Recently back from two industry conferences, I thought I'd share some of the hot topics for 2025 in DME and how providers are thinking about the changes ahead. There are multiple challenges DME providers face, from shrinking reimbursement rates and more restrictive prior authorization requirements, to new compliance demands and rising administrative backlogs. At the same time, there are advantages on the horizon, particularly in the form of advanced technology and automation, which may prove to be the saving grace for this industry.

In this post, we’ll walk through the most important DME industry trends in 2025—including DME suppliers automation, Medicare/Medicaid DME processing, prior authorization automation for DME, DME billing automation, AI for the DME industry, DME digital transformation, and DME backlog reduction—and highlight how forward-thinking providers are using these shifts to drive operational efficiency.

Payment pressures and the return of competitive bidding

The Centers for Medicare & Medicaid Services has confirmed that the DMEPOS Competitive Bidding Program will resume in 2026 after a pause since 2021. The HHS FY 2026 Budget in Brief allocates $22 million to restart the program and describes competitive bidding as a strategic investment that saves taxpayer money while maintaining beneficiary access to affordable medical equipment. Trade coverage reached the same conclusion when HME News reported CMS’s plans in June 2025.

Industry groups warn the payment impacts could be significant. VGM & Associates notes that proposed bidding and pricing methodologies could push reimbursement lower for common DMEPOS categories. AAHomecare has likewise urged CMS to ensure sustainable rates and to strengthen bidder qualifications so that prices do not drop below viable levels.

Competitive bidding is not new. It has been part of Medicare policy for DMEPOS in multiple rounds since 2011. Reviews by the GAO documented how the program concentrates market share among contract suppliers and creates concerns for smaller providers, particularly in rural areas. The HHS OIG has also highlighted access risks in bidding regions.

On the broader fiscal context, reductions in federal health spending enacted in 2025 focus heavily on Medicaid. The Congressional Budget Office estimated nearly one trillion dollars in Medicaid reductions over ten years. For DME, cost control is showing up through multiple levers: competitive bidding, tighter prior authorization, and more stringent documentation rules.

Bottom line: Competitive bidding may be coming back in 2026, and providers will need efficiency strategies to remain sustainable under lower payment rates.

Prior authorization remains a top operational bottleneck

Prior authorization continues to be one of the largest administrative hurdles for DME suppliers. A 2025 analysis by the Kaiser Family Foundation found that Medicare Advantage insurers made nearly 50 million prior authorization determinations in 2023 and denied 6.4 percent of requests. Of those denials that were appealed, about 82 percent were overturned, showing that many initial denials could have been approved with proper documentation and persistence.

Medicaid managed care plans deny requests at higher rates. A 2025 KFF review reported that Medicaid MCOs denied 12.5 percent of prior authorization requests, more than double the Medicare Advantage rate. Most Medicaid beneficiaries do not appeal, which means many never receive medically necessary equipment.

The burden on providers is growing. More and more DME items require prior authorization. While some payers have moved to online portals, these systems are often slow and require constant status checks because many requests do not generate immediate approvals. Sweeping portals for updates consumes staff time, while appealing denials is so tedious that most suppliers do not pursue it. The irony is that appeal success rates are high, which suggests providers could secure more approvals and revenue if they had the bandwidth to contest denials.

Policy changes aim to improve the process. The CMS Interoperability and Prior Authorization Final Rule requires payers to shorten turnaround times and provide specific denial reasons by 2026. In mid-2025, HHS announced a pledge by major insurers to reduce the volume of services subject to prior authorization and to expand real-time determinations. Still, until those changes are fully implemented, suppliers will carry the administrative burden.

Bottom line: Prior authorization automation for DME is becoming a necessity, not a nice-to-have.

Technology, automation, and outsourcing reshape operations

At a recent conference, a DME owner told me his team has built more than 60 “bots,” most of them simple RPA tools rather than AI. Each bot handles a specific task such as intake checks, document routing, eligibility verification, or portal sweeps for prior authorization updates. Together, these bots replace what he estimates would require about 40 additional employees. They built everything in-house. It is a clear example of how custom workflows can let a provider run a much larger business with the staff it usually takes to run a smaller one.

Even CMS is preparing to use AI. The agency plans to pilot the WISeR model in 2026 to apply artificial intelligence to Medicare claims review for DME. The goal is to reduce unnecessary services. Many suppliers are concerned that denials could rise unless documentation is complete and accurate, which reinforces the need for strong intake, rule validation, and audit trails.

From my conversations across both conferences, many providers are not waiting. They are adopting automation to improve throughput, reduce errors, and shorten cycle times. Several leaders also described partnering with revenue cycle specialists to handle submission, follow ups, and appeals so internal teams can focus on patient-facing work while billing and collections are managed with consistent processes and dedicated oversight.

Bottom line: The providers who combine automation, AI, and outsourcing are proving they can handle higher volumes with fewer resources, positioning themselves as the most competitive players in the DME industry.

DME 2026: From challenges to opportunities

The DME industry is facing significant challenges in 2025, from shrinking margins and tougher prior authorization requirements to new compliance rules. But the story is not only about pressure. It is also about opportunity. Providers are proving that with the right combination of automation, outsourcing, and innovation, they can overcome bottlenecks and run leaner, more resilient businesses. The tools that once seemed out of reach—bots, AI systems, and digital workflows—are now helping suppliers manage today’s demands and prepare for tomorrow’s.

While challenges remain, the future of DME is also filled with exciting new opportunities to deliver better patient care with greater efficiency.