HealthBridge US Issues Advisory on CMS 36-Month Rule Enforcement for DMEPOS Providers

FOR IMMEDIATE RELEASE
HealthBridge US Issues Advisory on CMS 36-Month Rule Enforcement for DMEPOS Providers

Los Angeles, CA – HealthBridge US, a national healthcare consulting firm specializing in Medicare regulatory compliance and provider enrollment strategy, is issuing a formal advisory regarding the CMS “36-Month Rule” and its implications for Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) suppliers.

The 36-Month Rule, codified at 42 CFR §424.57(c), places strict limitations on changes of ownership (CHOW) involving DMEPOS suppliers within 36 months of initial enrollment or most recent ownership change. The rule was implemented to prevent improper transfers of Medicare billing privileges and to strengthen program integrity safeguards.

Under this regulation, a DMEPOS supplier that undergoes a change of majority ownership within 36 months of initial enrollment or within 36 months of the most recent change of ownership is generally prohibited from conveying Medicare billing privileges to a new owner. Instead, the new owner must enroll as a new supplier and obtain a new Medicare supplier number. In practical terms, this means the Medicare contract does not automatically transfer.

Why This Rule Matters

For DMEPOS providers, the 36-Month Rule significantly alters acquisition strategy, valuation, and transaction structure. Buyers often assume they can acquire an operational DMEPOS entity and continue billing under the existing PTAN. However, if the transaction falls within the 36-month window, CMS will typically require the new owner to submit a new enrollment application. This results in:

• Loss of billing continuity

• Potential interruption of cash flow

• Increased administrative burden

• Re-accreditation and site inspection requirements

• Possible impact on competitive bidding eligibility
  

Additionally, certain revocations may occur if CMS determines that an ownership transfer violates regulatory requirements.

Limited Exceptions

CMS recognizes limited exceptions to the 36-Month Rule, including:

• Death of the majority owner

• Court-ordered sale

• Transfers to an immediate family member

• Certain mergers where ownership remains substantially the same
  

Each exception is narrowly interpreted and requires proper documentation. Suppliers should not rely on assumptions. CMS scrutiny is high, particularly given broader enrollment enforcement actions reflected in recent regulatory updates to provider enrollment policies

Strategic Implications for Investors and Operators

The 36-Month Rule fundamentally changes how DMEPOS transactions must be structured. Asset purchases may be more viable than stock transfers in certain cases. Buyers must conduct detailed regulatory due diligence, including:

• Verification of enrollment effective dates

• Review of prior ownership disclosures

• Analysis of revocation history

• Confirmation of accreditation status

• Assessment of pending adverse legal actions
  

Failure to properly evaluate these elements can result in significant financial loss and operational disruption.

HealthBridge US Advisory

HealthBridge US strongly recommends that DMEPOS suppliers and investors consult regulatory counsel and enrollment specialists before executing any ownership change within the 36-month period. Early regulatory analysis can prevent revocations, denials, and unnecessary delays.

“Compliance must drive transaction strategy,” stated HealthBridge US leadership. “The 36-Month Rule is not a minor administrative issue—it is a structural enrollment control that directly impacts Medicare billing authority.”

HealthBridge US provides comprehensive DMEPOS consulting services including CHOW analysis, PECOS enrollment strategy, accreditation coordination, competitive bidding advisory, and Medicare compliance audits.

For regulatory guidance or transaction consultation, contact HealthBridge US.

About HealthBridge US
HealthBridge US is a national healthcare consulting firm specializing in Medicare enrollment, regulatory compliance, accreditation preparation, and program integrity advisory services for DMEPOS, home health, hospice, and other Medicare-certified providers.