CMS implements immediate 6 month moratorium on enrollment of new DMEPOS suppliers

In a notice published in the Federal Register today (Feb. 27, 2026), the Centers for Medicare & Medicaid Services (CMS) announced a six-month nationwide moratorium on enrollment of new suppliers of Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) to traditional fee-for-service Medicare.

To support the rationale for this sweeping moratorium, CMS points to “numerous” reports from the Department of Health and Human Services Office of Inspector General (HHS-OIG) that outlined payment safeguard issues with DMEPOS suppliers. CMS also claims that HHS-OIG has a series of studies currently in progress that are aimed at evaluating the high risk of fraud and abuse historically associated with DMEPOS suppliers, and recent trends in fraudulent schemes involving this supplier type. None of those studies has been completed yet. Finally, CMS describes several recent criminal convictions and HHS-OIG and the Department of Justice (“DOJ”) investigations and indictments involving DMEPOS suppliers, illustrating the increased trend of fraudulent activities, all of which leads CMS to the conclusion that medical supply companies have significant potential for fraud, waste or abuse. 

The moratorium only applies to traditional Medicare for now, as CMS determined that it is in the best interest of Medicaid and Children’s Health Insurance Program (CHIP) beneficiaries for states to determine what is appropriate for those programs based on an evaluation of their respective fraud risk. That said, CMS encouraged states to implement their own moratoria on suppliers tailored to their specific populations and geographic considerations and offered to consult with state agencies in those efforts. Therefore, it is possible that we may see more states follow CMS’ lead to implement their own restrictions on DMEPOS supplier enrollments in Medicaid and CHIP programs. 

What suppliers will be impacted?

The moratorium applies to seven types of DMEPOS suppliers nationwide. The notice identifies the seven types as:

● Medical supply company.

● Medical supply company with orthotics personnel.

● Medical supply company with pedorthic personnel.

● Medical supply company with prosthetics personnel.

● Medical supply company with prosthetic and orthotic personnel.

● Medical supply company with registered pharmacist.

● Medical supply company with respiratory therapist.

The notice specifically defines a medical supply company as a business whose “principal function” is to furnish DMEPOS supplies directly to another party. CMS indicates that this means that the moratorium  does not apply to grocery stores, retail pharmacies, or inpatient or outpatient medical providers, such as physicians, home health agencies, or hospitals, since  their primary purposes are other functions (i.e.,  selling food, dispensing prescribed medicines, and treating patients, respectively).

According to CMS, the moratorium applies to all new enrollments. This means that any existing DMEPOS suppliers who are seeking to open a new location (which requires a separate enrollment) will be forbidden from enrolling that new location. Additionally, due to the recent application of the so-called “36-month rule” (pursuant to 42 CFR 424.551) to DMEPOS suppliers, any supplier that undergoes a non-exempt change in majority ownership within 36 months of its initial enrollment, or its most recent non-exempt change in majority ownership, is required to enroll as a “new” DMEPOS supplier. In the notice, CMS specified that DMEPOS suppliers required to re-enroll under the 36-month rule will also be prohibited from enrolling under the moratorium 

The moratorium is initially in effect for six months, in accordance with 42 CFR 424.570(b); however, CMS may extend the moratorium for subsequent six-month periods, as CMS deems necessary. As noted below, previous moratoria have been extended over several year periods.

Where does the authority come from?

The authority for CMS to implement this moratorium comes from an anti-fraud provision of the Affordable Care Act that added Section 1866(j)(7) to the Social Security Act. That section permits the Secretary of HHS to impose a “temporary moratorium” on the enrollment of new providers of services and suppliers in Medicare, Medicaid, and CHIP.

The authority was implemented by CMS regulations at 42 CFR 424.570 that established a procedure for CMS to work with HHS-OIG and DOJ to determine if there is significant potential for fraud, waste and abuse with respect to a particular supplier type or geographic area.

As noted above, CMS has previously implemented moratoria on enrollment of certain suppliers and providers. Those prior moratoria were applied to categories of providers but were restricted by geographic area. In particular, a 2013 moratorium restricted enrollment of new home health agencies and ambulance services in areas of Illinois, Florida, Texas, Michigan and Pennsylvania. Those prior moratoria were extended in some form or another every 6 months for the next 6 years until they finally expired in January 2019.

What does this mean for DMEPOS suppliers?

For DMEPOS suppliers who bill traditional fee-for-service Medicare, this could be a very disruptive event. They cannot open new locations that will have to be separately enrolled in Medicare. They must be careful in their changes of ownership to review whether a change of ownership could require a new enrollment and thus place their existing locations outside of the moratorium. Suppliers will be permitted to change a practice location, update supplier information, such as phone number or address, or update ownership information (known as a “change in information”) which is not viewed as a change of ownership under 42 CFR 489.18 or a change in majority ownership under 42 CFR 424.551 (e.g., indirect ownership changes, changes to less than 50% of a supplier’s equity interests, with no change in the supplier’s Federal Employer Identification Number).  

Additionally, we note that many Medicaid programs and sometimes even commercial payors require DMEPOS suppliers to be enrolled in Medicare as part of their credentialing/certification process. Therefore, while the moratorium does not directly restrict enrollments in other federal health care programs, it may ultimately have that effect.

CMS also noted that it would “very closely screen” all DMEPOS supplier applications submitted during the moratorium and warned DMEPOS suppliers against efforts to skirt in under the moratorium by asserting that they do not fit into one of the seven types, or otherwise providing false or misleading information. Including false information in an enrollment application could result in a 10-year ban from federal health insurance plans, as well as possible civil and criminal penalties.

Finally, we note that CMS’ nationwide moratorium on enrollment of new DMEPOS suppliers comes on the heels of CMS’ recent final Home Health PPS rate rule issued December 5, 2025, and effective January 1, 2026, which, included changes to the DMEPOS competitive bidding program. Among other things, the rule strengthened the grounds for revoking a supplier’s billing privileges even for a single beneficiary complaint or minor administrative error.

In the case of a revocation, a supplier is barred from enrollment for a minimum of one year and up to 10 years (or longer if a second revocation). While CMS stated in the rule that it only revokes billing privileges after a thorough investigation of the facts and when it is truly warranted, the risk of supplier number revocation, along with this new nationwide moratorium on new DMEPOS suppliers, highlights the need for extreme vigilance for suppliers to ensure compliance with the DMEPOS supplier standards and other applicable requirements.

Reed Smith will continue to follow developments related to this the regulation of DMEPOS suppliers. If you have any questions about this moratorium or about any other regulatory matters, please contact the authors of this post or your health care lawyers at Reed Smith.