March 30, 2026

CMS imposes Medicare DMEPOS moratorium (and Florida says, “Hold my beer”)

Grayson Dimick, Jamie Gelfman, Dexter Golinghorst, Steven Schnelle, Monica Wallace McDermott Will & Schulte + Follow Contact LinkedIn Facebook X Send Embed

On February 27, 2026, the Centers for Medicare and Medicaid Services (CMS) announced a six-month nationwide enrollment moratorium prohibiting initial Medicare enrollment for seven types of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) suppliers – the first nationwide DMEPOS enrollment freeze in the program’s history (the moratorium). The moratorium represents a significant escalation of CMS’s fraud enforcement posture under Administrator Dr. Mehmet Oz and aligns with the Trump administration’s broader anti-fraud agenda, including US President Donald Trump’s March 16, 2026, executive order establishing the Task Force to Eliminate Fraud under Vice President JD Vance’s leadership. On March 25, 2026, Florida became the first state to implement a parallel Medicaid DMEPOS moratorium, signaling that the federal-state partnership model CMS invited may soon expand nationwide. For DMEPOS suppliers, investors, and transaction parties, the regulatory landscape has fundamentally shifted.

In Depth

The broader enforcement context

The moratorium aligns with President Trump’s March 16, 2026, executive order establishing the Task Force to Eliminate Fraud, chaired by Vice President Vance. The task force is charged with coordinating a national strategy to combat fraud in federal benefit programs and has 90 days to develop implementation plans, suggesting rapid regulatory evolution ahead. CMS Administrator Dr. Oz has emphasized the DMEPOS moratorium as a key component, stating that CMS is taking steps to “fight fraud, protect taxpayer dollars, and keep seniors safe from harmful low-quality products.” In imposing the moratorium, CMS cited longstanding Office of Inspector General (OIG) concerns regarding DMEPOS fraud, analysis of enrollment and claims data, and criminal convictions and Department of Justice (DOJ) investigations. DMEPOS suppliers should anticipate heightened scrutiny across multiple program integrity fronts, including enrollment, billing, site visits, and ownership changes.

CMS’s authority and duration

Under 42 C.F.R. § 424.570(a)(2), CMS may impose a temporary moratorium on newly enrolling providers and suppliers upon determining significant potential for fraud, waste, and abuse with respect to a particular provider or supplier type, geographic location, or both. While CMS previously imposed geographic moratoria targeting home health agencies in South Florida, Los Angeles, Houston, and Detroit between 2013 and 2018, the current moratorium marks the first nationwide enrollment freeze.

The moratorium runs through August 27, 2026, and may be extended in six-month increments, with any extensions announced in the Federal Register.

Impact on DMEPOS suppliers

The moratorium applies to seven categories of medical supply company 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; and medical supply company with respiratory therapist.

A “medical supply company” is a business whose principal function is to furnish DMEPOS directly to another party. The moratorium generally does not apply to grocery stores, retail pharmacies, or medical providers whose “principal function” is not DMEPOS provision. CMS will closely screen all applications during the moratorium and has cautioned that circumvention attempts could result in 10-year re-enrollment bars and OIG referral.

Initial enrollment applications submitted during the moratorium will be denied, but applications received before February 27, 2026, remain unaffected. CMS has published Q&As that provide further interpretation of the moratorium’s scope.

The 36-month rule and M&A implications

Effective January 1, 2026, CMS expanded the “36-month rule” (42 C.F.R. § 424.551) to include DMEPOS suppliers. Under this rule, a supplier that undergoes a change in majority ownership (CIMO) within 36 months after its initial enrollment or most recent CIMO must enroll as a new supplier, thus subjecting it to the Moratorium. A CIMO occurs when an individual or organization acquires more than 50% direct ownership interest via asset sale, stock transfer, merger, or consolidation. Certain exceptions apply, such as internal corporate restructurings or changes in corporate form.

The moratorium can create significant M&A structuring challenges, as asset purchases typically require the buyer to enroll as a new supplier. Absent further CMS guidance, which could be issued pursuant to its Q&As, such transactions would be prohibited during the moratorium unless the buyer can operate without Medicare/Medicaid revenue or delay closing. Similarly, stock or equity purchases dependent upon maintaining existing Medicare/Medicaid enrollment cannot proceed if the 36-month rule is triggered and, even if the transaction is structured at an indirect level to avoid the 36-month rule, stock transactions expose buyers to full historical liability of the seller.

Alternative structures such as management agreements may accomplish business objectives without triggering new enrollment, but CMS has warned that circumvention attempts will be met with heightened scrutiny and potential 10-year re-enrollment bars.

Florida becomes the first state to implement a Medicaid DMEPOS moratorium

CMS declined to impose a federal Medicaid moratorium but encouraged states to implement tailored moratoria. On March 25, 2026, CMS Administrator Dr. Oz announced that Florida had become the first state to receive CMS approval for a Medicaid-specific enrollment pause. The same day, the Florida Agency for Health Care Administration (AHCA) issued a health care alert (the alert) to Florida Medicaid providers (details shown in the the following chart). This alert was disseminated via email to individuals registered with Florida Medicaid for program-related alerts and appears as an archived alert on AHCA’s “Managed Care Alerts” website. However, providers that did not receive the email distribution may be unaware of this development.

| Element | Florida Medicaid Moratorium |
| --- | --- |
| Effective Date | March 20, 2026 |
| Duration | Initial six-month period (through approximately September 20, 2026) |
| Scope | DME providers (provider type 90) in all Florida counties |
| Exclusions | Pharmacies, hospitals, or other medical providers that provide DME as a “secondary function” |
| Pending Applications | Applications submitted on or before March 20, 2026, will continue to be processed |
| Existing Providers | May continue to deliver and bill for authorized servic |

Medicare and Florida Medicaid alignment

The two moratoria are not perfectly aligned, creating potential complexity for suppliers navigating both programs. The Florida moratorium runs through approximately September 20, 2026, while the Medicare moratorium runs through August 27, 2026, creating a potential three-week period where Medicare enrollment could resume while Florida Medicaid remains frozen.

Florida’s moratorium became effective March 20, 2026, but AHCA did not issue its alert until March 25th. Suppliers who submitted applications between March 20 and March 25 should contact AHCA immediately.

While the Medicare Moratorium applies to seven specific medical supply company specialty codes with designated personnel types, Florida’s moratorium applies broadly to provider type 90 suppliers, without specifying subcategories. Accordingly, a supplier blocked under one moratorium may or may not be blocked under the other.

How will the moratorium impact Florida managed care?

Florida suppliers now face moratoria on both Medicare and Medicaid enrollment, significantly constraining market entry for suppliers serving Florida’s large dual-eligible population. The vast majority of Florida Medicaid beneficiaries are enrolled in managed care plans, and it is unclear whether the Florida moratorium will create network adequacy challenges if managed care organizations (MCOs) cannot add new DME suppliers to their networks during the moratorium. MCOs typically credential providers before adding them to networks, but credentialing presupposes Medicaid enrollment. Incumbent DME suppliers already enrolled in MCO networks may be the only available option for the duration of the moratorium, which could shift negotiating leverage in MCO contracting toward existing enrolled suppliers.

How will the “principal function” versus “secondary function” exception be interpreted?

Both moratoria exempt providers for which DME is not the “principal function,” and Florida explicitly carves out pharmacies, hospitals, and other medical providers furnishing DME as a “secondary function.”

However, neither moratorium specifies how “principal function” is determined (e.g., revenue percentage, personnel devoted to the different operations, location) and if investigated, what documentation would be required to support principal function.

While a pharmacy or medical practice, for example, could expand into DME by characterizing DME as “secondary” to their primary function, CMS has explicitly warned that circumvention attempts will be met with 10-year re-enrollment bars and OIG referral. Accordingly, suppliers navigating the secondary function exception must consider potential enforcement exposure.

Which states may follow Florida?

CMS’s invitation for states to implement Medicaid moratoria suggests additional states may follow Florida. Key indicators include historical DME fraud concentration (Texas, California, Michigan); active Medicaid fraud control unit (MFCU) participation in federal enforcement (California, Texas, Michigan, Ohio, Georgia, Arizona); and political alignment with the Task Force to Eliminate Fraud. The speed with which Florida obtained approval – less than one month after the federal moratorium – suggests states with prepared requests could receive approval within weeks. Suppliers operating in multiple states should monitor state-level developments closely.

Ongoing CMS enforcement against DMEPOS suppliers

The moratorium is the latest in a series of CMS program integrity actions. CMS has actively scrutinized DMEPOS suppliers’ compliance with enrollment requirements, DMEPOS supplier standards (42 C.F.R. § 424.57(c)), and quality standards – exercising revocation authority even for minor deficiencies such as surety bond reporting failures or signage violations. Revoked suppliers face re-enrollment bars of at least one year, and if the moratorium is extended, suppliers subject to such bars may be unable to re-enroll upon bar expiration.

Takeaways

• Monitor developments: Watch for moratorium extension notices and state Medicaid moratoria. Monitor the moratorium FAQs for updates.
• Maintain compliance: Ensure timely enrollment updates, maintain organized documentation, prepare for site visits, and conduct internal auditing. CMS will closely scrutinize all DMEPOS activity during the moratorium.
• Evaluate M&A structures: Analyze ownership history for CIMO trigger risks; consider transaction structures that avoid the 36-month rule and new enrollment requirement but ensure appropriate purchase agreement protection and due diligence review.
• Prepare for enforcement: Engage counsel promptly upon receiving inquiries from HHS-OIG, DOJ, state MFCUs, CMS, or the Medicare administrative contractors (MACs).
• Florida-specific: DME providers that submitted applications between March 20 and March 25 should contact AHCA immediately regarding application status. [View source.]

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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