On February 25, 2026, the Centers for Medicare & Medicaid Services (CMS) implemented a six-month nationwide moratorium on the enrollment of certain durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) companies. The moratorium, which is effective immediately, has serious implications not only for entities planning to enroll in Medicare but also for existing DMEPOS suppliers that are currently engaged in or are contemplating a potential transaction, or plan to expand their business.
Past Is Prologue: CMS’s Use of Enrollment Moratoria
Following the enactment of the Patient Protection and Affordable Care Act, Congress gave CMS the authority to implement temporary moratoria on the enrollment of new fee-for-service Medicare, Medicaid, or Children’s Health Insurance Program (CHIP) providers and suppliers, if doing so was necessary to prevent or combat fraud, waste, and abuse (FWA).
CMS previously exercised its power to impose moratoria in July 2013, when it blocked enrollment of new home health agencies, subunits and branch locations, and Medicare Part B ambulance suppliers in certain geographic areas it viewed as high risk for FWA. Notably, what began as six-month moratoria were repeatedly extended by CMS and lasted until January 2019.
Under the current moratorium, CMS has long viewed DMEPOS suppliers—and medical supply companies in particular—with a heavy measure of skepticism. Concerns include DMEPOS suppliers’ financial relationships with potential referral sources that may implicate the federal Anti-Kickback Statute and the Stark Law, as well as questionable billing and coding practices that CMS has alleged are intended to maximize reimbursement at Medicare’s expense, lack of medical necessity for DMEPOS items, and the failure to comply with Medicare payment standards.
In issuing the moratorium, CMS cited several specific examples of alleged fraud schemes involving medical supply companies, its consultation with the Department of Health and Human Services, Office of Inspector General, and the Department of Justice, and its analysis of claims and reimbursement data to reach the conclusion that medical supply companies pose a significant potential risk for FWA.
Spotlight on Medical Supply Companies: Scope of the DMEPOS Enrollment Moratorium
Based on the DMEPOS supplier enrollment application (CMS Form 855S), there are nearly two dozen business or organizational types that can request Medicare billing privileges as DMEPOS suppliers. Those entity types range from ambulatory surgical centers to hospitals, with one such organizational type being a “medical supply company.” Under the CMS moratorium, no new DMEPOS suppliers that fall within the group of medical supply companies enumerated in the notice will be permitted to enroll in Medicare.
CMS Form 855S uses “medical supply company” as the umbrella organizational type when enrolling as a supplier. In its moratorium, however, CMS made clear that seven subtypes of medical supply companies were covered by the enrollment prohibition, including those with orthotics, pedorthic, or prosthetics personnel; registered pharmacists; or respiratory therapists.
Exclusively for purposes of the moratorium’s applicability, a medical supply company is considered a business whose “principal function” is to furnish DMEPOS supplies (regardless of supply type) directly to another party, such as beneficiaries with a medical order (for example, via mail order), medical providers and suppliers, or both.
Because the Medicare Supplier Standards require that all DMEPOS suppliers separately enroll each distinct physical location, any medical supply companies that have existing Medicare enrollments at a given address will be prohibited from enrolling new locations at a different address (see 42 C.F.R. § 424.57(b)(1)).
Additionally, through a recent change in the 2026 Home Health Prospective Payment System Final Rule, CMS expanded the reach of its so called “36-month rule” to DMEPOS suppliers, meaning that if an existing DMEPOS supplier undergoes a nonexempt majority change in ownership (CIMO) within 36 months of its initial Medicare enrollment or the last CIMO, the DMEPOS supplier number will not automatically transfer to the buyer and a new enrollment application will be required. That new enrollment application will now be blocked by the moratorium if the supplier is a medical supply company (see 42 C.F.R. § 424.551(b)(1)).
While the initial duration of the moratorium is six months, CMS has the authority to seek additional six-month extensions. Given CMS’s historical use of provider and supplier enrollment moratoria, there is good reason to believe that CMS may extend the moratorium well beyond the initial six-month time frame.
Providers and suppliers may exercise existing appeals procedure to administratively challenge the denial of Medicare billing privileges, but those procedural rights are limited to evaluating whether the provider or supplier falls within the scope of the moratorium. If it does, CMS regulations do not permit any exceptions to the moratorium for individual providers or suppliers.
It’s Not for Everyone: Limits of the DMEPOS Enrollment Moratorium
Most significantly, the enrollment moratorium only applies to “medical supply companies.” Other types of DMEPOS suppliers, such as hospitals, home health agencies, pharmacies, physician practices, skilled nursing facilities, and others, are not subject to the enrollment ban.
This tracks CMS’s statement that the prohibition is intended to apply only to entities whose primary business is to furnish DMEPOS, and not to entities that engage primarily in some other kind of business function or patient care, with DMEPOS as an ancillary service line. One example CMS provided in its notice was a grocery store pharmacy that is also enrolled as a DMEPOS supplier. CMS explained that the entity’s primary business is selling food or medications, not the provision of DMEPOS, and therefore it would not be subject to the moratorium.
Despite the moratorium’s exclusion for DMEPOS suppliers that are not medical supply companies, CMS has warned that it will carefully review new Medicare enrollment submissions to ensure enrolling entities are not mischaracterizing themselves as something other than medical supply companies in an effort to avoid the moratorium.
Additionally, CMS explained that even for medical supply companies, the moratorium will only apply to new enrollment applications, and will not cover the following activities:
- Changes in practice location.
- Changes in provider or supplier information, such as phone numbers.
- Changes in ownership (except changes in ownership implicating the expanded 36-month rule, which now includes DMEPOS suppliers).
Finally, the moratorium will not prevent the processing or approval of enrollment applications for medical supply companies that were pending and submitted before February 25, 2026, the date of the CMS notice.
Key Considerations for Providers, Suppliers, and Investors
Given these impacts, providers, suppliers, and investors should consider the following:
- Providers and suppliers should pay close attention to the specific nature of their DMEPOS enrollment and business activities to determine whether they are medical supply companies and whether the moratorium covers their entity.
- While the initial duration of the moratorium is six months, given CMS’s past actions, interested parties should plan for the possibility that it could remain in place for a much longer period.
- For existing medical supply companies enrolled in Medicare, expansion though adding new locations will not be possible because the Supplier Standards require separate enrollment for each location. Entities may be able to pursue alternative strategies, including acquisitions, to facilitate growth while the moratorium is in effect.
- Changes of ownership involving medical supply companies may not implicate the moratorium if a new enrollment application is not required. However, parties should carefully analyze whether the transaction triggers the recently expanded 36-month rule, which now applies to DMEPOS suppliers. If the acquired entity initially enrolled in Medicare within the preceding 36 months, or underwent a CIMO during that period, the moratorium may apply.
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