CMS announces nationwide Medicare enrollment ban on DMEPOS medical supply companies

Yesterday, the Centers for Medicare & Medicaid Services (CMS) announced the imposition of a six-month nationwide moratorium on Medicare enrollment of Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) medical supply companies (Moratorium). The Moratorium is scheduled to take effect upon publication of the agency’s notice in the Federal Register, which is expected to occur tomorrow, February 27, 2026.

Publicized as part of CMS’s efforts to "crush" fraud, waste, and abuse, the agency cites longstanding program integrity problems with DMEPOS suppliers as the rationale for imposing the Moratorium. In its notice, CMS recites recent examples of DMEPOS fraud schemes and asserts a reliance on data analytics of Medicare payment and enrollment in support of the Moratorium.

This alert summarizes the Moratorium and provides key takeaways.

What is the Moratorium that has been announced by CMS?

The Moratorium is a temporary ban on the enrollment of new DMEPOS medical supply companies in the Medicare program. During the Moratorium, new enrollment applications submitted by DMEPOS medical supply companies, including applications by existing DMEPOS medical supply companies for new practice locations, will be denied.

Does the Moratorium apply to all types of DMEPOS suppliers?

No. The Moratorium applies only to the following “Medical Supply Company” categories of enrollment (as listed on the CMS 855S Medicare Enrollment Application for DMEPOS Suppliers):

• 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

CMS defines a “medical supply company” to be a business whose principal function is to furnish DMEPOS supplies (regardless of supply type) directly to another party, such as, but not limited to, 1) beneficiaries, 2) medical providers and suppliers, or 3) both.

We note that the identified seven categories may cause confusion since the first category – medical supply company – encompasses the other six categories. However, we believe that CMS was aiming for inclusivity by tracking the exact enrollment categories from the 855S. Accordingly, it is likely that CMS intended for a broad application of the Moratorium to apply to all DMEPOS companies whose principal function is to dispense DMEPOS.

The Moratorium does not apply to other types of suppliers that can enroll with Medicare as a DMEPOS supplier, such as pharmacies, individual practitioners (e.g., physicians, chiropractors, physical, or occupational therapists), home health agencies, hospitals, department stores, grocery stores, or nursing facilities whose primary function is to provide healthcare items or services other than DMEPOS.

CMS is affirmatively cautioning medical supply companies against attempts to circumvent the Moratorium (e.g., by enrolling as a DMEPOS supplier type not subject to the Moratorium). Such circumvention could lead to a variety of adverse actions, including denial of enrollment, imposition of a reapplication bar of up to ten years, and/or referral to the Office of Inspector General (OIG) for investigation and possible criminal, civil, or administrative penalties.

Does the Moratorium apply to state Medicaid program enrollments?

No. The Moratorium does not directly apply to state Medicaid program enrollment; however, CMS is encouraging each state to implement a DMEPOS medical supply company moratorium tailored to the specifics of each state’s beneficiary population. All such moratorium decisions will be within the discretion of the states.

Are there other circumstances when the Moratorium does not apply?

Yes. The Moratorium does not apply to:

• DMEPOS medical supply company enrollment applications received by the Medicare contractor prior to the effective date of the Moratorium. It is worth noting, however, that the return or rejection of a pre-Moratorium enrollment application is likely to mean that any resubmission application will have to wait for the Moratorium to be lifted.
  
  
• Revalidation applications undertaken by currently enrolled DMEPOS medical supply companies to renew their enrollment records.
  
  
• Currently enrolled DMEPOS medical supply companies seeking to update their enrollment records to change information as needed (e.g., name and address changes).

However, certain changes in ownership of an enrolled DMEPOS medical supply company, as discussed below, may trigger the Moratorium.

Will the Moratorium affect acquisitions of DMEPOS suppliers?

It could. The Moratorium applies to new enrollments required as a result of the new Change in Majority Ownership (CIMO) rule (42 C.F.R. § 424.551) that became effective for DMEPOS suppliers on January 1, 2026.

Under the rule, a CIMO occurs when there is an acquisition of more than 50 percent direct ownership interest in a DMEPOS supplier during the 36 months following the supplier’s initial enrollment or within 36 months of the most recent CIMO. The acquisition of majority ownership of a DMEPOS supplier occurs through the cumulative effect of asset sales, stock transfers, consolidations, or mergers during the relevant 36-month period.

The only exceptions to the application of the CIMO rule include the following situations:

• A DMEPOS supplier’s parent company undergoes an internal corporate restructuring, such as a merger or consolidation.
  
  
• The owners of the existing DMEPOS supplier change the DMEPOS supplier’s current business structure (e.g., corporation to partnership or corporation to LLC) and the owners remain the same.
  
  
• An individual owner of the DMEPOS supplier dies.

When a non-exempt CIMO occurs, the DMEPOS supplier’s current enrollment is terminated and the prospective owner of the DMEPOS supplier must enroll in Medicare as a new supplier, undergo a survey, and become newly accredited. According to CMS’s Moratorium notice, “[t]his means that the supplier’s new enrollment is an initial enrollment no less than if the supplier had never enrolled in Medicare before. Hence, our moratorium would prohibit the supplier in this § 424.551 situation from reenrolling in Medicare because, again, it would constitute an initial enrollment; the supplier is ‘new.’”

How long will the Moratorium last?

The Moratorium is temporary and will remain in effect for six months. Thereafter, CMS has authority to extend the Moratorium in six-month increments. CMS will announce any extension or lifting of the Moratorium in the Federal Register.

It is unclear at this time how long the Moratorium will last; however, CMS has previously used its authority to extend and expand prior enrollment moratoria applicable to home health agencies and ground ambulance suppliers.

Key takeaways

• Although the Moratorium seeks to impact only prospective newly-enrolling medical supply companies as DMEPOS suppliers, in reality, currently enrolled medical supply companies will be prohibited from adding new practice locations and, in some cases, from selling their businesses.

• The timing of the Moratorium may create challenges for DMEPOS suppliers seeking to expand or grow in anticipation of the next round of DMEPOS competitive bidding, for which planning is currently underway and bidding is scheduled to occur in the late summer/early fall of 2026.
  
  
• For the duration of the Moratorium, stakeholders will need to carefully structure acquisitions and changes in ownership of DMEPOS medical supply company businesses. While not all ownership changes in DMEPOS medical supply companies will trigger the Moratorium, asset transactions as well as non-exempt CIMO acquisitions, which would require new enrollments, will be subject to the Moratorium.
  
  
• Stakeholders should monitor for imposition of equivalent moratoria by state Medicaid programs of DMEPOS medical supply company enrollments, which CMS appears to be actively encouraging.

For more information

We are continuing to monitor this development, including the reaction of state Medicaid programs. For additional information regarding the Moratorium or the DMEPOS CIMO Rule and how these agency actions may affect business or acquisition prospects, please contact the authors of this alert or any member of DLA Piper’s Healthcare Regulatory team.