Vice President JD Vance and CMS Administrator Mehmet Oz, MD, announced a series of actions affecting Medicare and Medicaid, including a $259.5 million deferral of federal Medicaid funding in Minnesota and a six-month moratorium on new Medicare enrollment for certain durable medical equipment, prosthetics and orthotics suppliers, according to a Feb. 25 White House news release.
The push comes after President Donald Trump highlighted the White House’s focus on what it claimed was fraudulent behavior across multiple social programs. The move includes three key initiatives: a DMEPOS enrollment moratorium, the Minnesota Medicaid funding deferral and broader anti-fraud enforcement steps.
Here’s what ASCs and physicians need to know:
Moratorium on durable medical equipment, prosthetics and orthotics suppliers
CMS implemented a six-month nationwide moratorium on new Medicare enrollment for certain DMEPOS suppliers, including applications for initial enrollment and certain changes in majority ownership. The agency said it stopped more than $1.5 billion in suspected fraudulent DMEPOS billing last year.
According to a CMS action notice, the moratorium applies specifically to seven categories of medical supply companies: medical supply companies and those with orthotics personnel, pedorthic personnel, prosthetic personnel, prosthetic and orthotic personnel, a registered pharmacist or a respiratory therapist. During the moratorium, no new suppliers in these categories may enroll in Medicare, and new practice locations are prohibited if they qualify as an initial enrollment.
CMS said the moratorium does not apply to entities that furnish DMEPOS but do not do so as their principal function. Pharmacies, hospitals, physician offices and other providers whose primary business is not supplying DMEPOS would not be affected.
The agency said it does not anticipate access-to-care disruptions, pointing to more than 79,000 approved DMEPOS suppliers nationwide. Other supplier types — explicitly including physicians and hospitals — may continue to open new practice locations. Additionally, CMS said it is allowing each state to decide whether some form of a DME moratorium is appropriate for their respective Medicaid and CHIP programs.
CMS cited data from 2023 to 2025 showing that medical supply company specialties had a 17% revocation rate, nearly triple that of other DMEPOS supplier types, and ranked among the highest for payment suspensions, law enforcement referrals and fraud complaints.
Medical supply companies also account for a disproportionate share of high-risk billing, according to CMS. These suppliers submitted more than 70% of claims for certain high-risk orthotic brace codes on CMS’ Master List and more than 80% of claims for off-the-shelf orthotic braces identified as vulnerable to fraud.
CMS said the enrollment pause will allow the agency to implement additional safeguards to address longstanding fraud, waste and abuse concerns in the DMEPOS sector.
Broader enforcement, transparency and new stakeholder input
CMS also reported additional anti-fraud actions tied to Medicare in 2025, including suspending $5.7 billion in suspected fraudulent Medicare payments, denying 122,658 Medicare claims, revoking 5,586 providers and suppliers’ billing privileges, and sending 372 fraud referrals encompassing $3.7 billion in billing to law enforcement. The agency also said pricing actions on skin substitutes reduced Medicare Part B premiums by $11 per month.
CMS said it plans to publish a list of those providers or suppliers that have had their ability to operate in Medicare revoked, and why, to offer greater transparency to patients and insurers. CMS also said that during the moratorium it will work toward additional safeguards to address fraudulent billing in the DMEPOS space.
In addition, CMS is seeking stakeholder feedback through its Comprehensive Regulations to Uncover Suspicious Healthcare initiative. The CRUSH request for information invites input from states, physicians, suppliers, payers, technology companies, patient advocates and beneficiaries on ways to strengthen the agency’s ability to detect fraud, waste and abuse and program inefficiencies in Medicare, Medicaid, the Children’s Health Insurance Program and the Health Insurance Marketplace. Stakeholders may submit recommendations on both existing authorities and potential new regulatory approaches.
Minnesota funding deferral and warning of additional withholds
CMS’ review of Minnesota’s Medicaid spending in the fourth quarter of 2025 resulted in a deferral of $259.5 million in federal matching funds. CMS alleges $243.8 million of the withheld funding was flagged as “unsupported or potentially fraudulent” claims, while $15.4 million was linked to claims for individuals “lacking a satisfactory immigration status.”
CMS said it may defer more than $1 billion in federal funds over the next year if the state does not address program integrity vulnerabilities. The state must submit a comprehensive remedial plan within 60 days; if it does not comply, the federal government could withhold up to $1 billion in funds this year alone.
“This is a campaign of retribution,” Gov. Tim Walz said. “Trump is weaponizing the entirety of the federal government to punish blue states like Minnesota. These cuts will be devastating for veterans, families with young kids, folks with disabilities, and working people across our state.”
The proposed funding freeze followed President Trump’s State of the Union address the previous day, during which he highlighted alleged Medicaid fraud. In his remarks, he blamed what he described as “Somali pirates who ransacked Minnesota.” He also cited significant fraud concerns in California, Massachusetts and Maine.
