Buying a DME Company: Enrollment Diligence Before You Sign

A DME company's value sits largely in its ability to bill: its Medicare enrollment, its accreditation, its state licenses, its Medicaid enrollments and its payer contracts. Those are not ordinary assets. Some transfer with notice, some require new applications, and since January 1, 2026 some do not transfer at all. Diligence on them belongs before the purchase agreement is signed, because several of the answers change the price or the structure.

Does the 36-month rule apply to this deal?

Check this first. Under 42 CFR 424.551, added by the calendar 2026 home health final rule (90 FR 55618), a "change in majority ownership" happens when an individual or organization acquires more than a 50 percent direct ownership interest in a DMEPOS supplier within 36 months after its initial Medicare enrollment, or within 36 months after its most recent change in majority ownership. That includes asset sales, stock transfers, mergers and consolidations, and the cumulative effect of several transactions.

When it applies, "the Medicare billing privileges do not convey to the new owner." The buyer must enroll as a new DMEPOS supplier and undergo a survey and obtain new accreditation. The exceptions are narrow: an internal corporate restructuring of the parent, a change of business structure (for example, LLC to corporation) where the owners stay the same, and the death of an individual owner.

The practical effect: a supplier enrolled two years ago is worth much less to an outside buyer of a majority stake than one enrolled four years ago, because the buyer is effectively starting a new enrollment. During the 2026 moratorium on new medical supply companies, CMS said that such a re-enrollment counted as an initial enrollment and was blocked. See the 36-month ownership rule.

Which records should a buyer pull from the seller?

• The PECOS enrollment record for every location: PTAN, effective dates, supplier type, products, owners and managing employees, authorized and delegated officials.
• Enrollment history: the initial enrollment date, every prior change of ownership, revalidation dates (every three years under 42 CFR 424.57(g)), and any denials, revocations, payment suspensions or reenrollment bars.
• Accreditation certificates and survey reports, including the products listed, the next resurvey date under the annual cycle, and any plans of correction.
• The surety bond and riders, and whether the seller carries an elevated amount for adverse legal actions in the last 10 years (424.57(d)(3)).
• Liability insurance history; a lapse means revocation retroactive to the lapse (424.57(c)(10)(ii)).
• Every state license and permit, with its holder name, location, expiration and any transfer rule.
• Medicaid enrollments by state and any state-specific bonds.
• Competitive bidding status, including whether the seller has registered or bid in Round 2028.
• Exclusion checks of the company, every owner and managing employee.

What has to be filed with Medicare after closing?

If 424.551 does not apply, the change is still reportable. Medicare's general rule for suppliers is that "any change in the ownership or control of that supplier must be reported on the enrollment application within 30 days of the change," and "a change of ownership that also changes the tax identification number" generally requires a new enrollment application from the new owner (42 CFR 424.550(c)). Supplier standard 2 repeats the 30-day reporting duty (424.57(c)(2)). A supplier making a change of ownership must also submit a $50,000 surety bond (424.57(d)(2)(i)), and a buyer that becomes enrolled through a purchase of assets or ownership needs a bond effective from the purchase date to bill from that date (424.57(d)(2)(ii)).

Screening goes up too. An enrolled DMEPOS supplier "submitting a change of ownership application" or "reporting any new owner (regardless of ownership percentage)" is placed in the high categorical risk level (42 CFR 424.518(c)(1)(vii)), which means fingerprints for every 5 percent owner and a site visit. And Medicare billing numbers cannot be sold or lent: "a provider or supplier is prohibited from selling its Medicare billing number or privileges" (424.550(a)).

What happens to accreditation and state licenses?

Accreditation does not move automatically. CMS's MLN905710 fact sheet says it "doesn't automatically transfer after a merger, acquisition, or sale," and that CMS, your enrollment contractor and your accrediting organization must all be notified. Under 424.551, a covered majority change requires a new survey and new accreditation; for other changes, follow the accrediting organization's change-of-ownership process. State licenses are often non-transferable. California's home medical device retailer license is not transferable, Georgia's DME supplier license is non-transferable and tied to its location, and Tennessee requires a change of ownership to be reported 30 days ahead with a new application and fee. Build each state's process into the closing timeline.

Can a buyer take over a competitive bidding contract?

Not by buying it. CBIC's Contract Supplier Obligations fact sheet says "the sale of a competitive bidding contract is prohibited and is grounds for contract termination." CMS may allow a contract to transfer to a successor that merges with or acquires a contract supplier, but only if the successor meets all program requirements and assumes all of the contract's obligations, and the supplier must notify CMS while negotiating (42 CFR 414.422(d)). For Round 2028 bidders, CBIC's October 2026 fact sheet adds that a change of ownership before the close of the bid window must be reflected in the bid in Connexion by the close of the window; one after the window closes but before award is not used to evaluate the bid.

Which findings should change the deal?

1. A majority purchase inside the 36-month window, which makes the deal a new enrollment.
2. Unreported owners or managing employees, which can put the seller's enrollment at risk.
3. Accreditation that does not cover products the company bills.
4. State licenses missing for states the company ships to.
5. An insurance or bond lapse in the history.
6. An adverse legal action that raises the bond and may affect enrollment.

Who signs the filings after closing?

The buyer's authorized official signs the change of ownership or new enrollment application; only an individual with authority to bind the supplier legally and financially, and with an ownership or control interest, may do so (42 CFR 424.510(d)(3)). We prepare it, and once that official approves us as a PECOS surrogate, enter and submit it for the official to sign. We never hold the I&A login or PIN.

How do we support a DME acquisition?

Our Ownership Change Review ($995) pulls and reviews the enrollment, accreditation, bond, license and Medicaid records above, checks whether 424.551 applies, and lists the filings and state processes the deal triggers, with dates. If the buyer must enroll as a new supplier, the Medicare DMEPOS Enrollment Package ($1,295) and Accreditation Readiness ($2,495) apply; state licenses are $699 each ($899 in California, Florida, Georgia and Alabama). We are not lawyers or valuation advisers, and no one can promise that CMS or a state will approve a transfer. See the enrollment hub for the rules in one place.