CMS launches three-pronged plan to CRUSH health care fraud

The Centers for Medicare & Medicaid Services (CMS) this week announced three concurrent actions targeting fraud in Medicare and Medicaid: a six-month freeze on new enrollments for certain durable medical equipment (DME) suppliers, a $259.5 million hold on federal Medicaid funds to Minnesota and a call for public comment on a possible new anti-fraud approach.

Vice President J.D. Vance, Department of Health and Human Services (HHS) Secretary Robert F. Kennedy Jr. and CMS Administrator Mehmet Oz, M.D., MBA, announced the actions Wednesday, Feb. 25, at a White House news conference, one day after President Donald J. Trump declared a “war on fraud” during his 2026 State of the Union address.

“CMS is done trying to catch fraudsters with their hands in the cookie jar — instead, we’re padlocking the jar and letting them starve,” Oz said. Kennedy described the shift in enforcement philosophy as moving from a “pay and chase” approach to a “detect and deploy” strategy, with artificial intelligence (AI) tools used to flag suspicious payments before they go out.

In 2025, CMS said it suspended $5.7 billion in suspected fraudulent Medicare payments, denied 122,658 claims, revoked billing privileges for 5,586 providers and suppliers, and sent 372 fraud referrals encompassing $3.7 billion in billing to law enforcement.

DMEPOS Moratorium

Effective immediately, CMS has imposed a six-month nationwide moratorium on new Medicare enrollment for certain DME, prosthetics, orthotics and supplies (DMEPOS) companies.

The freeze applies to initial enrollments and changes in majority ownership for medical supply companies and suppliers whose principal personnel include orthotics, pedorthic, prosthetics, prosthetic and orthotic, registered pharmacist or respiratory therapist staff — seven supplier types in total.

Physician offices, hospitals and pharmacies are not affected. The agency said entities for which DMEPOS supply is not the primary business may continue to open new practice locations.

CMS cited data showing that medical supply companies in the affected categories had a revocation rate of 17% between 2023 and 2025, nearly triple that of other DMEPOS supplier types. Those same 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 fraud vulnerable.

The agency said it stopped more than $1.5 billion in suspected fraudulent DMEPOS billing in 2025.

CMS does not expect the moratorium to disrupt patient access, citing the more than 79,000 approved DMEPOS suppliers currently operating nationwide. The agency said it plans to use the pause to develop additional safeguards for the sector.

The fraud patterns CMS is targeting in medical equipment track closely with what federal investigators have documented elsewhere in Medicare’s supply billing.

David Tawes, M.A., regional inspector general in the Office of Evaluation and Inspections at the HHS Office of Inspector General, told Medical Economics last fall that the structure of Medicare Part B payment can make certain supply products attractive targets.

“Skin substitutes seem particularly vulnerable to fraud, waste and abuse,” Tawes said. “There have been numerous investigations that have come back with findings of fraud.”

Tawes explained that clinicians are sometimes approached with arrangements that should raise immediate red flags. “Be wary if you hear something that sounds sketchy or too good to be true," he said. "It's probably not on the up and up." Complaints can be submitted through the OIG website or by calling 1-800-HHS-TIPS.

CMS also said it will publish a public list of providers and suppliers whose Medicare billing privileges have been revoked, along with the stated reasons, to give patients and private insurers greater visibility into administrative enforcement actions.

Minnesota’s $259.5 million deferral

CMS deferred $259.5 million in quarterly federal Medicaid matching funds to Minnesota following a program integrity review of the state’s fourth-quarter fiscal year 2025 spending.

The agency said $243.8 million was flagged as unsupported or potentially fraudulent claims, with an additional $15.4 million tied to claims from individuals described as “lacking a satisfactory immigration status.”

CMS said it notified the state in January of its intent to withhold funds, citing concerns about rapid spending growth in personal care services, home and community-based services and other practitioner services. Minnesota has 60 days to submit a comprehensive remedial plan. If the state cannot show program integrity improvements or demonstrate that the flagged claims were allowable, CMS said it could defer more than $1 billion in federal funds over the next year.

The withheld amount represents a fraction of the roughly $11.8 billion in annual federal Medicaid funding Minnesota receives, according to KFF. The state’s Medicaid program covers more than 1.17 million adults and children.

Minnesota Gov. Tim Walz called the action “a campaign of retribution” in a post on X, saying it has “nothing to do with fraud” and accusing Trump of “weaponizing the entirety of the federal government to punish blue states like Minnesota.”

On Feb. 26, Walz said he would introduce an anti-fraud legislation package to state lawmakers.

Minnesota has been under scrutiny for Medicaid fraud for several years. In 2022, federal prosecutors charged 47 defendants for allegedly defrauding federal child nutrition programs of $250 million. In March 2025, two individuals were convicted for their roles in that scheme. The state also faced charges in a fraud case involving its housing stabilization program in September 2025.

Trump singled out Minnesota in his State of the Union address. He also drew attention to California, Massachusetts and Maine.

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The CRUSH initiative

The action with the greatest long-term potential significance for how Medicare and Medicaid police fraud is the one that does not take effect immediately.

CMS published a request for information (RFI) in the Feb. 27 Federal Register as part of what the agency is calling the Comprehensive Regulations to Uncover Suspicious Healthcare initiative, or CRUSH. Comments are due March 30, 2026.

The agency is asking states, providers, suppliers, payers, technology companies, patient advocates and beneficiaries for input on how CMS can strengthen its ability to prevent, detect and respond to fraud, waste and abuse across Medicare, Medicaid, the Children’s Health Insurance Program (CHIP) and the Health Insurance Marketplace.

The RFI is open to input on existing regulatory authority as well as ideas for entirely new approaches. CMS has indicated it may use the feedback to inform a formal proposed rule.

Comments can be submitted through the Federal Register at docket CMS-6098-NC.