Effective January 1, 2026, the Centers for Medicare & Medicaid Services (“CMS”) implemented significant changes to the accreditation and enrollment framework for Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (“DMEPOS”) suppliers through the CY 2026 Home Health Prospective Payment System Final Rule (“Final Rule”). CMS adopted these changes in response to what it describes as long-standing program integrity vulnerabilities in the DMEPOS sector and acknowledged that the reforms will increase compliance costs and operational burdens for suppliers and accrediting organizations.
As summarized below, the provisions of this Final Rule apply broadly to all DMEPOS suppliers and materially affect ownership transactions, accreditation cycles and compliance planning.
Expansion of the 36-Month Rule for Ownership Changes
Under the Final Rule, CMS expanded its 36-month rule previously applicable to home health agencies and hospices to all DMEPOS suppliers. If a supplier experiences a change in majority ownership within 36 months of its initial Medicare enrollment or within 36 months of its most recent change in majority ownership, Medicare billing privileges will not transfer to the new owner unless an exception applies. Instead, the DMEPOS supplier’s enrollment terminates, requiring the buyer to enroll in Medicare as a new DMEPOS supplier and obtain accreditation following a survey by a CMS-approved accrediting organization.
A change in majority ownership occurs when an individual or organization acquires more than a 50 percent direct ownership interest, whether through a single transaction or the cumulative effect of multiple transactions. CMS includes asset sales, stock transfers, mergers and consolidations within this definition. One important note: indirect changes in ownership, such as changes in ownership of a parent entity, do not trigger the 36-month rule.
CMS adopted limited exceptions, including internal corporate restructurings of a parent company, changes in legal form where ownership remains the same and the death of an individual owner. Of note, CMS did not provide grandfathering protections for suppliers enrolled within 36 months prior to January 1, 2026, meaning transactions closing after that date may still trigger the rule regardless of when enrollment occurred.
Annual Accreditation and Survey Requirement
CMS replaced the long-standing three-year accreditation cycle with a requirement that all DMEPOS suppliers be resurveyed and reaccredited at least once every 12 months. CMS characterized the prior cycle as a serious vulnerability in its oversight of supplier compliance and emphasized that suppliers may be surveyed more than once in a 12-month period, which is a significant increase in surveys and will prove burdensome to DMEPOS suppliers.
For suppliers accredited before January 1, 2026, the annual resurvey and reaccreditation cycle begins upon expiration of the supplier’s current accreditation term. Suppliers initially accredited on or after January 1, 2026, must complete their first annual reaccreditation within 12 months of initial accreditation.
Additional Accreditation and Compliance Changes
The Final Rule strengthens CMS oversight of DMEPOS accrediting organizations through expanded reporting, monitoring, accountability standards and conflict-of-interest safeguards. CMS reaffirmed that all accreditation surveys must be unannounced and eliminated the 90-day temporary accreditation allowance for new or relocated supplier locations, requiring surveys before accreditation is issued. As a result, when a DMEPOS supplier relocates, billing Medicare from the new location cannot begin until the survey is completed, accreditation is granted and the enrollment update is approved. This effectively results in a suspension of Medicare billing from the new location until all accreditation and enrollment requirements are fully satisfied.
Practical Takeaways
Majority changes in direct ownership that occur within 36 months of initial certification or a prior majority change in direct ownership will now result in the termination of the DMEPOS supplier’s billing privileges, requiring the new owner to apply for enrollment and accreditation, unless an exception applies.
The Final Rule’s new annual survey requirement increases operational and compliance demands; transaction structuring, diligence and accreditation planning are now critical considerations for DMEPOS suppliers, investors and lenders.
DMEPOS suppliers should review enrollment timelines, ownership history and expansion plans, and consider whether proactive compliance or restructuring steps are advisable before entering into transactions.
For more information on the Final Rule, please contact:
- Robert Markette at (317) 977-1454 or rmarkette@hallrender.com;
- Brian Jent at (317) 977-1402 or bjent@hallrender.com;
- Lauren Hulls at (317) 977-1467 or lhulls@hallrender.com;
- Julie Mitchell at (317) 429-3643 or jmitchell@hallrender.com; or
- Your primary Hall Render contact.
Special thanks to summer associate Landon McCall for his assistance with this article.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer specific questions that would be legal advice.
