Medical Supply Industry Warns of Consequences After Medicare Ban

The Trump administration’s provisional ban on Medicare enrollment of equipment suppliers, aimed at cracking down on fraud, risks overburdening companies and leaving seniors with less access to products, industry leaders say.

The Centers for Medicare & Medicaid Services in February placed a six-month Medicare enrollment moratorium on suppliers furnishing common medical supplies, known as durable medical equipment, such as wheelchairs, prosthetics, or orthotics. CMS Administrator Mehmet Oz said the agency acted to catch up on a backlog of fraud cases affecting the medical equipment industry.

Oz said in a panel discussion with Medicare Advantage industry advocates in early March that, with a pause in enrollment, “we believe we’ll have time to do some of the reforms required to clean up that business.”

The move comes as the Trump administration increases its focus on fraud in the trillion-dollar Medicare program and health care more broadly, launching a task force this week to coordinate a national strategy to tackle alleged abuses within federal benefits programs.

The United States Sentencing Commission, which tracks US crime data, estimates that health-care fraud offenses have increased by 19.7% since 2020. Some of that fraud can be attributed to abusive billing for durable medical equipment. In one example in 2025, the Department of Justice charged 15 individuals with billing over $10.6 billion in fraudulent payments for medical devices.

Placing a temporary moratorium on new DME suppliers could give the agency’s fraud watchdogs time to set up the infrastructure necessary to catch fraud before it happens, said Joanne Chiedi, the former acting inspector general at the US Department of Health and Human Services during President Donald Trump‘s first term.

“When I was working there, the systems were not in place and the checks and the balances that needed to be in place weren’t there. Therefore, it was always chasing the money,” Chiedi said.

“I suspect that’s what CMS, in concert with OIG, is working on to come up with, identify those high-risk patterns before the money goes out the door,” she said.

Equipment industry leaders such as Tom Ryan, president and CEO of the American Association for Homecare, caution that the ban would put longstanding suppliers in the same bucket as new unvetted entities, creating unintended consequences for existing equipment suppliers in compliance and the patients relying on their products.

“It prevents existing firms from engaging in normal business transactions, such as acquiring new or existing DME suppliers or opening up a new location to service beneficiaries. So, it blocks normal business growth. And that’s where we have a concern,” Ryan said.

“More and more people are growing older every day. There are areas that need to see supplier growth, and we don’t want to curtail that,” he added.

Potential Impact

The CMS’s ban on durable medical equipment provider enrollment wouldn’t be the first time the agency issued a moratorium in response to allegations of rampant fraud. In 2013, the agency placed a temporary ban on enrolling home health providers operating in Chicago and Miami. What was supposed to last six months, however, lasted more than five years.

The result was a decrease in the number of home health agencies in operation, according to the Illinois HomeCare & Hospice Council.

Reed Smith attorney Arielle Lusardi says a six-month ban on DME provider enrollment is unlikely to create significant problems for medical equipment supply chains, but if prolonged, it could create potential access issues for hospitals and their patients.

“Hospitals rely on DME supplier partners to connect patients at the discharge point. So, if their typical suppliers start to exit the market, or their enrollment is disrupted because of a higher degree of oversight from CMS, they can no longer service patients,” Lusardi said.

“You pair that with the inability of new suppliers to enter the market, I think that is where the patient impact could arise,” she added.

What’s Next?

Although the moratorium will apply to providers enrolling in the Medicare program, Lusardi says the ban could have broader implications for the industry, especially if state Medicaid agencies follow suit with similar restrictions.

“We haven’t seen anything come up yet, but I think CMS’s directive in the moratorium was generally that each state should evaluate what restrictions they might put in place to combat broad waste and abuse in this area in their Medicaid programs. So, we might see some greater restrictions on that end, too,” Lusardi said.

Affected companies will have little legal recourse to combat the moratorium, according to DLA Piper attorney Tracy Weir, as the Social Security Act allows the CMS the statutory authority to issue enrollment bans.

“The statute also says that an enrollment moratorium implemented under the Social Security Act is not subject to judicial review. So it really limits the ability to challenge the moratorium,” Weir said.

Still, Ryan said the industry is pushing the CMS to offer a waiver to vetted providers that have been in operation for three or more years. He added he did not believe pursuing legal action was necessary at the moment.

“We feel that we are legitimately respected by CMS, and that we can have their ear and talk reasonably to figure out how to make this work,” Ryan said.