CMS's DMEPOS competitive bidding program redux

The Centers for Medicare & Medicaid Services (CMS) finalized its proposed rule and published the calendar year (CY) 2026 Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program (CBP) Updates Final Rule (Final Rule) in the Federal Register on December 2, 2025. With the Final Rule, CMS has revived and, based on lessons learned from prior rounds and current issues, made significant changes in this redux of the DMEPOS CBP.

While the Final Rule goes into effect January 1, 2026, the start of the next round will not begin until January 1, 2028. Notably, the proposed rule triggered over 950,000 public comments but CMS largely maintained its positions without significant revision. Industry groups are already urging the Trump Administration and Congress to delay implementation over concerns related to the revised bid-setting mechanisms and the impacts on product quality, as well as patient access and choice.

This alert highlights key changes and components of the DMEPOS CBP implemented by the Final Rule.

Key takeaways

This Final Rule will impact the DMEPOS CBP through the following key changes:

• Establishing the Remote Item Delivery (RID) CBP


• Classifying Class II Continuous Glucose Monitors (CGMs) and insulin pumps as durable medical equipment (DME) items eligible for monthly rental


• Adding ostomy, tracheostomy, and urological supplies to the DMEPOS CBP


• Setting the Single Payment Amount (SPA) calculation for lead items at the 75th percentile of winning bids, and


• Establishing bid limits for new items in the RID DMEPOS CBP.

Key provisions

Product categories for the next round of DMEPOS CBP

CMS does not specify the product categories in the Final Rule that will be subject to the next round of DMEPOS CBP, but it updated its fact sheet on December 8, 2025 to clarify that the next round of competitive bidding will be limited to the following product categories in a national RID CBP:

• Class II CGMs and insulin pumps


• Urological supplies


• Ostomy supplies


• Hydrophilic urinary catheters


• Off-the-shelf (OTS) back braces


• OTS knee braces


• OTS upper extremity braces

Notably, however, CMS has the authority to use program instruction or other means to update these product categories, therefore the exact product categories are still subject to change.

Creation of the RID CBP and timeline for implementation

While prior rounds of the DMEPOS CBP included mail order competitive bidding areas (CBAs), CMS has since determined that an RID CBP would be more appropriate for items in seven high volume product categories (i.e., CGMs; insulin pumps, urological supplies, ostomy supplies, OTS knee braces, OTS upper extremity braces, and OTS back braces) because these items are generally furnished from remote supplier locations several hundreds of miles from beneficiary residences. It remains to be seen, however, whether there will be one national RID CBP per product category or regional RID CBPs.

While CMS’s nationwide RID CBP includes all states, territories, and the District of Columbia, CMS left open the possibility of regional programs. Contract suppliers for each product category will be responsible for furnishing all items under the product category to all Medicare beneficiaries regardless of where they live. These items can either be shipped to the beneficiary’s home or may be picked up by the beneficiary or caregiver at a local pharmacy or supplier storefront if the beneficiary or caregiver chooses to pick up the items in person. This differs from the mail order CBP rules.

CMS is aiming for the following timeline for the next round of RID CBP:

• 2025: The pre-bidding supplier awareness program begins in December.


• 2026:


• Late spring/early summer: Lead items for the CBP and number of contracts to be awarded for each product are announced; bidder education program begins.


• Late summer/early fall: Bidding registration begins, and the bidding window opens.


• 2027:


• Late summer/early fall: Contracts awarded, and single payment amounts announced.


• 2028:


• Next round begins; contracts and SPAs come into effect.


• Six-month transition period begins for beneficiaries to switch to contract suppliers.

The number of contracts offered for each product category will be based on 125 percent of the number of suppliers furnishing at least 3 percent of total national allowed services for the lead item in 2025. Based on its updated fact sheet, CMS expects to limit the number of supplier contracts under RID CBP to be awarded nationwide as follows (although exact numbers may be adjusted based on 2025 and 2026 claims data):

• Ten combined contracts for Class II CGMS and insulin infusion pumps


• Eight separate contracts for urological and ostomy supplies


• Six separate contracts for OTS upper extremity braces and OTS knee braces


• Four contracts for OTS back braces

However, if less than 30 percent of the winning suppliers are small suppliers, additional contracts may be offered in an effort to meet the 30 percent small supplier target.

Payment for CGMs and insulin infusion pumps

CMS has historically paid for the purchase of CGMs and made capped rental payments for insulin infusion pumps for up to 13 months of continuous use, at which time the beneficiary may take ownership of the pump. Citing the rapid rate of change in glucose monitoring technologies and the need for frequent software updates to ensure proper functioning and prevent cyberattacks, CMS has reclassified CGMs and insulin infusion pumps to items that require frequent and substantial servicing and will phase in monthly rental payments for these items. CMS will bundle the rental amount for the device with payment for the supplies and accessories in the new payment amount for Class II CGMs and insulin infusion pumps.

Beneficiaries who own their CGMs or insulin infusion pumps may either continue to use them until replacement is necessary or immediately switch to a rental item. CMS will permit a temporary transition period enabling separate payment for replacement supplies and accessories for CGMs and insulin infusion pumps owned by the beneficiary as the DMEPOS CBP is phased in for the first time. During this transition period, beneficiaries will receive replacement supplies and accessories from the CBA’s contract supplier for the useful life of the device or until the device is lost, stolen, or irreparably damaged. Separate payment for supplies and accessories during the transition will be based on payment rules for non-lead items.

New supplies are added to the product categories eligible for the DMEPOS RID CBP

In identifying the DMEPOS CBP as an effective way to reduce Medicare payments for items and services, CMS cites increases in Medicare charges for ostomy, tracheostomy, and urological supplies; the identification of fraudulent billing to Medicare for urinary catheters; and recent reports, such as the United States Department of Health and Human Services (HHS) Office of Inspector General’s 2022 report on intermittent urinary catheters. As a result, CMS includes ostomy, tracheostomy, and urological supplies as items that may be included in the DMEPOS CBP in the Final Rule.

SPAs are set using a new method of calculation and may be adjusted for inflation

CMS aims to establish SPAs that ensure the DMEPOS CBP will achieve savings in each product category. To achieve such savings, the DMEPOS CBP must result in total payments to contract suppliers that are less than the total amounts that would otherwise be paid under the DMEPOS fee schedules. In the 2021 round of DMEPOS CBP, CMS did not award contracts for 13 of the 15 product categories because total payments in the CBAs for these product categories would not have been less than the total payments under the fee schedule.

CMS believes that the prior methodology for calculating SPAs (based on maximum winning bid amounts) was too susceptible to the impacts of outlier bid pricing, a reason CMS asserts for the unsuccessful competition of 13 of the 15 product categories in the 2021 round. In order to prevent a similar result and help mitigate the impacts of outlier pricing, CMS incorporates a change to the methodology for calculating SPAs in the Final Rule, shifting from using the maximum winning bid to using the 75th percentile of winning bids.

Additionally, CMS previously required bidders to account for possible effects of inflation when formulating their bids. CMS has changed this approach going forward: CMS will now apply an “annual inflation update” to SPAs with multi-year terms under the Final Rule. In general, this update will be determined by the percentage change in the Consumer Price Index for All Urban Consumers over a 12-month period ending six months prior to the start of the second and third year of the contract period. The update will mirror the annual DMEPOS fee schedule updates to ensure that multi-year SPAs do not exceed the unadjusted DMEPOS fee schedule amounts.

Bid limits for new items in the RID CBP

CMS will apply the following bid limits for new items added to the RID CBP for the first time, including CGMs, insulin infusion pumps, and OTS back and knee braces:

• Rental class II CGMs and all necessary supplies: The bid limit will be the monthly fee schedule amounts for the supplies plus the average purchase fee schedule amounts for the class II CGM device divided by 60 (intended to capture the five-year useful life of the device). Per the updated fact sheet, the bid limit under this calculation would be $272.69 for a nationwide RID CBP when using 2025 fee schedule amounts.


• Rental insulin infusion pumps: The bid limit will be the nonrural adjusted fee schedule amount for a one-month period plus the total nonrural adjusted rental fee schedule amounts applicable for 13 months divided by 60.


• OTS back brace or OTS knee brace: The bid limit will be the average nonrural payment amount.


• All other items included as a lead item in a RID CBP product category: The bid limit will be the average payment amount that would otherwise apply to the item under 42 CFR part 414 subpart C, D, or Q.

A few additional changes

CMS also implemented the following changes, among others, in the Final Rule:

• Numerical business credit reports: Each bidding entity must submit a numerical business credit report, or alternatively, a personal credit report with a numerical credit score or rating from the supplier’s authorized official or delegated official listed in the Medicare Provider Enrollment, Chain, and Ownership System (PECOS), in addition to documentation showing that the supplier entity is unable to generate a numerical business credit report.


• Notification of missing covered documents: CMS will notify bidding entities by the close of the bid window whether any covered documents are missing. Bidding entities will have ten days upon receipt of notification to submit the missing covered documents.


• Bid surety bond riders: Bidders may submit a bid surety bond rider to change or amend an original bid surety bond. Bidding entities will be allowed ten business days to amend or change an original bid surety bond that does not fulfill bid surety bond requirements, set out in 42 CFR § 414.412(G)(i)-(ii), through the use of a bid surety bond rider.


• Termination or modification of supplier contracts: CMS has the right to unilaterally terminate or modify a DMEPOS CBP supplier contract in the event of a public health emergency. The termination or modification clause can be triggered when CMS determines during a public health emergency, as declared by the Secretary of Health and Human Services, that beneficiary access to DMEPOS CBP items or services is impacted such that terminating or modifying DMEPOS CBP supplier contracts, rather than awarding additional supplier contracts, would address access issues. After terminating or modifying a DMEPOS CBP supplier contract, CMS would revert back to the general fee-for-service program requirements.


• Other changes: Among other changes made to the provider enrollment rules, CMS also finalized its proposal to require resurvey and reaccreditation of DMEPOS suppliers every year, as opposed to every three years.

Industry considerations

With the Final Rule set to become effective on January 1, 2026, stakeholders are encouraged to consider the following steps:

• Monitor for developments from industry groups opposing effectuation of the Final Rule.


• Evaluate how payment changes for CGMs and insulin infusion pumps will impact existing purchasing, operations, internal processes, revenue cycle, and information systems.


• Determine the impact that the RID CBP may have on strategic planning goals or initiatives.


• Bookmark the Competitive Bidding Implementation Contractor website for detailed information on the next round of bidding, such as the pre-bidder supplier awareness program, exact dates in 2026 and 2027 for the bidding education program, announcement of product categories and items, registration, and the bidding window.


• Watch for updates and any additional instructions to the DMEPOS CBP Information Technology Systems. Although not expressly addressed in the Final Rule, the fact sheet reflects that the bidding-related information technology systems have been consolidated into one system – Connexion – which is CMS’s DMEPOS CBP secure portal. Among other changes, it appears that the bidding system will contain a “country of origin” question to obtain information on where products are manufactured, though how CMS intends to use this information remains unclear.

DLA Piper will continue to monitor developments concerning the DMEPOS CBP. For more information about these developments, please contact your DLA Piper relationship partner, the authors of this alert, or any member of our Healthcare industry groups.