2026 DME Proposed Rule: What Providers Need to Know

CMS has proposed significant DME regulation changes in the 2026 Home Health Payment Update Rule that focus on combating fraud, improving supplier compliance, and enhancing efficiency through increased oversight and expanded requirements. The proposed changes would dramatically impact DME operations through annual accreditation surveys, expanded competitive bidding, and enhanced data reporting requirements.

• Annual accreditation surveys instead of the current three-year cycle would increase costs and operational burden
• Expanded competitive bidding to include continuous glucose monitors, insulin pumps, and certain medical supplies
• Prior authorization exemption process for providers with 90% or higher claim approval rates
• Enhanced oversight requirements and increased data submission for both providers and accrediting organizations
• Significant financial impact through decreased reimbursement rates paired with increased costs
• Comments are due by August 29, 11:59 PM

We strongly encourage DME providers to review the proposed rule and submit comments with data, beneficiary stories, and constructive suggestions. Visit the CHAP website for a summary of DME provisions or contact your state and national associations for guidance in developing your comment letter.

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Transcript

Introduction to DME Rule Changes

Speaker 1 0:00

Greetings. I'm Jennifer Kennedy, the lead for Compliance and Quality at CHAP, and welcome to the CHAP ChapCast. Today's topic is going to be what we're calling the second part of the calendar year 2026 Home Health Payment Update Rule, which this podcast will include just the DME provisions, and I'm so pleased to be joined with my colleague, kim Skian, who is the VP for Accreditation at CHAP and my partner in crime and, even more, I'm really happy to announce that we have Shannon Dorsey Dunlap, who is a Director of Accreditation and our DME expert at CHAP, on with us today. So welcome, kim and Shannon.

Speaker 2 1:07

Thank you.

Speaker 1 1:07

Hi Jennifer.

Speaker 3 1:09

Thank you.

Speaker 1 1:11

All right. Well, this, wow, this has taken a lion's share of effort to read just the DME provisions in this rule. They are lengthy, they are rearranged in terms of where CMS is putting different things, there are new requirements and this section really had that overall theme of improving efficiency and validation that DME providers are compliant with the regulatory requirements and that preventing fraud and abuse in the DME space is something that CMS needs to be concentrating on and getting a hold of. So update of these regulations is aimed at really that fraud and abuse decrease goal in order to preserve the Medicare trust fund. So, given all of that introduction, let's go ahead and talk a little bit about the highlights of the rule and, more importantly, why should DME providers even care about this?

Speaker 3 2:28

Yeah, no, jennifer and Shannon, thank you for joining us today. We are very happy to have you with us to share your expertise. I'll start just by building on what Jennifer just said in terms of introduction. We know, in the home health proposed rule there were approximately 200 pages, if I'm not mistaken, dedicated to the DME proposed changes, some of which include AO oversight for DME providers, but there are quite a few changes that also directly impact DME providers and it really is important that the providers, dme providers do understand what the potential implications are with the components of this rule and what the next steps would be in terms of you know what the impact may be and also, then, how they could potentially prepare. And for that I would like to turn it, as we said to Shannon. Shannon, one of the things, just if you don't mind, as we you know, get started if you'd like to please just provide a very brief overview of your role here at CHAP as a DME expert.

Speaker 2 3:51

Sure, thank you for having me. I'm glad to be participating today. I'm a director of accreditation with CHAP and I have really all of DME nationwide. So as far as the site visitors reviewing the site visit reports, providing the organization you know with resources and helping them interpret CMS regulations as well as check standards.

Speaker 1 4:15

Well, I was going to say Shannon. Since the time I've been here, shannon's taught me a lot about DME. So first of all, thank you, shannon, for that. It helped me read those 200 and X pages a little more intelligently with your guidance. So I can't thank you enough for that.

Speaker 2 4:32

Absolutely. I've been in DME since the early 90s, so it's been a long time.

Speaker 3 4:38

Well, we certainly appreciate it and your value and expertise, both to us at CHAP and to the industry and, of course, to our customers. Shannon, let's talk about a few of the elements identified here in the proposed rule. One area that will directly impact both the AOs and the providers, should this become finalized, is CMS's proposal to have DME accreditation surveys to be conducted annually, and so, if you can talk a little bit about the reasons behind the potential reasons behind the recommendation and what this impact may have on providers, Sure, of course CMS is concerned about compliance from both suppliers and AOs.

Speaker 2 5:39

Of course they're proposing to direct the AOs to do additional surveys, which would include the annual and then surveys at any time thereafter. And of course, the main focus here, as Jennifer has already mentioned, is decreasing fraud, right and abuse. That's the primary goal.

Speaker 1 6:00

So you know when you talk about that, shannon, reading that rule, there was just like case after case after case, primarily cited from the OIG Office of the Inspector General, about fraud and abuse in this space, and I know that you know you've been around the block for many years in the DME area. What are some examples that you've seen or read about of fraud and abuse happening in the DME area? What are some examples that you've seen or read about of fraud and abuse happening in the DME area?

Speaker 2 6:31

I think common examples are false delivery right, Saying that the beneficiary has received a product when in reality they have not received that product. They have not received that product. Or it could also be upcoding right, Giving them a basic item and then billing for complex or custom items. So I think those are probably the most common that we see.

Speaker 1 6:57

Right, and I think you know we've read stories you know in who knows who is the, maybe pro-publica or you know another type of journalistic entity talked about the braces that have been fraudulently sussed out and those providers are facing consequences. Wheelchairs, electric wheelchairs, that's it, the electric wheelchairs. So we've all seen some of the writings out there about some of the abuse happening in this space and what are your thoughts about CMS trying to shore that up?

Speaker 2 7:41

Well, absolutely. I mean, I think we all across the industry do not condone right fraud and abuse. We want that to be monitored, to be policed, so to speak. However, it's just the mechanism to do that. I think is where we all may disagree. Hopefully the community, the DME community itself.

Speaker 1 8:21

through this process of you know, submitting comments will be able to do, or be able to provide, realistic feedback as to what could help decrease fraud and abuse. Great Thank you for that.

Speaker 3 8:25

So, kim I didn't mean to get us off track here. Oh no, that's fine, it's all wonderful information. Thank you both for your insight. This is probably one of the most important areas of the proposed rule that will have a direct impact on both providers and the AOs. So the providers do need to think and look and consider what the impact would be from a workload perspective, from a financial perspective, you know, in increasing those surveys to annually.

Exemption Process for Prior Authorization

Speaker 3 8:59

So, when you're thinking about any comments that you might be submitting, either yourselves or through your state or national associations, these are areas that you want to consider. Another area and, jennifer, I'm going to ask you about this but there is a proposed exemption process for the prior authorization for certain DemiPost items. Now, if I'm reading this correctly and certainly, shannon, jump in if I'm not there are limited areas where there are already limited supplies. If you will that receive prior off and if this is finalized, there will be an opportunity for the DME providers in some cases to not have to submit. Is that correct? They will receive an exemption for regarding if they achieve a certain threshold. Is that correct, jennifer?

Speaker 1 10:01

Yeah, it's the claim approval rate of 90% or greater in order to qualify for that exemption. But I invite Shannon to weigh in here as well with any other insights she has.

Speaker 2 10:15

Yeah, absolutely, it would be the MAC. So the Medicare Administrative Contractor that are completing the post-payment medical reviews, that are completing the post-payment medical reviews and of course, that's where the 90% approval rate or greater would qualify them for an exemption.

Speaker 3 10:32

So this is one area that is potentially positive for the DME providers. Yes, which is with everything else, that that's definitely a positive proposal, or should be with everything else, that that's definitely a positive proposal, or should be, shannon?

Competitive Bidding Program Changes

Speaker 2 10:52

do you mind talking a little bit about the proposed rule? Changes to competitive bidding. Sure, the rule includes potential adjustments to the program, to the competitive bidding program, including determining payment amounts, the number of contracts that are awarded and potential adjustments to the state plan amendments. This includes the state plan amendments at 75th percentile. Cms proposes to set the single payment amount to the 75th percentile of the winning bid. Additionally, they're looking at the definition of medical supplies. So in the past it's been understood that medical supplies such as urological ostomy or trach do not meet the definition of medical equipment that was included in the competitive bid program. This proposed rule includes the medical equipment supplies. It also includes the continuous glucose monitors and insulin pumps. So yeah, they're adding a few more categories to the competitive program.

Speaker 1 12:04

So what do you think the impact could be, Shannon, on DME providers if these changes are made finalized?

Speaker 2 12:22

Well, if these items, these additional items, go through competitive bid, we know that that will decrease, right, the reimbursement. So, in addition to decreasing reimbursement, you're also looking at increasing costs when it comes to the annual accreditation cycle. So they're kind of getting hit on both sides.

Speaker 2 12:37

Yeah, that sounds extremely burdensome, and not only to operations, but possibly to quality, maybe even Exactly, yeah, there's a lot of preparation that goes into accreditation, even though I mean you have your policies and procedures and you're supposed to be compliant at all times, right? I mean that's the intent for accreditation for quality. However, you know organizations prepare you still prepare for accreditation, whether you're doing your own mock audit or your own mock surveys. You have people that are available right to assist the site visitor when they come on site. So there is a cost in preparing for the every three-year accreditation cycle and now they're looking to increase it to once a year or more frequently if requested.

Speaker 1 13:32

Right, that doesn't sound like it could be sustainable for any period of time To me it doesn't.

Speaker 2 13:39

No, I agree. And for DME I mean, you know when you're looking at a profit loss margin, you know if 3% or less sometimes that could be significant.

Speaker 1 13:51

Yeah, no doubt. Well, that sounds definitely like something that our listeners out there should be putting in a comment letter their feedback about that.

Speaker 2 14:02

Absolutely, absolutely. Everyone should be commenting, as requested to CMS and providing calculations regarding the cost, and, of course, all state associations, aa, home Care. Everyone is coming together as a DME community to comment on this, so there are plenty of resources out there for those independently owned organizations. I hope they don't feel like they're on their own, because they're not. As an industry, everyone has come together to reply to this proposed regulation, and so I encourage all of the organizations, regardless of size, to reach out to your state associations, reach out to your national associations and participate in the comment period.

Speaker 1 14:50

Thank you, shannon, and I appreciate that you said something about including calculations, because CMS does appreciate quantitative data as much as they can get it as well. They do appreciate qualitative data as well, but quantitative data is something that I think they would appreciate very much. All right, kim, let's go ahead and switch gears and talk about the enhanced oversight requirements that are written into the DME provisions of this proposed rule as well.

Speaker 3 15:32

Sure. Well, again, there were many provisions included in here, many of which are similar to what had previously been published by CMS in the AO Oversight Proposed Rule, which was not finalized, so in that case it was for home health and hospice and other providers. In this case, this is specific to DME and one of the requirements is increasing the frequency, or proposals is increasing the frequency of the DME surveys and reaccreditations to annually, as we have discussed. So again, this has an impact, direct impact, on both providers and on the AOs and again, as CHAP, you know, we absolutely maintain a high-quality survey experience and we will work with whatever the final rule is in terms of any requirements to ensure that we meet the need of the experienced DME site visitors, as we do now, and a thorough and compliant survey process. But there are definitely some comments that I believe, again from both the AO side and the provider side, that should be included. I also in some of these comments, jennifer, we went through them in detail and I also would recommend providers also look at them but identifying where there could potentially be alignment from CMS with the other service lines, if you will, other CMS service lines in our case, such as Home Health and Hospice.

Speaker 3 17:30

In some of the cases, some of the examples or proposals there are, it appears as though there are more stringent requirements or they're requesting information that really, whether it's related to Appendix M in Hospice, appendix B in home health or Appendix Q for immediate jeopardy right To be able to, you know, implement some consistency. What that looks like, I can't you know, speak to that, but I just think that there needs to be a level playing field for both, for all the AOs, in other words, defined by CMS wherever possible, and also in alignment with the other services, because there are stricter requirements for becoming and maintaining a DME AO, including that increased data submission and timeframes and enhanced monitoring of AO operations. And I had commented a while ago regarding, again, home health and hospice, when CMS has the processes in place, we have something called a direct observation visit survey, which is a CMS coming on site at the time at the same time of an actual survey to observe the site visitor or the surveyor at that time, as opposed to separate validation surveys. So you know, is that something that CMS is thinking about? We also have been subject to additional compliance requirements and scrutiny and other provisions related to conflict of interest. Again, we just we are from an AO standpoint. We're seeking clarification of some areas, cms direction in others, and then also in and also, you know, really taking a look at consistency as much as possible across the different CMS service lines.

Speaker 3 19:41

Jennifer, you're much more in the weeds with the enhanced oversight part of this proposed rule. Do you have any other key points that we should make sure providers are aware of?

Speaker 1 19:55

Well, you know, I think CMS, you know, did an ample job of outlining the examples from the OIG fraud and abuse and the need to, you know, tighten up on not only suppliers but also the AOs who accredit suppliers. But I also think that we need more data. You know there could be data that will help us qualify the fraud and abuse. Like is it happening in certain states? Like hospice fraud and abuse is happening in certain states? Is it happening with newer providers as opposed to well-established providers?

Speaker 1 20:37

So there are, you know, different categories of, I think, risk that can be possibly applied here, that that data wasn't readily offered in this proposed rule. So I'd love to see some more data on that. Not sure if we'd get it or not, but I think we should ask for it anyway. And you know there are many more requirements for AO compliance and data submission and all of that is fine and I would just echo you, kim, in saying whatever CMS wants, we can do. It just needs to be consistent across providers, across AOTYPES, so that we're all submitting apples rather than apples and oranges, right.

Provider Comment Period and Next Steps

Speaker 3 21:22

Excellent point, for sure. So, jennifer, what happens now next for providers, now that the proposed rule has been posted?

Speaker 1 21:33

So what happens next is comments, kim, and I think we've said it amongst the three of us enough that providers need to be thinking about sending a comment letter, and comments are due by the 29th at 1159 pm to CMS, and at the beginning of the proposed rule there's instruction on different ways to submit comments to CMS. And then we wait. Cms will review all the comments and usually the timing for a final rule is in and around the end of October, early November.

Speaker 3 22:17

Thanks, thanks, jennifer.

Speaker 1 22:21

Yeah. So that's the timeline that we're looking at and I would say from my standpoint, providers and suppliers they don't have they really shouldn't complain about what we get on the back end in the final rule if they didn't take time to review the rule and make their own comments. So this is a we've never seen such a robust review and revision of requirements for DME. So this is it, folks. This is your time to make sure that CMA understands the reality of what you do every day, and if what they're proposing seems realistic or not. So we're strongly advising you to send comments. We have a very robust summary of highlights of the DME provisions posted on our website so you can use that as a guide or, as Shannon and Kim have mentioned, turn to your state associations and national associations for guidance. All right, what are your final thoughts as we bring this chap cast to a close?

Speaker 3 23:41

as we bring this chat cast to a close, so I would just say, reiterating what we already have said, please read the rule, understand the impact on your own provider situation, both from a resource perspective and financial, and submit those comments. And to really understand what the impact is Because, as you said, we've seen that the direction of CMS toward tighter DME oversight you know, provider oversight has been taking place for the past year and a half or so, past couple of years, and we've seen that this is an area of focus. So, while it's not surprising that there is CMS's direction to heading into this oversight, it still is something, as Jennifer pointed out, that is new for many providers and for most providers, and so you really do want to make sure you take the time to evaluate what the impact is and get those comments in.

Speaker 1 24:55

Perfect, thank you so much. And again, when you're writing your comment letter, as Shannon mentioned, use data. You need to use data. You need to put in beneficiary stories. If you have them, you will. And when you make a comment that this will not work for you, or if you make a comment that states something that is is untenable, you should follow it up with a suggestion to CMS on how it could possibly work. Cms is open to hearing suggestions, so make sure that you're not just putting in negative no, we don't like this. No, we don't like this. What are your suggestions for improvement? All right, well, again, thank you to Shannon, dorsey Dunlap and to Kim Scan. My fine colleagues here at CHAP, thanks for joining today.

Speaker 3 25:56

Thank you for having us and for joining us, Shannon.

Speaker 1 26:02

And thanks to all of you for taking your time out of your day to plug into our podcast. We know you're busy so we do appreciate that. So, from Kim and Shannon and me and the entire CHAP staff, keep your quality needles surging forward, stay safe and well, and thanks for all you do.