AMARILLO, TX – On June 30, 2025, CMS issued a proposed rule addressing the next iteration of competitive bidding. Comments are due by August 29, 2025. The final rule should be issued around November 1, 2025 and the effective date should be January 1, 2026.
While the DME industry’s focus is justifiably on competitive bidding, there are other components of the proposed rule that DME suppliers should be aware of. This article discusses these three components.
Reaccreditation
The proposed rule states that (i) reaccreditation must occur every year rather than every three years, (ii) the surveys must be unannounced, and (iii) all locations must be surveyed.
The requirement for DME suppliers to be reaccredited every year is a huge challenge for both accreditation companies (“AOs”) and DME suppliers. There are a limited number of AOs that accredit DME suppliers. It is unknown if the AOs have the capacity to reaccredit suppliers on an annual basis. In effect, this component of the proposed rule will triple the work load of the AOs.
It is time consuming and costly for DME suppliers to prepare for reaccreditation every three years. The requirement of annual reaccreditation will be an expensive burden to place on suppliers.
Provider Enrollment
The DME supplier’s PTAN is the lynchpin for everything that the supplier does. The PTAN allows the supplier to bill traditional Medicare. Equally as important, as a general rule, (i) a supplier cannot obtain a state Medicaid provider number without first obtaining a PTAN and (ii) a supplier cannot secure Medicare Advantage contracts and Medicaid Managed Care contracts without first obtaining a PTAN. If a DME supplier loses its PTAN, then the dominos quickly start falling.
The final rule gives CMS (through its Provider Enrollment contractors) the following basis to revoke a PTAN:
- A Medicare beneficiary attests that he/she never received the item or service listed on the DME supplier’s claim.
- A supplier inputs false or misleading information on the 855S.
- Failure by the DME supplier to timely report a change of ownership (“CHOW”).
- Revocation of one location’s PTAN will result in the revocation of the PTANs of the other locations.
- Noncompliance with a Supplier Standard.
A Provider Enrollment contractor can immediately bring a DME supplier to its knees by revoking its PTAN. Depending on the reason for the revocation, the supplier can (i) appeal the revocation or (ii) submit a Corrective Action Plan (“CAP”). But the uncertainty arising out of the revocation, coupled with the inability of the supplier to submit claims to traditional Medicare until the appeal is successful or the CAP is accepted, is unsettling. And, of course, there is the risk that the appeal will be unsuccessful or that the CAP will not be accepted.
In addition, revocation of the DME supplier’s PTAN likely violates the supplier’s Medicare Advantage and Medicaid Managed Care contracts…meaning that the supplier may need to convince the insurers not to terminate their contracts while the supplier goes through the appeal/CAP process.
The DME supplier should be aware that if it has multiple PTANs, revocation of one PTAN will likely result in the revocation of the supplier’s other PTANs. Every DME supplier should have a formal compliance program. An important component of the compliance program should be Provider Enrollment. The compliance program should include protocols designed to ensure that the DME supplier is not doing anything that will jeopardize its PTAN.
These protocols should include a simple – but vitally important – component: the supplier needs to look for mail from Provider Enrollment contractors. Too often, DME suppliers will not open mail from Provider Enrollment contractors until days have passed since the suppliers received the correspondence. By that time, the clock has been ticking to file an appeal or submit a CAP.
Change in Majority Ownership (“CIMO”)
The proposed rule requires DME suppliers, with a majority ownership change in the first 36 months of enrollment, to enroll as a new supplier. This mirrors the same requirement that has been in existence for years for home health agencies. The proposed rule allows CMS to deactivate Medicare billing privileges for DME suppliers that undergo a CIMO without meeting the re-enrollment requirements.
The impetus behind this proposed requirement is likely tied to “DME supplier flipping.” Similar to flipping of houses, what we are seeing in the marketplace are individuals who set up multiple “shell” DME companies. The DME companies will do what is minimally necessary to obtain a PTAN. And then the owner will “flip” the DME companies to purchasers pursuant to stock (not asset) sales. There have been instances when the new owners engage in fraudulent activities.
The CIMO rule will make it less attractive for individuals to engage in “DME supplier flipping.”
Jeffrey S. Baird, JD, 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].
