AMARILLO, TX – The Balanced Budget Act of 1997 directed DHHS to conduct DMEPOS competitive bidding (“CB”) demonstration projects. As a result, from 1999 to 2002, demonstration projects were conducted in Florida and Texas.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“MMA”) was subsequently passed. The MMA adopted DMEPOS CB.

The first CB program (that I will call “CB-1”) ran from 2011 until 2018. The program went into a hiatus beginning 2018…except for off-the-shelf knee and back braces. The program, pertaining to knee and back braces, expired on 12/31/2023.

The hope of the DME industry was that CB would not be resurrected. This hope has been dashed by the current iteration of CB. I will refer to this as CBP-2. While there was at least some logic behind CBP-1, the same cannot be true of CBP-2. CBP-2 appears to be driven by DOGE concepts. If CBP-2 is implemented as proposed, multiple problems will arise.

On August 27, 2025, AAHomecare submitted a 45 page letter to CMS expressing AAHomecare’s comments and concerns about CBP-2. The following summarizes the key points made by AAHomecare.

• CBP-2 appears to be in direct conflict with the Trump Administration’s Executive Orders (“EOs”) 14192 and 14267. EO 14192 (“Unleashing Prosperity Through Deregulation”) aims to alleviate unnecessary regulatory burdens placed on the American people, and EO 14267 (“Reducing Anti-Competitive Regulatory Barriers”) aims to eliminate regulations that reduce competition, entrepreneurship and innovation, as well as the benefits they create for American consumers.
• CBP-2 eliminates several of the important guardrails that the previous Trump Administration implemented that would establish a more financially sustainable CBP. For example, the previous Trump Administration increased the bid ceiling to the unadjusted 2015 fee schedules and established the bid price at the clearing price. AAHomecare urges CMS to maintain those guardrails.
• CMS has exceeded its authority by proposing to include certain medical supplies such as ostomy, urological and tracheostomy supplies in CBP-2. CMS inappropriately relies on legal justifications that disregard fundamental principles of statutory construction and inappropriate information to support the revised interpretation. A prior bidding demonstration that included urological supplies found that medical supplies are not suited for CB due to beneficiary access and product quality issues.
• CMS should exclude CGMs from CBP-2 because it is a relatively new technology with a very limited number of manufacturers. The addition of CGMs will introduce access barriers, administrative burdens on suppliers, and stifle competition.
• CMS should not reintroduce insulin infusion pumps to the CBP. CMS previously included insulin infusion pumps and determined that they were not suited for CB, especially considering the fragile patient population that requires such therapy.
• CMS should not reclassify CGMs and insulin infusion pumps and supplies to the “frequent and substantial servicing” payment category. The items do not meet the legal requirements for such a change.
• CMS should exclude liquid oxygen from CBP-2. It is exceedingly costly to provide, and very few beneficiaries have a medical need for this type of oxygen therapy.
• CMS should discontinue the use of lead item bidding and allow bidders to bid on individual HCPCS codes to better reflect market pricing. The fundamental flaw with the lead item bidding/pricing methodology is that it assumes there is a rational relationship in the relative Medicare payment amounts for items with a product category. This is not true. The lead item bidding results in disproportionate payment cuts to non-lead items. While AAHomecare supported lead item bidding years ago, that was before (i) AAHomecare members experienced it and (ii) CMS established the non-lead items payment methodology.
• CMS must pay DME CB contractors the amount they bid…the same as commercial payors do. If CMS moves ahead with a uniform amount for all bidders, CMS should maintain the current methodology for determining the single payment amounts (“SPA”) at the clearing price. Any reduction will jeopardize beneficiary access and will not reflect true market pricing, which is counter to CMS’ emphasis throughout the proposed rule.
• CMS must consider DME supplier experience in a geographic area and product category, capacity, and whether the bids are bona fide when awarding contracts. CMS must require bidders to have sufficient cash flow to expand to fulfill contracts. Failing to maintain the safeguards put in place due to lessons learned by CBP-1 poses a return to the problems of unrealistically low bids that were submitted without viable plans or experience with specific products to serve beneficiaries. To ensure bidders’ bids are sustainable, CMS should conduct its bona fide bid analysis on lead and non-lead items with SPAs.
• CMS should maintain the bid ceiling at the unadjusted 2015 fee schedule. The proposal to set the bid ceiling based on SPAs established from a flawed bidding program will continue to depress prices to unsustainable levels, jeopardizing the viability of the DMEPOS industry and access to care.
• CMS’ proposed method for determining the number of DME CB contractors is arbitrary and designed solely to eliminate most DMEPOS suppliers from the market. The proposal does not take into account supplier capacity and beneficiary demand.
• Annual re-accreditation is not warranted, overly burdensome, and simply not feasible or practical. The accreditation process is designed to determine compliance with Medicare Quality Standards; it is not a Medicare regulatory compliance process.
• The provider enrollment and revocation proposals are unduly punitive. The proposals seek to expand CMS’ unilateral revocation authority for a number of reasons that are unwarranted and without allowing the DME supplier to provide explanatory or corrective information.

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, a law firm based in Texas with a national health care practice. He represents pharmacies, infusion companies, HME companies, manufacturers, and other health care providers throughout the United States. 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].