The Centers for Medicare & Medicaid Services has placed 11 durable medical equipment, prosthetics, orthotics and supplies suppliers on its Preclusion List after identifying more than $3.4 billion in suspected fraudulent Medicare billing during 2025 and 2026.

The action prevents Medicare Advantage and Part D plans from paying claims associated with the companies. CMS said the suppliers had no Medicare claims history before 2025 and subsequently displayed several warning signs, including billing for deceased beneficiaries, submitting claims for equipment beneficiaries had not requested or received, and using improper billing practices.

All 11 suppliers allegedly billed Medicare for items attributed to beneficiaries who were deceased on the reported dates of service. Four had previously been revoked from Original Medicare but subsequently began billing Medicare Advantage plans—a shift that CMS said required action through the agency’s Preclusion List.

CMS said it worked with the Department of Health and Human Services Office of Inspector General and used claims analytics, payment safeguards, enrollment authorities and beneficiary complaints to identify the activity. The agency characterized the $3.4 billion as suspected fraudulent billing; the announcement does not state that the full amount was paid to the suppliers.

Why it matters: Although the alleged activity occurred primarily through Medicare billing rather than hospital purchasing contracts, the case carries wider lessons for supply chain, compliance and revenue cycle leaders.

The rapid emergence of companies with no claims history, combined with extraordinary billing volume, questionable addresses, and beneficiary complaints, demonstrates why supplier onboarding cannot be treated as a one-time administrative step. Organizations need ongoing monitoring capable of detecting changes in ownership, operating status, billing behavior and federal-program eligibility.