Things to know about DME Competitive Bidding
Things to Know About DME Competitive Bidding
If you're a DME supplier serving Medicare patients, competitive bidding isn't just a policy detail you can skim and file away. It shapes what you get paid, which products you can supply, and whether you’re able to operate in your market.
What is the DMEPOS Competitive Bidding Program?
The DMEPOS Competitive Bidding Program (CBP) is a Medicare initiative that replaced the traditional fee schedule for certain equipment in specific geographic areas. Instead of a flat rate, suppliers compete by submitting bids to win contracts. CMS then uses those bids to set payment rates.
The program covers a defined list of product categories. Not every DME item falls under it. But for the categories that do, like respiratory equipment and diabetes supplies, having a contract often determines whether you can serve Medicare patients at all.
Why Did Medicare Create This Program?
Congress established the DMEPOS CBP in 2003 through the Medicare Prescription Drug, Improvement, and Modernization Act. The goal was simple: reduce what Medicare spent on DME.
Before competitive bidding, Medicare paid based on a static fee schedule that was widely seen as too high. Competitive bidding introduced market-based pricing, which drove rates down significantly. It also set minimum quality standards that suppliers must meet to participate.
2026 Timeline for Competitive Bidding
The current round runs through 2028. Here's where things stand:
Missing a bid window or submitting incomplete documentation means losing contracted status. That can make it difficult to continue serving Medicare patients in your area.
Key Deadlines for Suppliers in 2026
2026 isn't just business as usual. There are compliance checkpoints that need to be on your radar:
- Contract performance requirements stay active all year. Quality and service standards from your contract award still apply.
- Accreditation renewals run on their own cycle. A lapse in CMS-approved accreditation can trigger contract termination.
- Surety bond renewals must stay current.
- Business updates: If you have multiple locations or changes to your info on file with the NSC, report them promptly.
Notable Systems' automation software can help track and manage these requirements within your existing workflows.
What's New in This Round?
New Product Categories
Several categories have been added or expanded. The biggest additions: continuous glucose monitors (CGMs) and insulin pumps. These were previously reimbursed at standard fee schedule rates. Now they fall under competitive bidding.
For suppliers in the diabetes space who haven't had to think about competitive bidding before, that changes in 2026.
Modernized Admin Systems
CMS has updated how it manages the program on the administrative side:
- The Connexion Portal is now the central hub for bid submission, contract management, and compliance documents.
- The surety bond process is more flexible. Suppliers who have bond issues now have defined pathways to fix them rather than facing automatic termination.
- CDRD (Competitive Bidding Data Required Documents) review is now a formal step in bid evaluation, meaning documentation gaps get caught earlier.
The New Math of Medicare
Pricing has changed in meaningful ways.
- The 75th Percentile Rule is the biggest shift. Previously, CMS based rates on median bids. This pushed rates so low that sustainability became a concern. Now, rates are set at the 75th percentile of bids, which results in modestly higher payment rates.
- CPI-U Inflation Adjustments are also new. For the first time, competitive bidding rates adjust annually for inflation. Rates won't erode in real terms the way they did under flat fee schedules.
- Bid Limits set caps on how high bids can go relative to the existing fee schedule, and in some cases, floors that prevent bids from going too low.
Remote Item Delivery: DME Without Borders
One of the biggest structural changes is the expansion of Remote Item Delivery (RID) rules.
Historically, competitive bidding was local. You bid in specific areas and served patients there. RID changes that for certain product categories. Suppliers of items like CGMs and urological supplies can now ship directly to patients anywhere in the country, even without a contract in the patient's local area.
What this means:
- Suppliers with strong direct-to-patient operations can now access the entire country
- Local suppliers face new national competition in markets that were previously protected
Two other rules worth knowing:
- The 125% Supplier Methodology: If there aren't enough contracted suppliers in a CBA, non-contracted suppliers can serve those patients at 125% of the competitive bidding rate.
- Tribal Exemptions: Certain rural and tribal areas are carved out from standard competitive bidding rules.
Tech, Trust, and Transitions
Both CGMs and insulin pumps now bill under a monthly rental model. Instead of a one-time payment, reimbursement comes in recurring payments over the equipment's use period.
This isn't new territory for oxygen suppliers, but it is for many diabetes supply companies. The rental model changes:
- Cash flow: Revenue is spread out over time
- Documentation: Continued use records and compliance checks become part of the ongoing cycle
- Patient relationships: Regular outreach and check-ins become revenue-critical
Two additional rules to know:
- Patient Continuity (Grandfathering): Existing patients can stay with their current supplier under transition terms, even if that supplier doesn't hold a new contract.
- Emergency Termination Clause: CMS has defined circumstances for expedited contract termination.
Summary
The DMEPOS Competitive Bidding Program is evolving fast. Here's the short version of what matters most:
- The 75th percentile rule and CPI-U adjustments bring more pricing stability than previous rounds
- Remote Item Delivery opens national markets for the right product categories
- CGMs and insulin pumps bring big opportunity and the operational complexity of monthly rental billing
- CMS's modernized systems mean documentation and compliance management matter just as much as the bids you submit
Staying competitive requires operational systems that can keep up. Notable Systems helps DME and HME suppliers streamline the billing workflows competitive bidding demands. From order intake and documentation to real-time compliance checks before claims go out the door, explore how Notable Systems can support your revenue cycle.
Want to hear how DME providers are navigating competitive bidding directly from industry experts? Watch our webinar, Competitive Bidding and the Future of DME.