject claims for prescriptions from listed providers.

While CMS did not disclose the identities of the 11 suppliers or the amount of the $3.4 billion in suspected billing that was actually paid, the agency highlighted that it prevented nearly $24 million in claims from two suppliers before payment was made.

One Florida supplier submitted $18.4 million in catheter claims over two days in December 2025. On December 15, they billed $6.1 million for 500 beneficiaries. The next day, they billed $12.3 million for 777 beneficiaries.

A Texas-based company submitted approximately $5.5 million in claims for orthotics, with six beneficiaries stating that they did not know the ordering providers, had never heard of the supplier, and did not need the equipment.

CMS also found that another company in New Jersey had billed a Medicare Advantage plan for 38 encounters involving beneficiaries who were already deceased, with beneficiaries reporting that they did not know the providers involved and had not requested the equipment.

According to the Department of Health and Human Services Office of Inspector General, Medicare spends over $7 billion annually on durable medical equipment, prosthetics, orthotics, and supplies through Original Medicare alone.

An August report from the Office of Inspector General concluded that fraudulent medical equipment billing persists due to schemes exploiting three essential components: a Medicare-enrolled supplier, a physician order, and a beneficiary’s identification number.

In February, CMS suspended $5.7 billion in suspected fraudulent Medicare payments in 2025. It prevented $1.5 billion in suspected fraudulent medical equipment billing. CMS also revoked billing privileges for 5,586 providers and suppliers. Additionally, it referred 372 cases involving $3.7 billion in billing to law enforcement.

Broader enforcement actions

CMS imposed a six-month nationwide moratorium on new Medicare enrollment for hospice and home health agencies in May, following a similar moratorium previously established for certain durable medical equipment suppliers.

Proposed changes to Medicare enrollment would grant CMS additional authority to remove noncompliant providers and recover improper payments, potentially saving approximately $82 million annually.

Medical equipment fraud has also impacted value-based payment calculations, prompting CMS to modify Medicare Shared Savings Program calculations to shield accountable care organizations from anomalous catheter billing attributed to a small group of suppliers.

Industry Response and Future Safeguards

Proposed changes to enrollment rules would grant CMS additional power to remove noncompliant providers and recover improper payments. These measures aim to address value-based payment calculations that were previously impacted by anomalous billing practices.