CMS bans 11 medical suppliers over $3.4B in fraudulent claims

The Centers for Medicare & Medicaid Services (CMS) has barred 11 suppliers of medical equipment from future Medicare Advantage and Part D payments after identifying over $3.4 billion in suspected fraudulent billing during 2025 and 2026. The suppliers, which offer durable medical equipment, prosthetics, orthotics, and related supplies, billed for multiple beneficiaries who were deceased on the reported dates of service and for equipment that beneficiaries never requested or received. The agency’s move comes as part of a broader effort to address systemic billing abuses.

CMS Administrator Dr. Mehmet Oz condemned the fraud in a statement released September 8, describing it as “a level of indecency that we will not stand for.” The suppliers in question had no prior Medicare claims history before 2025 and were added to CMS’s Preclusion List, which requires Medicare Advantage plans and Part D sponsors to reject any payments from listed entities. The agency did not disclose the names of the suppliers or break down how much of the $3.4 billion was actually processed.

Two cases illustrate the scale of the fraud. A Florida-based supplier submitted approximately $18.4 million in catheter claims over two consecutive days in December 2025—$6.1 million for 500 beneficiaries on December 15 and $12.3 million for 777 beneficiaries the following day. In Texas, a company filed approximately $5.5 million in orthotics claims. Six beneficiaries interviewed by investigators said they did not know the ordering providers, had never heard of the suppliers, and did not need the equipment. CMS also confirmed the company’s listed location was not operational.

A New Jersey supplier further demonstrated the pattern by billing a Medicare Advantage plan for 38 encounters involving deceased beneficiaries. Beneficiaries also reported that they did not know the providers involved and had not requested the equipment.

Durable medical equipment, prosthetics, orthotics, and supplies account for over $7 billion in annual Medicare spending through Original Medicare alone, according to data from the Department of Health and Human Services Office of Inspector General. Despite existing safeguards, fraud in this area persists, often by exploiting three key elements: a Medicare-enrolled supplier, a physician’s order, and a beneficiary’s identification number. An August report from the OIG highlighted how fraudsters continue to bypass protections.

This latest enforcement action follows CMS’s February announcement that it had suspended $5.7 billion in suspected fraudulent Medicare payments in 2025. The agency also blocked $1.5 billion in fraudulent medical-equipment billing, revoked billing privileges for 5,586 providers, and referred 372 cases, totaling $3.7 billion in billing, to law enforcement. These measures reflect CMS’s intensified focus on rooting out fraudulent activity within Medicare programs.

To further combat fraud, CMS imposed a six-month moratorium in May on new enrollments for hospice and home health agencies. Earlier moratoriums had targeted specific durable medical-equipment suppliers. Proposed changes to Medicare enrollment rules could grant CMS additional authority to remove noncompliant providers and recover improper payments, with projected annual savings of $82 million.