On June 30, 2025, the Centers for Medicare & Medicaid Services (CMS) released its Calendar Year 2026 Home Health Prospective Payment System and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program (CBP) Proposed Rule.
While some in the DME industry expected changes, few anticipated the sweeping scope and scale of this proposed rule.
CMS not only plans to revive competitive bidding, it aims to completely transform it.
From creating new nationwide contract structures to reclassifying major product categories, the proposed changes signal the most significant shake-up to DME operations in over a decade.
For providers already managing razor-thin margins, staffing shortages, and rising operational costs, this may represent a fundamental shift that requires immediate attention and long-term planning.
A Look Back: Competitive Bidding’s Troubled History
CMS introduced competitive bidding in 2013 to combat fraud and reduce costs. While the intention was to increase efficiency, the results were far from simple.
AAHomecare reports a 37% decline in supplier locations since the rollout. Many of these closures weren’t fraudsters or large chain exits.
They were small, local providers, often family-run businesses that served as essential community anchors.
As Erin Dolan of Med-Essentials explained, “It is already difficult for patients to find a provider to work with Medicare without competitive bidding, so limiting the provider field is only going to make that situation worse.”
The 2021 bidding round showed signs of the program's flaws.
Despite expectations for savings, CMS only applied bid pricing to back and knee braces.
Many providers invested significant resources to participate, only to see most of the program shelved at the last minute.
This left deep scars across the industry.
Providers who lost time and money felt misled and hesitant to engage in future programs.
New Pressures in 2025
Today, providers face an even tougher landscape than in 2013 or 2021.
Costs for equipment, supplies, and staffing continue to climb, while inflation adds constant strain. Tariffs, particularly on imported components and medical devices, further tighten margins.
“Current reimbursement rates are already unsustainably low, leaving providers with razor-thin profit margins,” one HME Newspoll respondent wrote. “Reintroducing competitive bidding would further strain operations, reduce access to essential equipment, and compromise quality of care.”
With fewer local suppliers, patients are left with limited options.
Larger national players can’t always provide the fast, personalized service that many patients, especially in rural areas, rely on.
When access breaks down, patients wait longer for oxygen, mobility aids, and critical monitoring equipment.
These delays increase hospitalizations, worsen health outcomes, and ultimately drive higher system-wide costs.
The exact opposite of CMS’s intended savings.
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What’s Different This Time?
Introducing the Remote Item Delivery CBP (RID CBP)
Perhaps the most dramatic shift in the new proposed rule is CMS’s plan to establish a Remote Item Delivery Competitive Bidding Program (RID CBP).
Instead of hundreds of local competitive bidding areas (CBAs), CMS proposes consolidating contracts into a single nationwide or a few large regional CBPs.
Under this model, suppliers would provide items to all Medicare beneficiaries in a given region or nationwide, regardless of where the beneficiary lives.
For smaller providers who rely on local community relationships and delivery routes, competing nationally is nearly impossible.
The risk of further consolidating the industry into a few large suppliers becomes very real.
This shift fundamentally changes market dynamics and could leave patients with fewer options and longer wait times, especially in areas where local providers have historically filled critical gaps.
Expanded Product Categories
CMS is proposing to include new categories in future CBPs, such as:
- Continuous glucose monitors (CGMs)
- Insulin pumps
- Urological supplies
- Ostomy supplies
- Off-the-shelf braces
Adding CGMs and insulin pumps is particularly significant.
These products are critical for diabetes management and mobility, with high daily use.
Reducing prices through competitive bidding could limit patient access to newer technologies or specialized devices, especially if only large, high-volume suppliers win contracts.
Reclassifying CGMs and Insulin Pumps
CMS proposes to reclassify CGMs and insulin pumps into a monthly rental payment model.
Currently, CGMs are purchased and replaced approximately every five years, and insulin pumps move from rental to ownership after 13 months.
Under the proposed rule, these devices would become permanently rented items.
Providers would bill monthly for the equipment and all related supplies.
Suppliers would be responsible for servicing, software updates, and replacements, adding new operational complexities and cash flow pressures.
While CMS argues this provides flexibility to upgrade technology sooner, the move eliminates patient ownership and ties providers to continuous servicing obligations.
Updates to Payment and Bidding Structure
Historically, CMS set single payment amounts (SPAs) at the highest winning bid for a lead item within a CBA.
Now, CMS proposes setting SPAs at the 75th percentile of winning bids.
Additionally, CMS will adjust supplier capacity estimates, cap the number of contract suppliers, and introduce inflation adjustments tied to CPI-U.
For providers, this introduces more predictability but also makes it harder to plan cash flow.
The emphasis on national scale and rental payments further complicates operations.
New Accreditation and Enrollment Requirements
The proposed rule introduces annual reaccreditation for DMEPOS suppliers (previously every three years). CMS also proposes stricter data management, reporting, and oversight requirements for accrediting organizations.
New Medicare enrollment rules also increase the grounds for revocation, including abusive prescribing patterns and false information on applications.
These changes reflect CMS’s push to tighten oversight and eliminate bad actors, but they also introduce significant administrative burdens and compliance costs for honest providers.
Prior Authorization Exemption: A Silver Lining
CMS proposes a new exemption pathway for suppliers with a ≥90% prior authorization affirmation rate.
Eligible suppliers would no longer be required to submit prior authorizations, significantly reducing administrative burden.
However, exemptions could be withdrawn if compliance drops, placing pressure on providers to maintain strong documentation and process controls at all times.
While this could be a positive incentive, it also underscores the need for operational rigor.
The Role of Automation: A Key Survival Strategy
Providers can’t change CMS policy, but they can change how they operate internally.
Automation is no longer optional, it’s foundational for survival.
By automating intake, payer-specific validations, documentation checks, and billing workflows, providers can:
- Reduce manual errors that lead to denials or rework
- Improve documentation accuracy to qualify for prior authorization exemptions
- Keep orders moving quickly to preserve cash flow under new rental payment models
- Reduce reliance on staff memory and static checklists
- Enhance audit readiness for new accreditation and enrollment rules
Automation also supports faster scaling.
In a nationwide or regional CBP model, being able to handle higher order volumes without adding staff will be critical.
Providers that build lean, resilient workflows today will be far better equipped to navigate these sweeping changes.
Beyond Survival: Building for the Future
While the immediate reaction to the proposed changes is understandably frustration and concern, providers have an opportunity to redefine their operational foundations.
Streamlined, automated workflows don’t just help with compliance, they free up staff to focus on patient relationships, proactive problem-solving, and scaling care quality.
The future of DME is not about racing to the bottom on price alone.
It’s about delivering reliable, compliant, high-quality service at scale.
Without breaking teams in the process.
Looking Ahead: DME Competitive Bidding
CMS’s 2025 proposed rule signals a new chapter for DME competitive bidding.
The move toward large-scale contracts, expanded product categories, and rental-based payment models introduces a fundamentally different landscape.
Providers must now decide:
- Do they prepare to bid and operate at a national or regional level?
- Do they exit certain Medicare product lines and refocus their business?
- Or do they double down on operational excellence to remain competitive, regardless of scale?
While policy decisions lie beyond any one provider’s control, how they respond internally is up to them.
Those who invest now in automation, documentation integrity, and process efficiency will not only survive but potentially emerge stronger.
The providers who prepare for these changes today will be the ones best positioned to keep serving patients tomorrow.
