The 36-Month Ownership Rule for DMEPOS Suppliers

Buying an enrolled DME company used to be a way to skip the line: the buyer reported the change of ownership, and the supplier number kept working. CMS closed that path for recent enrollments. The CY2026 home health final rule (CMS-1828-F, 90 FR 55342) added 42 CFR 424.551, effective January 1, 2026, and paragraph (h) of 424.57 now points every DMEPOS supplier to it.

What does 424.551 say?

A change in majority ownership "occurs when an individual or organization acquires more than a 50 percent direct ownership interest in a DMEPOS supplier during the 36 months following the DMEPOS supplier's initial enrollment into the Medicare program or the 36 months following the DMEPOS supplier's most recent change in majority ownership (including asset sale, stock transfer, merger, and consolidation)" (424.551(a)).

When one happens, "the Medicare billing privileges do not convey to the new owner." The prospective owner must instead:

1. "Enroll in the Medicare program as a new DMEPOS supplier under the provisions of § 424.510," and
2. "Undergo a survey by, and obtain a new accreditation from, a CMS-approved DMEPOS accrediting organization" (424.551(b)).

How is the 36 months counted?

From the later of two dates: the effective date of the supplier's initial Medicare enrollment, or the date of its most recent change in majority ownership. A company that changed hands two years ago is inside a new 36-month window even if it has been enrolled for a decade.

The rule also counts in steps. It "includes an individual or organization that acquires majority ownership in a DMEPOS supplier through the cumulative effect of asset sales, stock transfers, consolidations, or mergers during the 36-month period." Buying 30 percent this year and 25 percent next year is a majority change. The test is direct ownership of more than 50 percent.

What are the exceptions?

Three, in 424.551(c):

• the supplier's parent company is undergoing an internal corporate restructuring, such as a merger or consolidation;
• the owners are changing the business structure, for example from a corporation to a partnership or from an LLC to a corporation, "and the owners remain the same";
• an individual owner dies.

A sale to a new owner, even a family member, is not on the list.

What does "enroll as a new supplier" mean in practice?

Everything a startup goes through. CMS's moratorium notice (CMS-6099-N) described it this way: the supplier's "current enrollment is terminated," and its "new enrollment is an initial enrollment no less than if the supplier had never enrolled in Medicare before." That means:

• a new accreditation survey and accreditation before the 855S, now on the annual cycle;
• a full CMS-855S with the initial application fee ($750 in 2026);
• a surety bond, plus elevated amounts for any adverse legal actions;
• high-risk screening with fingerprints of every 5 percent owner and a site visit (424.518(c));
• no billing under the new enrollment until the contractor assigns a supplier number, and payment only for items furnished on or after that date (424.57(b)(2)).

It also means exposure to any moratorium. CMS said the 2026 medical supply company moratorium "would prohibit the supplier in this § 424.551 situation from reenrolling," because the exemption for ownership changes in 424.570 does not apply when the rule requires an initial enrollment.

What about a sale outside the 36 months?

The older rules still apply, and they are not light. The ownership change must be reported within 30 days (424.57(c)(2)). The buyer submits a $50,000 bond "effective from the date of the purchase or transfer in order to exercise billing privileges as of that date"; if the bond is effective later, the new billing privileges start on the bond's effective date (424.57(d)(2)(ii)). Reporting any new owner puts the supplier in the high screening category, with fingerprints (424.518(c)(1)(vii)). The 855S asks for a dated bill of sale.

And accreditation never moves on its own. "Accreditation doesn't automatically transfer after a merger, acquisition, or sale. You must notify us, your NPEC, and your AO" (MLN905710). CMS's Q&A sets the deadline at 30 days from the effective date of any change in ownership and says "An accreditation survey is required for all changes in majority ownership." A change that also changes the TIN means surveying, accrediting and enrolling as a new supplier, according to the same Q&A.

What should a buyer check before signing?

1. The enrollment effective date for every location, from PECOS, and the date of any prior majority change. Ask for the history in writing.
2. The ownership chain over the last 36 months, including earlier partial sales that could add up with yours.
3. Whether an exception genuinely applies. An internal restructuring with the same owners is not the same as a sale to a related company.
4. Adverse legal actions that will raise the bond and must be disclosed.
5. Accreditation status and the next survey window for each location.
6. State licenses, which are often non-transferable and need new applications on a sale.
7. Moratorium status if the supplier is a medical supply company type and the deal will require a new enrollment.

Our post on enrollment diligence before you buy a DME company covers the deal side.

How do we help with an acquisition?

An Ownership Change Review is $995 (see pricing). We reconstruct the enrollment and ownership timeline, apply 424.551 and its exceptions, map the accreditation, bond and license steps, and tell you before closing whether the deal means a change of information or a new enrollment. If it is a new enrollment, the Medicare DMEPOS Enrollment Package ($1,295) and Accreditation Readiness ($2,495) apply. Your authorized official signs every application.