HR1 clears Senate: DMEPOS industry faces cuts, Medicaid shake-up & new challenges

WASHINGTON – The Senate cleared the One Big Beautiful Bill Act, HR1, in a 51–50 vote, with Vice President JD Vance casting the tie-breaking vote. The bill now returns to the House of Representatives, where lawmakers must decide whether to adopt the Senate’s revised version or negotiate further changes before it can reach the president’s desk.  

Among the bill’s many provisions, several have significant implications for the DMEPOS industry, particularly through changes to Medicare and Medicaid. 

VGM & Associates provided this high-level analysis: 

Medicare reimbursement cuts 

The legislation includes a 4% across-the-board cut to Medicare reimbursement rates, including those for home medical equipment (HME). These reductions are tied to the PAYGO (Pay-As-You-Go) rules, which automatically trigger spending cuts when legislation increases the federal deficit. This could place additional financial strain on providers already operating on thin margins.  

Medicaid overhaul 

The bill imposes new work or education requirements for Medicaid enrollees aged 19–64. According to the Congressional Budget Office, these changes could result in millions losing coverage over the next decade. For the DMEPOS industry, this may translate into a decline in demand for equipment and services among Medicaid beneficiaries.  

Broader financial impact 

The bill’s overarching goal is to curb federal health care spending, with projected cuts to Medicaid, SNAP and clean energy programs helping offset tax reductions and defense spending increases. For DMEPOS providers, this could mean tighter state budgets, reduced reimbursement rates, and increased administrative burdens.  

“These policy shifts could potentially present serious challenges for both providers and patients who depend on DMEPOS products for daily living and chronic care management,” VGM stated. “Providers may need to reassess their business models, while patients—especially those in vulnerable populations—could face new barriers to accessing essential equipment.”  

• Related: Will they or won’t they? Possibility of Medicaid cuts complicate payer relations, reimbursement reform