Significant Medicare Regulation Changes for Durable Medical Equipment Companies

Owners and potential buyers of Durable Medical Equipment (DME) companies must prepare for a significant regulatory change affecting Medicare transactions starting January 1, 2026. The new Medicare regulation imposes restrictions on ownership transfers, impacting billing capabilities if compliance is not met. Failure to comply with the updated Medicare ownership transfer rules could lead to operational challenges due to an inability to bill Medicare efficiently.

Understanding the New Medicare Regulation

Traditionally, changes in stock ownership for a Medicare-enrolled DME required the CMS 855S form to maintain billing capabilities and comply with regulatory compliance requirements. The upcoming change mandates that Medicare billing privileges won't automatically transfer to a new owner following a majority ownership change within 36 months of the supplier's initial Medicare enrollment or the latest change in ownership, unless exceptions apply. This is crucial for ensuring consistency in payer and provider interactions.

The Centers for Medicare & Medicaid Services (CMS) will consider a change of ownership as involving more than a 50 percent alteration in direct ownership through mechanisms such as asset sales, stock transfers, or mergers. Even if each change is less than 50 percent, if combined changes exceed this threshold, the rule applies. The 36-Month Rule necessitates prospective buyers to enroll as new suppliers with an individual Medicare provider number, impacting underwriting and claims processing timelines.

Navigating Regulatory Compliance

This regulation aims to enhance program integrity by addressing rapid ownership transitions within this supplier segment, reflecting industry risk management concerns. With an estimated 3,768 DME suppliers potentially affected annually, industry experts recommend engaging experienced healthcare legal counsel during ownership transactions to navigate these complex regulatory compliance requirements effectively. This proactive approach ensures alignment with industry standards and helps manage potential disruptions in business operations.