Medicare DME fraud is facing increased federal scrutiny after the Centers for Medicare & Medicaid Services identified 11 medical supply companies linked to more than $3.4 billion in suspected fraudulent billing during 2025 and 2026. CMS is barring the suppliers from future Medicare Advantage Part C and Part D payments after detecting billing patterns involving deceased beneficiaries, equipment patients did not request and supplies beneficiaries said they never received.
The enforcement action is part of a broader effort to address fraud involving durable medical equipment, prosthetics, orthotics and supplies, commonly known as DMEPOS.
Medicare DME Fraud Targets High-Risk Suppliers
CMS said the 11 companies shared several warning signs. They had submitted no Medicare claims before 2025, used improper billing practices and later generated unusually large claim volumes.
All 11 submitted claims associated with beneficiaries who were already deceased, according to the agency. Some also billed for equipment allegedly supplied to people who said they had never requested or received the products.
Four of the companies had previously been blocked from receiving traditional Medicare payments but subsequently began billing Medicare Advantage plans. CMS is working with the Department of Health and Human Services Office of Inspector General to prevent the companies from receiving additional MA or Part D payments.
Medicare DME Fraud Analytics Detect Suspicious Claims
Two cases cited by CMS demonstrate the scale of the suspected activity.
A Florida supplier submitted $18.4 million in catheter claims over just two days. That included $6.1 million in claims for 500 beneficiaries on December 15, 2025, followed by $12.3 million for 777 beneficiaries the next day.
In another case, a Texas supplier submitted $5.5 million in orthotics claims. Six beneficiaries contacted by CMS reportedly said they did not know the company, had not ordered the products and did not need orthotics.
CMS also identified claims from the supplier with service dates after nine beneficiaries had died and determined that the company did not operate at its listed location. Payments in both the Florida and Texas cases were suspended before reaching the suppliers.
These cases illustrate how data analytics can help CMS identify abnormal billing patterns before questionable payments leave the Medicare program.
CMS Expands DME Supplier Controls
The September enforcement action follows several other measures targeting DMEPOS fraud.
In February 2026, CMS imposed a six-month nationwide moratorium on new Medicare enrollment for certain DMEPOS supplier categories. The moratorium also restricted specified changes in majority ownership and remained in effect until August 27. CMS said the action prevented approximately $1.5 billion in potentially fraudulent billing.
The agency is now moving from that temporary enrollment restriction toward additional ongoing safeguards.
CMS says DMEPOS remains a frequent target for fraud and intends to ensure that only qualified and legitimate suppliers participate in Medicare.
Medicare DME Fraud Triggers Prior Authorization
Beginning October 15, 2026, CMS will implement probationary prior authorization for certain DMEPOS products supplied by newly enrolled companies and suppliers undergoing specified ownership changes.
Prior authorization allows CMS and its contractors to verify that Medicare coverage, coding and payment requirements are satisfied before certain equipment is provided.
CMS is also expanding the broader Required Prior Authorization List. Additional orthoses, pressure-reducing support surfaces and a manual wheelchair base will become subject to prior authorization beginning October 28, with some requirements rolling out nationally in phases through April 2027.
These measures are designed to stop questionable claims before payment rather than relying solely on recovery efforts after fraud has occurred.
Supplier Accreditation Becomes Stricter
CMS has also strengthened accreditation requirements for DMEPOS suppliers.
Previously, suppliers generally underwent reaccreditation every three years. Under finalized 2026 rules, suppliers will now be resurveyed and reaccredited annually.
The agency is also increasing oversight of organizations that accredit DME suppliers.
Accrediting organizations will need to provide CMS with more frequent and detailed information, while CMS will have greater authority to monitor their performance and respond to deficiencies.
The changes follow concerns that some suppliers may have received accreditation despite failing to meet quality standards or may have fallen out of compliance after initially qualifying.
CMS Expands High-Risk Equipment Monitoring
Medicare’s DMEPOS Master List identifies equipment categories considered vulnerable to unnecessary utilization or improper payment.
As of October 28, 2026, the Master List will contain 550 items. Eighty-two will be on the Required Prior Authorization List, while 105 will require a face-to-face encounter and written order before delivery.
Continuous glucose monitors are one example of the program-integrity challenges CMS is targeting.
CMS reported a 17.3% improper payment rate for glucose monitors in 2025, representing more than $203 million in projected improper payments. The agency has identified schemes involving devices billed without beneficiary knowledge and claims for patients with no documented history supporting medical necessity.
Medicare DME Fraud Crackdown Broadens
The DME enforcement actions form part of CMS’s wider effort to address fraud, waste and abuse across Medicare, Medicaid, CHIP and Affordable Care Act programs.
CMS reported that Medicare program-integrity savings reached a record $41.9 billion in fiscal 2025, up 59% from $26.3 billion the previous year. The agency calculated a return of $22.30 for every program-integrity dollar spent.
For legitimate DME suppliers, tighter requirements may bring additional administrative work through accreditation, enrollment reviews and prior authorization.
For CMS, however, the objective is to prevent high-risk companies from exploiting Medicare before questionable claims are paid.
The latest Medicare DME fraud action demonstrates that federal oversight is shifting toward earlier detection, stronger supplier screening and proactive payment controls. As CMS combines advanced analytics with accreditation, prior authorization and payment exclusions, DMEPOS suppliers can expect significantly greater scrutiny across enrollment and billing.
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