The next major Medicare risk for spine and orthopedic practices may not begin with a denied surgical claim. It may begin with the enrollment file.
CMS’ July 1 proposed rule is formally a home health payment regulation centered on a proposed 2.4% Medicare payment increase for home health agencies in 2027. But embedded in the rule is a broader program integrity package that would apply across Medicare provider and supplier types, not just home health agencies, and give CMS more power to revoke enrollment, remove noncompliant providers and recover payments after the fact.
CMS estimates the provider enrollment and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies accreditation provisions would shift about $82 million annually from Medicare providers and suppliers back to the federal government, largely through expanded retroactive revocations.
For spine and orthopedic groups, the rule is notable for what it is not. It is not a spine rule. It is not an orthopedic rule. But its focus on Medicare enrollment, DMEPOS, ownership, practice locations and managing employees places it squarely in the orbit of musculoskeletal care.
CMS is proposing to make all Medicare enrollment revocations retroactive to the date a provider or supplier fell out of compliance. Under current regulations, some revocations take effect prospectively, generally 30 days after CMS or a contractor mails notice. CMS said the proposal would make the remaining prospective revocation grounds retroactive, allowing the agency to recover payments made during the period of noncompliance.
That change could turn an administrative lapse into a material financial event. A missed ownership update, an inaccurate enrollment-related form, a practice-location problem or a DMEPOS supplier issue would no longer threaten only future Medicare billing privileges. Under the proposal, those issues could also create exposure for payments already received.
Why spine and orthopedic practices should pay attention
The clearest musculoskeletal connection is orthotic bracing. CMS has identified DMEPOS as a frequent fraud target, with $1.9 billion in improper payments in fiscal 2024, or a 21.4% improper payment rate. In CMS’ fraud materials, orthotics include rigid and semirigid devices used to support or restrict motion in the leg, arm, back and neck, making the category directly relevant to spine braces and broader orthopedic bracing.
Spine bracing is already a high-risk documentation area. CMS’ 2024 improper payment data show lumbar-sacral orthoses had a 54.4% improper payment rate, with projected improper payments of $47.8 million. Insufficient documentation accounted for 64.4% of improper payments for lumbar-sacral orthoses during the reporting period, while no documentation accounted for another 20.1%.
The risk is not limited to spine braces. CMS has also flagged lower-limb orthoses, including ankle-foot, knee-ankle-foot and knee orthoses, as a documentation and medical-necessity vulnerability. In 2024, lower-limb orthoses had a 35.2% improper payment rate, with projected improper payments of $91.2 million. CMS said insufficient documentation, no documentation, medical necessity problems and other errors contributed to improper payments.
That brings the proposed enforcement package squarely into orthopedic territory. A spine group that furnishes lumbar braces, an orthopedic practice that orders knee braces, or a multispecialty musculoskeletal platform with DMEPOS relationships could face similar questions: Was the item medically necessary? Was the treating relationship documented? Was the correct provider disclosed? Was the supplier relationship clean? Were replacement items supported by the original clinical record?
HHS’ Office of Inspector General has also identified orthotic braces as a longstanding Medicare vulnerability. From 2014 through 2020, Medicare paid about $5.3 billion for orthotic braces, and OIG found issues involving braces ordered for enrollees without a documented treating relationship, new suppliers located in areas known for Medicare fraud and prohibited solicitation of beneficiaries.
Recent federal cases show why regulators remain focused on the space. In March, a Texas durable medical equipment company owner was sentenced to 90 months in prison in a $59.9 million Medicare fraud conspiracy involving kickbacks and medically unnecessary DME. The scheme involved orthotic braces including knee, back, shoulder and wrist braces, and the defendant was found to have concealed his role in one company by falsely identifying another person as the sole owner and manager in a Medicare enrollment application.
The proposal also includes one operational clarification that could matter to legitimate spine and orthopedic practices. CMS would clarify that a new comprehensive face-to-face encounter is not required when a DMEPOS item is being replaced with an item under the same HCPCS code. But CMS said audited claims would still need documentation from the original face-to-face encounter to show that medical necessity, billing and coverage requirements were met.
In practice, that could ease repeat documentation burdens for replacement braces, but it would not weaken the underlying documentation standard. For spine and orthopedic groups, the important distinction is that replacement does not mean unsupported. The original medical record still needs to show why the brace was ordered, why it remained medically necessary and whether the coverage criteria were satisfied.
CMS is widening its definition of enrollment risk
CMS is also seeking new authority to revoke a provider or supplier when the agency determines the enrollment presents a high risk of fraud, waste or abuse because the provider is located in a limited geographic area with an excessive number of providers and suppliers. CMS said a potential scheme could involve multiple types of providers and suppliers, for example, home health agencies, hospices, DMEPOS suppliers and physicians, operating in the same general area.
That provision could be sensitive for physician office buildings, orthopedic campuses, ASC corridors and specialty medical complexes, where proximity is common and often legitimate. CMS acknowledged that many physicians and practitioners practice in the same building or complex and said providers should not assume they would be revoked merely because they operate near other providers.
Still, CMS said it does not plan to use bright-line thresholds for “limited geographic area” or “excessive number,” arguing that fixed numbers could allow bad actors to structure around the rule.
Physician leadership and ownership are now part of the compliance equation
The rule would also broaden scrutiny of the people behind the provider. CMS is proposing to revoke enrollment if a provider or supplier, or an owner, managing employee, managing organization, officer or director, was convicted within the past 10 years of a federal or state misdemeanor related to sexual assault or financial misconduct, if CMS deems the conviction detrimental to Medicare and its beneficiaries.
Another provision would expand CMS’ ability to revoke enrollment for false or misleading information. Current rules allow revocation when a provider certifies false or misleading information on the enrollment application. CMS is proposing to extend that authority to false or misleading information on, or associated with, any CMS or Medicare enrollment-related form, including documentation submitted with those forms.
For spine and orthopedic groups, the language describing employee managers may be one of the most practical areas to review. CMS is proposing to make clear that medical directors, clinical directors, department heads, supervising physicians, nursing directors, alternate administrators and other clinical personnel can qualify as managing employees if they exercise operational or managerial control or conduct day-to-day operations. CMS said the categories would apply to all provider and supplier types and that clinical personnel must be disclosed when they meet the definition.
That matters in musculoskeletal care because physician leaders often hold multiple roles. A spine surgeon may be a medical director, ASC partner, service-line leader, supervising physician, delegated official or owner. An orthopedic platform may rely on a management-services organization, private equity-backed management structure, regional medical directors or shared DME relationships. CMS’ proposal makes the organizational chart, not just the claim, part of the risk profile.
The bigger message for MSK leaders
The proposal comes amid a wider federal fraud crackdown. On June 23, the Justice Department announced its 2026 National Health Care Fraud Takedown, charging 455 defendants, including 90 physicians and other licensed medical professionals, in alleged schemes involving more than $6.5 billion in false claims. The Justice Department said CMS separately suspended 1,079 providers and revoked billing privileges for 1,403 providers as part of the coordinated enforcement action.
Taken together, the message for spine and orthopedic leaders is straightforward: Medicare enrollment is becoming a front-line compliance issue. Groups that prescribe, furnish or partner around braces should review DMEPOS documentation, ordering patterns, replacement-item support, beneficiary contact practices and supplier relationships. Practices should also audit CMS-855 and PECOS records, ownership disclosures, managing employee listings, practice locations, delegated officials and medical director arrangements.
The rule is not final. The 269-page proposed rule is scheduled for Federal Register publication July 6, and CMS is accepting comments through Aug. 31.
For spine and orthopedic groups, the question is not whether CMS is targeting musculoskeletal care by name. It is whether their Medicare enrollment files, bracing documentation and ownership structures would withstand the kind of program integrity review CMS is now trying to expand.
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