CMS Takes Action Over Alleged $3.4 Billion Medical Equipment Fraud

The Centers for Medicare & Medicaid Services (CMS) has announced that it is barring 11 medical equipment supply companies from receiving certain Medicare payments due to suspected fraudulent billing practices worth more than $3.4 billion.

The restriction applies to suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS).

The 11 suppliers billed more than $3.4 billion in 2025 and 2026.

The suspected fraudulent practices involved billing for medical equipment on behalf of beneficiaries who were dead, according to CMS.

The entities also supplied equipment to beneficiaries who neither requested nor received it, the agency said in a Sept. 8 statement.

All 11 companies were added to the CMS Preclusion List—a list of entities prohibited from receiving payments for Medicare Part D drugs and Medicare Advantage services or items prescribed or furnished to beneficiaries.

DMEPOS includes medical equipment such as wheelchairs and ventilators; power mobility devices such as power wheelchairs; surgical dressings and devices used for reducing fractures and dislocations; therapeutic shoes; and prosthetics and orthotics such as artificial legs and arms.

In one case, a Florida-based company submitted roughly $6.1 million in catheter claims for 500 beneficiaries in a single day, followed by an additional $12.3 million in claims for 777 beneficiaries the next day, CMS said in its recent statement.

In another case, a Texas company submitted about $5.5 million in orthotics claims.

Investigators interviewed six beneficiaries and discovered they did not need the orthotics, nor were they aware of such a supplier.

CMS did not publish the names of companies added to the Preclusion List.

“Fraudsters who take advantage of the recently deceased to line their pockets represent a level of indecency that we will not stand for,” CMS Administrator Dr. Mehmet Oz said in the statement.

“Brazen scams like these have plagued Medicare for decades, but under President Trump’s leadership and working with the White House Anti-Fraud Task Force, CMS is protecting the Medicare Trust Funds and its beneficiaries by using advanced data analytics to identify fraud networks and stop suspicious payments before the check clears,” Oz said.

According to CMS, the crackdown is part of the White House Anti-Fraud Task Force’s broader efforts to tackle healthcare fraud and protect taxpayer funds.

The White House Task Force to Eliminate Fraud was established by President Donald Trump through a March 16 executive order.

The task force is headed by Vice President JD Vance and co-chaired by Federal Trade Commission Chairman Andrew Ferguson.

The federal government loses an estimated $233 billion–$521 billion every year to fraud, according to an April 2024 report from the Government Accountability Office.

Medical Equipment Fraud

In an August 2026 white paper report, the Department of Health and Human Services’ Office of Inspector General said the United States faces a challenge with regard to combating durable medical equipment fraud in Medicare.

“Despite current safeguards, bad actors are still able to become Medicare-enrolled DMEPOS suppliers,” the report said.

Suppliers joining Medicare are required to buy a surety bond, aimed at deterring fraud.

However, such bonds have not kept bad actors from carrying out fraudulent billing, according to the report.

CMS conducts fingerprint-based background checks on DMEPOS company owners, but bad actors can hide true ownership details by using nominee owners.

In addition, unreported changes in ownership are difficult to detect.

The report called for strengthening on-site inspections, improving detection of unreported ownership changes, and increasing oversight of newly enrolled DMEPOS.

“Newly enrolled DMEPOS suppliers and suppliers that recently changed ownership pose an increased fraud risk. To address this risk, CMS should implement a period of enhanced oversight on such entities,” the report said.

Previously, in an Aug. 28 statement, CMS said that it had carried out enforcement action that stopped more than $1.6 billion in potentially improper Medicare lab payments under the Trump administration.

Some of the labs were billing beneficiaries for medically unnecessary services and for services never rendered, the agency said.

CMS said that labs engaging in such fraud can include those offering drug tests, pathogen detection, and genetic testing.

“When laboratories bill Medicare for tests they never performed, it drains the Medicare Trust Fund and diverts resources away from beneficiaries who need them,” Oz said in the statement.