Key Considerations for Healthcare Organizations and DMEPOS Suppliers
It has been several years since the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program (CBP) was fully active, and the healthcare community has been watching closely to see how CMS would reshape the program moving forward. With the release of Final Rule CMS–1828–F, CMS has introduced the most significant updates to CBP in more than a decade, marking a pivotal moment for providers, patients, and the healthcare industry at large.
Given the long time-gap since the last major bidding round, we reviewed the final rule, listened to experts in the field, and have summarized the key updates, compliance implications, and action items you should be aware of as CMS prepares for the next CBP cycle.
We’ll look at how the rule modernizes key components of the program, reshapes price-setting, revises supplier obligations, and updates bidding and contracting requirements. These changes will have substantial implications for both federally funded private healthcare facilities and DMEPOS suppliers.
Overview of the Competitive Bidding Program
CBP establishes market-based pricing for specific categories of DMEPOS items by requiring suppliers to submit bids and awarding contracts to those offering competitive rates that meet quality and accreditation standards. Historically, the program applied to define Competitive Bidding Areas (CBAs) and was designed to achieve cost savings, reduce improper payments, and maintain supplier quality.
Final Rule CMS–1828–F reaffirms these goals but implements several structural and operational changes that will influence how suppliers participate and how healthcare organizations access bid products competitively.
Major Changes Introduced in CMS–1828–F
- Creation of the Remote Item Delivery Competitive Bidding Program (RID-CBP)
CMS–1828–F establishes a new bidding model for items primarily distributed through shipment rather than in-person delivery. This allows CMS to group specific categories into regional or national bidding pools, to reflect current distribution practices and create a framework for competitive bidding items that have been handled outside the traditional CBA structure.
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Expansion of Product Categories
CMS–1828–F broadens the scope of the CBP to include additional, high-volume items such as:
- Continuous glucose monitoring (CGM) systems
- Insulin pumps (transitioned to a rental category due to ongoing servicing needs)
- Urological and ostomy supplies
- Hydrophilic urinary catheters
- Off-the-shelf (OTS) orthotic braces, including upper-extremity, knee, and back supports
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Revisions to Single Payment Amount (SPA) Calculations
CMS–1828–F makes several essential updates to the methodology used to establish payment rates:
Lead Items
- Payment amounts for lead items in each product category will now be based on the 75th percentile of all winning bids, replacing the prior approach that relied on the highest accepted bid.
Non-Lead Items
- For all non-lead items, CMS will apply ratios derived from the 2015 CBA-specific fee schedule, rather than using a national average as was done in 2021. This shift introduces more localized pricing and may lead to greater regional variation.
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Determination of Contract Awards
CMS–1828–F modifies how CMS will award contracts by:
- Reducing the requirement for CMS to award ten or more contracts per product category, giving CMS greater flexibility to adjust the number of contract suppliers as appropriate.
This flexibility allows CMS to tailor supplier numbers to product needs, market dynamics, and anticipated beneficiary demand.
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Updated Bid Limits and Conditions for Awarding Contracts
The final rule establishes more precise parameters for how bid ceilings will be set
Items Newly Introduced into CBP
- Bid ceilings for items being included for the first time will be tied to the current unadjusted fee schedule amount.
Items Previously Competitively Bid
- Bid limits will be set at the most recent SPA plus 10 percent.
- If more than one year has passed since the SPA was in effect, CMS will use the inflation-adjusted SPA plus 10 percent.
In all cases:
- Bid limits may never exceed the original, unadjusted fee schedule rate, ensuring that competitive bidding does not create higher-than-usual results in pricing above the fee schedule
Financial Documentation Requirements
CMS–1828–F simplifies the types of financial documentation required for bidding entities:
Suppliers must provide either:
- A business credit report with a numerical score from one of CMS’s designated credit reporting agencies; or
- If such a score is unavailable, a business credit report showing insufficient data plus a personal credit report with a numerical score for the entity’s Authorized Official or Delegated Official listed in the Provider Enrollment. Chain and Ownership System (PECOS).
Additionally:
- For each CBA bid placed, a $50,000 bid surety bond must be submitted.
This bond is specific to CBP requirements and is in addition to any bond required for Medicare billing privileges. - New Contract Clause for Public Health Emergency (PHE) Situations
CMS–1828–F introduces a new provision that allows CMS to unilaterally modify or terminate supplier contracts if a public health emergency (PHE) creates conditions warranting a temporary return to standard fee-for-service rules. This clause provides CMS with operational flexibility during emergencies but also requires suppliers to be prepared for abrupt contractual adjustments.
Legal and Compliance Implications of CMS–1828–F
CMS–1828–F introduces annual reaccreditation, more specific financial documentation requirements, and updated contract provisions, thereby increasing CMS oversight of suppliers. These updates are expected to lead to more frequent audits, closer examination of operational and billing documentation, and evaluation of supplier performance indicators such as delivery reliability, financial stability, and capacity to meet program requirements.
The rule modifies several components of the bidding and contracting framework.
- Contract awards are no longer required to meet a set minimum number per product category
- Bid ceilings are recalibrated based on the fee schedule or SPA history
- Bidding may occur on a regional or national basis through RID-CBP.
These changes could affect the number of suppliers participating in specific categories, the competitive landscape, and the availability of items for beneficiaries who rely on frequently replenished products. Healthcare organizations may need to review supplier agreements and assess potential impacts on product sourcing and patient continuity of care.
Financial impacts arise from the updated SPA methodology—using the 75th percentile for lead item payments and CBA-specific ratios for non-lead items—as well as the new bid limit calculations tied to either current fee schedule rates or prior SPAs. These revisions may affect reimbursement rates and require adjustments in procurement budgets. At the same time, enhanced accreditation and financial reporting requirements may increase suppliers’ administrative workload, influencing operational planning and cost structures.
The introduction of the Remote Item Delivery Competitive Bidding Program (RID-CBP) adds further operational specifications, including expectations for delivery timeliness, shipment and receipt documentation, inventory adequacy, and the capacity to support regional or national distribution. These requirements may influence which suppliers qualify for future contracts and may necessitate updates to how healthcare organizations evaluate vendor performance.
Looking Ahead
CMS anticipates initiating the next round of competitive bidding no later than 2028, with additional technical and procedural guidance expected in the coming years. In preparation, hospitals and clinics should reassess their supplier networks, evaluate continuity-of-care procedures, and plan for potential patient transitions involving high-volume or frequently replenished products.
DMEPOS suppliers will need to prepare for updated bidding obligations, ensure adherence to revised financial documentation standards, manage the new annual reaccreditation cycle, and assess their readiness to support regional or national distribution under the Remote Item Delivery Competitive Bidding Program. Compliance and legal teams should monitor forthcoming CMS guidance, track any litigation related to CMS–1828–F, and review internal processes to ensure alignment with evolving requirements.
Final Rule CMS–1828–F substantially reconfigures the DMEPOS Competitive Bidding Program by introducing new pricing methodologies, expanding product categories, revising bidding requirements, and strengthening oversight provisions. Adapting to these changes will require coordinated planning among healthcare providers and suppliers to ensure compliance, maintain reliable beneficiary access to essential items, and preserve operational stability as the next competitive bidding cycle approaches.