CMS Blocks 11 Suppliers Over $3.4B Fraud

The Centers for Medicare & Medicaid Services (CMS) has barred 11 medical-equipment suppliers from future payments under Medicare Advantage and Part D programs due to over $3.4 billion in suspected fraudulent billing across 2025 and 2026. These suppliers—specializing in durable medical equipment, prosthetics, orthotics, and related supplies—allegedly submitted claims for services provided to beneficiaries who were deceased on the billing dates. They also filed requests for equipment patients never ordered or received.

Dr. Mehmet Oz, CMS Administrator, called these schemes targeting recently deceased individuals particularly reprehensible in a statement released September 8. The suppliers had no prior Medicare claims history before 2025 and used improper billing methods, the agency noted. Four of them had already lost Original Medicare billing privileges before transitioning to Advantage plans. CMS added them to its Preclusion List after determining their actions harmed the program.

Medicare Advantage plans must now reject payments for items or services from these entities, while Part D sponsors must deny prescription drug claims from listed providers. The agency has not named the 11 suppliers or confirmed how much of the $3.4 billion had already been paid out. However, CMS identified nearly $24 million in fraudulent claims it stopped before payment.

A Florida supplier submitted approximately $18.4 million in catheter claims over two consecutive December 2025 days, including $6.1 million for 500 beneficiaries on the 15th and $12.3 million for 777 beneficiaries the following day. A Texas company filed roughly $5.5 million in orthotics claims, with six beneficiaries reporting they never requested the equipment or recognized the providers. Investigators also found claims for services rendered after nine beneficiaries had died.

CMS determined the Texas company was not operating at its reported location. Another New Jersey firm billed a Medicare Advantage plan for 38 encounters involving deceased beneficiaries, with patients confirming they did not know the providers or request the equipment. CMS’s actions reflect broader efforts to combat medical-equipment fraud, which costs Medicare over $7 billion annually through Original Medicare alone, according to the Department of Health and Human Services Office of Inspector General.

An August report from the OIG highlighted persistent fraud despite existing safeguards, exploiting three key factors: Medicare enrollment status, physician orders, and beneficiary identification numbers. In February, CMS suspended $5.7 billion in suspected fraudulent Medicare payments for 2025. The agency also blocked $1.5 billion in suspected fraudulent medical-equipment billing, revoked billing privileges for 5,586 providers, and referred 372 cases totaling $3.7 billion in billing to law enforcement.

Proposed Medicare enrollment reforms could grant CMS greater authority to remove noncompliant providers and recover improper payments, potentially saving $82 million yearly. The crackdown aligns with CMS’s recent measures, including a six-month nationwide moratorium on new hospice and home health agency enrollments, effective May. The agency had previously imposed a similar freeze on certain durable medical-equipment suppliers.

CMS also adjusted Medicare Shared Savings Program calculations to shield accountable care organizations from irregular catheter billing tied to a small group of suppliers. These steps address systemic weaknesses in healthcare billing systems. Recent enforcement included charging 324 individuals over $14.6 billion in healthcare fraud and settling a $117.7 million risk adjustment case with Aetna. The agency’s actions this year demonstrate a sustained commitment to protecting program integrity and preventing taxpayer waste.