Understanding the Competitive Bidding Program

When the Centers for Medicare & Medicaid Services (CMS) released its final rule making changes to the Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Competitive Bidding Program (CBP) on the Friday after Thanksgiving, a shock wave rippled through the industry. After months of industry supporters submitting detailed comments and lobbying the administration and Congress to urge CMS to make practical improvements, CMS simply finalized the provisions as proposed. 

Failing to consider any changes recommended by the industry, CMS has established CBP rules that appear to be solely intended to greatly decrease the number of suppliers for certain bid product categories and to impose draconian payment cuts within those categories.

At this point, there are still many unanswered questions. Everything we know is based upon the CMS final rule and its accompanying news release. We expect that CMS will issue sub-regulatory documents in the coming months to provide further details, as it has in the past. The government’s website is the Competitive Bidding Implementation Contractors (CBIC) at dmecompetitivebid.com.

New Remote Item Delivery Programs

In a revised fact sheet issued Dec. 9, 2025, CMS clarified that the next round of bidding will only include the seven product categories in national remote item delivery (RID) CBPs. That is a bit of good news—at least for now. Therefore, in the next round of bidding, CMS will not include the product categories that have previously been included: respiratory items such as oxygen and CPAP, standard mobility, hospital beds, walkers and enteral nutrition.

CMS will include the following seven product categories in the next round of competitive bidding as national remote item delivery programs:

• Class II continuous glucose monitors (CGMs) and insulin pumps
• Urological supplies
• Ostomy supplies*
• Hydrophilic urinary catheters
• Off-the-shelf (OTS) back braces
• OTS knee braces
• OTS upper extremity braces

(*It is unclear if CMS plans to include tracheostomy supplies in the “ostomy supplies” product category.)

CMS said it plans to phase in a nationwide RID CBP for the above product categories. These nationwide RID CBPs will include all areas of the United States, including territories and the District of Columbia. RID CBP contract suppliers will be required to be able to furnish all HCPCS codes in the product category to all Medicare beneficiaries, regardless of where they live. Beneficiaries will be required to receive items from a contract supplier for Medicare Part B to cover and pay for the item.

CMS has established the new RID CBP for items it believes are primarily provided via mail order or third-party delivery. The contract suppliers can ship the items included under a RID CBP to a beneficiary’s home. CMS said these items may also be picked up at a local pharmacy or storefront as long as the beneficiary chooses to pick up the items in person and the pharmacy or storefront is owned by a contract supplier or a subcontractor of the contract supplier.

Additionally, CMS is pulling the three new HCPCS codes for hydrophilic intermittent catheters into their own product category, separate from the overall urological supplies product categories. CMS revised three HCPCS codes for non-hydrophilic intermittent catheters as well, effective Jan. 1, 2026.

Changes to the Competitive Bid Program Rules

1. Revised Calculation of Bid Prices: Single Payment Amounts or “SPAs”

CMS has established a revised methodology to calculate the bid prices, called “single payment amounts” (SPAs). CMS will establish the SPA at the 75th percentile of winning bids instead of the previous method of using the highest maximum winning bid. SPAs will be updated at the beginning of the second year and third year of the contract period by the CPI-U.

2. Determining the Number of RID CBP Contract Suppliers

CMS has changed the method to determine how many contracts it will award for a product category. CMS will no longer use the bidder’s self-reported capacity statements. Instead, the number of contracts CMS will offer for each product category will be based on 125% of the number of suppliers furnishing at least 3% of the total national allowed services for the lead item in 2025. 

Based on 2024 claims data, CMS stated that there would be 10 national contract suppliers for the CGM/insulin pump product category, eight national contract suppliers for the urological supplies and ostomy supplies product categories, six national contract suppliers for the OTS upper extremity braces and OTS knee braces product categories and four national contract suppliers for the OTS back braces product category. 

The numbers may change because the number of contract suppliers will be based on 2025 or 2026 claims data and will be announced in late spring or early summer of 2026. If fewer than 30% of the winning suppliers are small suppliers, CMS may offer additional contracts toward its goal (not requirement) of meeting the 30% small supplier target.

3. Payment Rules for Continuous Glucose Monitors & Insulin Infusion Pumps

CMS is changing the payment category for CGMs and insulin infusion pumps from routinely purchased to “frequent and substantial service.” That means CMS will pay on a continuous, monthly rental basis with payment for all necessary supplies and accessories included in the monthly rental rates beginning on the first day of the contract period. 

Contract suppliers maintain ownership of the rental equipment and are allowed to bill for up to three months of rental in advance. CMS also said contract suppliers must furnish the brand of CGM or insulin pump ordered by the physician for the beneficiary. Beneficiaries who own their own CGM or insulin pump prior to the start of the contract period will be able to continue to use their equipment until it needs to be replaced, or they can elect to switch to a rented device. Contract suppliers must furnish replacement supplies and accessories for the beneficiary-owned CGM or insulin pump.

4. Bid Ceiling Changes

For all the new product categories except for CGMs and insulin pumps and supplies, the bid ceiling will be the then-current fee schedule. For Class II CGMs and supplies, CMS is changing the payment category from “inexpensive or routinely purchased” to the “frequent and substantial servicing” payment category. Under these new payment rules, CMS is establishing the bid ceiling for class II CGMs and supplies at a bundled payment rate that is based upon the average purchase fee schedule amount for the class II CGMs divided by 60, plus the fee schedule amount for class II CGM supplies. This results in a 2025 monthly bid ceiling of $272.69. It is unclear how contract suppliers will bill for the bundled payment.

The bid ceiling for OTS back braces or OTS knee braces identified as the lead item in the product category for 2025 cannot exceed the average of the 2026 non-rural fee schedule amounts for the item. The bid amounts submitted for the OTS upper extremity brace, urological supply or ostomy supply identified as the lead item for each of these three product categories for 2025 cannot exceed the average of the 2026 fee schedule amounts for the item.

5. Fewer Financial Document Requirements

CMS is dramatically reducing the types of financial documents that bidders will be required to submit with their bid. Each bidding entity will now only be required to submit a business credit report with a numerical credit score or rating, unless the bidding entity does not have either because it has not been in operation long enough to generate a numerical score or rating. Bidding entities that are unable to generate a report with a numerical credit score or rating will be required to submit a business credit report showing no data or insufficient information to generate a credit score or rating, in addition to a personal credit report with a numerical credit score or rating from the bidding entity’s authorized official or delegated official listed in the Medicare Provider Enrollment, Chain and Ownership System (PECOS).

In addition, the bidding system will contain a “country of origin” question to obtain information on where the product(s) is manufactured. Suppliers awarded a DMEPOS CBP contract will be listed on the Medicare Supplier Directory, along with their product(s) and country of origin information.

What Has Not Changed

The final rule makes many changes to the Medicare regulations on competitive bidding. Many of the competitive bidding regulations, however, have not changed, including the following:

• Lead Item Bidding: CMS will maintain its “lead item” bidding methodology. This means that for each product category, CMS will define each product category by a list of included HCPCS codes. Bidders will submit a bid price only for the “lead item” in each product category. The lead item is the item that has the highest total amount of allowed charges in the product category. All the non-lead items’ bid prices (SPAs) will be set based on the previous year’s ratio of the non-lead item to the lead item, using average national ratios.
• Bid Bonds: All bidders will be required to obtain a bid bond for each competitive bidding area (CBA) in which they bid, regardless of the number of product categories on which the bidder bids. If a bidder’s bid is at or below the median of winning bidders, and the bidder does not accept Medicare’s contract offer, that bidder’s bid bond will be forfeited and CMS will collect on the bid bond.
• Mandatory Assignment: Contract suppliers must agree to take the SPA as payment in full and cannot charge the beneficiary any excess amounts.
• Must Agree to Serve All Beneficiaries: If a beneficiary resides in the geographic area of the CBA, then the beneficiary generally must obtain a competitive bid item from a contract supplier.
• Commonly Owned or Controlled Suppliers: These suppliers must submit a single bid for a product category for a CBA.