The March 2026 MedPAC Report: Key Takeaways

Industry Insights

Overview

The March 2026 MedPAC Report to Congress does not single out durable medical equipment (DME) providers specifically. Yet for stakeholders across the DME value chain—suppliers, manufacturers, investors, and strategic partners—the report is one of the clearest signposts of where Medicare policy, spending pressure, and care delivery are heading.

The message is not subtle. Medicare is moving steadily toward home-based, outpatient, and Part B–driven care models while simultaneously tightening its expectations around efficiency, utilization, and demonstrated value. Medicare Advantage (MA) has become the dominant delivery and financing mechanism for Medicare beneficiaries, and with that shift comes more aggressive care management and standardization. Providers and services that appear to generate high margins without clear value justification are increasingly framed as sources of fiscal imbalance rather than innovation.

MEDICARE’S FINANCIAL REALITY

Medicare spending exceeded $1.1T in 2024 and is projected to nearly double by the mid‑2030s.

$1.1 Trillion

MedPAC opens its report with a sobering assessment of Medicare’s trajectory. Total Medicare spending surpassed $1.1 trillion in 2024 and is projected to double by the mid 2030s, driven by enrollment growth, service intensity, and rising Part B expenditures. Importantly, Medicare’s cost growth is no longer concentrated in hospital or institutional settings. Instead, it is increasingly tied to outpatient services, physician-administered care, home-based interventions, and related supplies.

This shift structurally favors DME. Equipment that enables care to move out of hospitals, shorten post-acute stays, and support chronic disease management at home aligns squarely with Medicare’s desired care setting. The implication is clear that DME’s relevance to Medicare is increasing, but so is scrutiny of Medicare spend across the board.

MEDICARE ADVANTAGE TRENDS

The most consequential theme running through the MedPAC report is the continued dominance of Medicare Advantage. As of 2025, roughly 55 percent of all Medicare beneficiaries are enrolled in MA plans, and penetration is even higher among populations with chronic conditions, respiratory disease, diabetes, and mobility limitations—precisely the populations that drive DME utilization.

MedPAC highlights that MA plans are paid materially more per beneficiary than traditional fee-for-service Medicare and are therefore under growing pressure to constrain downstream costs. To do so, plans rely heavily on utilization management tools: prior authorization, narrow networks, preferred vendor arrangements, and standardized care pathways.

For DME stakeholders, this represents a structural shift. Traditional Medicare coverage rules and fee schedules increasingly serve only as a reference point. Real market access is now determined by MA plan contracting decisions, network inclusion, and value propositions that go beyond simple product fulfillment. In this environment, DME suppliers are no longer passive recipients of referrals— they are managed care partners whose economics are negotiated and monitored.

More than half of beneficiaries are enrolled in Medicare Advantage— and penetration is highest among chronic populations.

55 %

POST-ACUTE CARE INSIGHTS

While much of the report focuses on skilled nursing facilities, home health agencies, inpatient rehabilitation facilities, and hospice providers, its findings have meaningful spillover effects for DME. MedPAC consistently points to persistently high margins in post-acute care, recommending payment reductions across multiple settings on the rationale that quality has not deteriorated despite declining utilization. This logic matters for DME because equipment utilization often mirrors post-acute patterns. Shorter facility stays, fewer therapy visits, and faster transitions home compress the window in which equipment is ordered, set up, and serviced. At the same time, alternative payment models such as ACOs and bundled payments push providers and MA plans to minimize downstream services wherever possible.

WORKFORCE RISKS

MedPAC devotes considerable attention to healthcare workforce shortages, particularly among home health aides and direct care staff. These shortages reinforce Medicare’s interest in shifting care away from labor-intensive settings and toward patient selfmanagement, remote monitoring, and technology-supported care models.

Products that demonstrably reduce caregiver burden, prevent hospitalizations, or support adherence will resonate with MA plans and integrated delivery systems. Conversely, equipment models that require frequent in-person touches or complex servicing become harder to defend in a constrained labor environment.

At the same time, workforce instability increases operational risk for DME suppliers themselves, putting pressure on setup times, patient education, and follow-up compliance.

WHAT MEDICARE WANTS

Self-management | Remote monitoring

Reduced caregiver burden

Fewer hospitalizations

WHAT BECOMES RISKY

Labor-intensive setups

Frequent in-person servicing

Complex patient education

High-touch maintenance models

CONSOLIDATION IS ACCELERATING—AND DME WILL NOT BE IMMUNE

The MedPAC report frames consolidation as an entrenched feature of modern healthcare. Providers consolidate to gain negotiating leverage, insurers integrate vertically to manage risk, and private capital seeks scale and efficiency across care settings. The Commission notes that consolidation tends to raise prices rather than improve quality, yet it acknowledges that scale increasingly determines market viability.

For the DME industry, the parallel is unmistakable. MA plans prefer to contract with fewer suppliers. Manufacturers benefit from standardized distribution relationships. Smaller, fragmented providers face increasing difficulty maintaining network access and negotiating favorable terms.

Whether through mergers, regional roll-ups, GPO participation, or manufacturer-aligned distribution models, scale is becoming less optional.

CONCLUSION

Taken together, the March 2026 MedPAC Report outlines a Medicare system that increasingly rewards integration, scale, transparency, and cost discipline. For DME stakeholders, the path forward is not about resisting these forces but aligning with them. Suppliers must deepen their capabilities and become essential partners across the healthcare continuum.

VGM Industry Insights provides data-driven analysis and trends within the durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) sector. Our focus areas include market trends, innovation, and strategic decision-making, helping stakeholders stay informed and competitive. We are committed to a forward-thinking approach, continuously monitoring industry developments to drive progress and innovation.

ALAN MORRIS SVP of Strategy and Business Development

Market Strategy Manager

TYLER COULANDER