A Medicare Advantage Plan (“MAP”) is a “middleman.” It is paid money by CMS. It pays money to DME suppliers that are in network, and the MAP “pockets the spread.” The middleman business model inherently generates the potential for abuse. The MAP wants to obtain as much money as possible from CMS…and wants to pay out as little money as possible to DME suppliers…thereby increasing the MAP’s spread.

CMS pays money to the MAP for it to “sweat the details.” That is, the MAP is expected to (i) enroll patients, (ii) sign up DME suppliers  (i.e., bring them into the MAP’s network), (iii) work with enrollees on an ongoing basis, (iv) work with DME suppliers on an ongoing basis, and (v) pay DME suppliers. It now appears that MAPs are subcontracting many of the “details” to another middleman: the Third Party Administrator (“TPA”). The TPA handles many of the functions that the MAP has contracted with CMS to handle. And out of its “spread,” the MAP pays the TPA.

The growth of TPAs is tantamount to the Wild Wild West. There is little government oversight…and little MAP oversight… of TPAs. And yet, MAPs delegate a great deal of authority to TPAs. While DME suppliers have appeal rights when it comes to actions by MAPs, such rights generally do not exist when it comes to actions by TPAs.

Description of a TPA
A TPA is a legal entity that manages the administration, utilization review, billing, and provider networks on behalf of MAPs. The stated goal of the TPA is to reduce costs by curbing “unbundling,” streamlining claims, and acting as a bridge between the MAP and the DME supplier. Key functions of a TPA are:

• Claims Management – Processing and adjudicating claims.
• Cost Control and Utilization Review – Monitoring equipment rentals and purchases to prevent overpayment, unbundling, and unnecessary utilization.
• Network Management – Providing access to a contracted network of DME suppliers.
• Regulatory Compliance – Ensuring compliance with state and federal regulations for equipment reimbursement.
• Supplier Management – Handling DME supplier inquiries, authorization, and payments.

TPAs differ from standard insurance companies because they do not take on the financial risk themselves…but do take on certain operational responsibilities of the MAP.

Criticism of TPAs
The following are criticisms of TPAs:

• Access to care is constrained. Physicians are not able to direct patients to their preferred DME suppliers. Rather, referrals are routed to DME suppliers based on negotiated pricing, often without regard to proximity or service capability.
• Too often, patients who once traveled a short distance to obtain basic equipment are now sent to suppliers much further away.
• The operational requirements imposed on contracted DME suppliers are often onerous…especially in light of the sharply discounted reimbursement.
• Network participation frequently requires near immediate order acceptance, rapid delivery, 24/7 on-call staffing, and after-hours responsibilities. These requirements are challenging for small to mid-sized DME suppliers that may not receive reimbursement great enough to cover the cost of equipment.
• Economics are increasingly disconnected from health care reality. Since COVID, DME equipment acquisition costs and operating expenses have dramatically increased. At the same time, TPAs routinely propose reimbursement rates that are dramatically lower than prevailing commercial fee schedules for commonly provided items.
• TPAs claim that their primary value lies in proprietary technology and administrative efficiency. Yet today’s DME suppliers already rely on sophisticated, widely available platforms for electronic referrals, documentation management, e-prescribing, inventory control, delivery tracking, and claims submission. In many cases, the TPA does not introduce new capability, but rather, inserts itself as an additional administrative intermediary between the physician, patient and DME supplier.
• TPAs suggest that managing claims and payor interactions generates meaningful savings for DME suppliers. However, this is often not the case.
• The DME supplier’s staff time is often redirected toward manually correcting errors, resolving discrepancies, and chasing payment issues introduced by the intermediary process.
• The proliferation of TPAs in the DME space does not represent the elimination of inefficiency, but the creation of another layer of administrative bureaucracy. Rather than simplifying care delivery, TPAs interpose themselves between physicians, patients, payors and DME suppliers. Savings achieved through reimbursement suppression and DME supplier concessions are not innovation. They are cost shifting.

Proactive Steps DME Suppliers Can Take to Curb TPA Abuses
DME supplies can proactively take the following steps to address problems caused by TPAs:

• Educate the following groups regarding the flaws of the TPA model: media, physicians, community at large, Congress, CMS, state legislators, and state insurance commissions.
• Lobby federal and state legislators to pass legislation designed to curb the abuses caused by the TPAs.
• Lobby CMS and state insurance commissions to issue regulations designed to curb the abuses caused by TPAs.
• Work with AAHomecare, state DME associations, and other industry stakeholders to accomplish the above.

Jeffrey S. Baird, Esq., is chairman of the Health Care Group at Brown & Fortunato, PC, a law firm based in Texas with a national healthcare practice. He represents pharmacies, infusion companies, HME companies, manufacturers, and other healthcare providers throughout the United States. Mr. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization and can be reached at (806) 345-6320 or [email protected]. 

WELLSKY WEBINAR

Competitive Bidding, Enrollment, and Ownership Changes: A DME Briefing

Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato & Cara C. Bachenheimer, Esq., Brown & Fortunato

Thursday, June 25, 2026

12 p.m. CENTRAL TIME
After being on pause for years, competitive bidding is back — reinstated under the CY 2026 Home Health Prospective Payment System Final Rule. This rule introduces significant structural changes to the Competitive Bidding Program (CBP), a program with already pre-existing barriers. Along with the competitive bidding updates, the Centers for Medicare & Medicaid (CMS) is also imposing additional accreditation requirements and stricter provider enrollment requirements and is revising change in majority ownership (CIMO) requirements. CMS has also issued a six-month moratorium against the issuance of new Provider Transaction Access Numbers (PTANs).

In this webinar, you’ll get straightforward guidance on what DME suppliers need to know about all these updates — what’s changing, what’s most challenging, and what steps you can take now to navigate the new landscape with less risk and more confidence.

Register for Competitive Bidding, Enrollment, and Ownership Changes: A DME Briefing on Thursday, June 25, 2026, 12 p.m. CT, with Jeffrey S. Baird, Esq., and Cara C. Bachenheimer, Esq.