Federal regulators in July via the 2026 home health proposed payment rule floated another round of competitive bidding – along with other major changes – for the durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) market.
The U.S. Centers for Medicare & Medicaid Services (CMS) finalized those plans late Nov. 28.
Broadly, DMEPOS competitive bidding in Medicare requires suppliers of certain equipment and supplies to compete for contracts, with Medicare awarding business to those offering the best combination of quality and lowest price. In theory, the goal is to reduce costs for beneficiaries and taxpayers while ensuring access to solid products.
But as is often the case, reality looks very different from theory.
In previous versions of competitive bidding, Medicare would frequently award winning bidders who set unrealistically low prices, leading to suppliers that couldn’t actually provide the equipment to patients who needed it. That, in turn, led to delays, shortages and confusion.
What’s more, earlier rounds of competitive bidding saw many DMEPOS organizations, especially home medical equipment (HME) providers, go under due to sharply reduced payments. Thousands of small and mid-sized HME companies either closed, merged, or exited key product categories, which reduced competition and limited patient choice.
HME stakeholders have been aggressively lobbying CMS to avoid reliving that experience.
“This rule as proposed cannot be finalized in its current form,” Tom Ryan, the CEO and president of the American Association for Homecare (AAHomecare), said in August. “We must delay it, get it pulled, or work collaboratively with CMS to make it workable.”
In its Nov. 28 announcement, CMS specified that it will begin a pre-bidding supplier awareness program in December.
By late spring or early summer of next year, the agency expects to announce specific dates for registration and bidding. At that time, CMS will also announce the lead items for the DMEPOS competitive-bid product categories and the number of contracts to award for each product category.
The bid window will be open by late summer or early fall of 2026, according to CMS. Then, roughly a year later, contracts will be awarded and single payment amounts announced.
Additional rounds for more products will follow at the beginning of 2028.
“CMS is finalizing improvements to the DMEPOS Competitive Bidding Program so that we can protect the Medicare Trust Funds and beneficiaries can benefit from lower copays,” CMS wrote in a fact sheet. “We expect to announce the product categories for which we will solicit bids and the specific timeframe for the next competition shortly.”
New from CMS
CMS in its announcement on competitive bidding highlighted several key changes to the latest iteration.
For starters, all the bidding-related information technology systems have been consolidated into one system called “Connexion.”
“In past competitive bidding rounds, suppliers submitted bids (Form A and Form B) electronically through DBidS and all other documents through Connexion,” CMS explained. “Bidders will no longer have to log into two different systems to submit their bid information.”
Additionally, single payment amounts – or SPAs – will no longer be for the full weight of a winning bid.
“SPAs are now calculated using the 75th percentile of winning bids instead of the maximum winning bid,” CMS continued. “In addition, the SPAs are updated at the beginning of the second year and third year of the contract period by the percentage change in the Consumer Price Index for all Urban Consumers (CPI-U) for the 12-month period ending 6 months prior to the start of the second (and third year, if applicable) of the contract period.”
In no case can the updated SPA exceed the unadjusted fee schedule amount for the item or 110% of the adjusted fee schedule amount for the item, according to CMS.
Another change is that payment for continuous glucose monitors (CGMs) and insulin infusion pumps will be made on a continuous, monthly rental basis with payment for all necessary supplies and accessories included in the monthly rental rates beginning on the first day of the contract period.
In total, CMS highlighted 11 key changes under a “what’s new” section in its announcement.
The full version of the 2026 home health final payment rule is available here.
This is a developing story. HME Business will continue to cover the updates around competitive bidding.
