DME Competitive Bidding 2028: Financial Impact on Suppliers
DME competitive bidding 2028 is shaping up to be one of the most significant reimbursement events for durable medical equipment suppliers in years. Medicare’s next round of the competitive bidding program is moving through bidding and contract award ahead of its planned start, and it includes a national remote item delivery program that reaches product lines many suppliers depend on.
For owners, the question is not only whether to bid. It is how the outcome could affect revenue, cash flow, debt service and the value of the business. This article looks at the round from a financial and lending perspective. Program details can change, rules vary by state and payer, and nothing here is legal, billing, compliance or reimbursement advice.
What Is Changing in DME Competitive Bidding 2028
In general, competitive bidding sets Medicare payment amounts for selected items in selected areas based on supplier bids, and limits Medicare billing for those items to contract suppliers. Suppliers that do not win contracts generally cannot bill Medicare for those items to beneficiaries in the affected areas, subject to limited exceptions.
As the upcoming round has been described, it is expected to include a national remote item delivery program covering items that can be shipped directly to patients, such as:
- Continuous glucose monitors and insulin pumps, with related supplies
- Ostomy supplies
- Urological supplies
- Off-the-shelf orthotics and braces
Because the remote item delivery program is national rather than limited to particular metro areas, a supplier that does not win a contract may lose access to Medicare revenue for those items everywhere it operates. Suppliers should confirm current program details with qualified reimbursement professionals and healthcare counsel.
Why It Matters Financially
For many suppliers, diabetic supplies, ostomy and urological products and braces are recurring, high-volume lines. A loss of contract eligibility or a lower payment amount can affect:
- Revenue: lost patients or lower reimbursement per item
- Margins: fixed costs spread over a smaller revenue base
- Debt service: lower cash flow available for loan payments
- Covenants: existing loans may include financial covenants that become harder to meet
- Valuation: buyers may discount businesses with heavy exposure to affected lines
Industry groups have warned that a meaningful number of suppliers could downsize or close if the round proceeds as proposed. Even suppliers that win contracts may face lower payment amounts and higher volume expectations.
Assess Your Exposure
The first step is understanding how much of your business is at risk. Owners can work with their accountant and billing team to:
- Break out Medicare revenue by product category and by area
- Identify which lines fall within the remote item delivery program
- Estimate gross margin for each affected line
- Model scenarios: winning a contract at a lower payment amount, and losing access entirely
- Review how each scenario affects cash flow and debt payments
Our article on how lenders underwrite DME payer mix explains why concentration in a single payer or product line draws scrutiny.
The Cost of Bidding and Winning
Winning a contract is not free of financial strain. Contract suppliers may be expected to serve every eligible beneficiary who orders from them, which can mean more inventory, more shipping capacity and more customer service staff at a lower payment amount per item.
Suppliers considering a bid should estimate whether they could serve higher volume profitably at the price they submit. A bid that wins but leaves thin margins can create its own cash flow problems. Owners should involve their accountant and qualified reimbursement professionals before submitting bids, and should think about how added inventory and staffing would be funded.
Cash Flow Planning Before Contracts Take Effect
There is time between contract awards and the start of the new payment period. Suppliers can use it to strengthen liquidity rather than wait. Options may include:
- Building cash reserves from current operations
- Reducing slow-moving inventory in affected lines
- Arranging a DME line of credit while financial results are still strong
- Reviewing existing debt to see whether payments or structure can be improved
Lenders evaluate current and expected cash flow. A supplier that seeks financing after revenue has already dropped may find fewer options. Every loan is subject to approval, and terms depend on the business, program rules and lender review.
Review Existing Debt
If a supplier carries several loans, equipment notes or other obligations, lower revenue can strain payments. Reviewing whether existing debt could be restructured or consolidated may help. Our guide on refinancing DME business debt explains how that process generally works. Not every obligation will qualify, and results depend on the business’s cash flow and lender review.
Diversify Revenue
Some suppliers respond to bidding risk by expanding into lines outside the program, such as complex rehab, sleep therapy, mobility or commercial payer contracts. Diversification takes time and capital, including inventory, staff training and, in some cases, new accreditation. Our article on expanding DME product lines covers the financing side of that decision.
Implications for Buyers and Sellers
The round also affects acquisitions. Buyers are likely to ask detailed questions about exposure to affected lines and whether the seller bid. Sellers with heavy exposure may see lower offers or more deal structure tied to future results. Our guide to DME company valuation explains how buyers weigh revenue concentration.
Final Thoughts
DME competitive bidding 2028 could reshape revenue for many suppliers, especially those concentrated in diabetic, ostomy, urological and brace lines. Owners who measure their exposure early, strengthen liquidity and review their debt before contracts take effect may have more options than those who wait.
US Medical Funding helps durable medical equipment suppliers plan working capital and financing around reimbursement changes. Learn more about our DME working capital and lines of credit.
