October 2026 - Newsletter

Beginning October 15, 2026, CMS will implement a new one-year Probationary Prior Authorization (PPA) process for newly enrolled Medicare DMEPOS suppliers and suppliers undergoing certain changes of ownership (CHOW). The probationary period begins when the supplier submits its first claim and requires prior authorization as a condition of payment for designated DMEPOS items. New locations enrolling separately and receiving a new PTAN may also be treated as newly enrolled suppliers.

The current PPA list includes 40 HCPCS codes: 38 orthoses and two osteogenesis stimulators. These include certain back, hip, knee, ankle, shoulder, elbow, wrist, and walking-boot orthoses, as well as electrical non-invasive osteogenesis stimulators. Suppliers subject to PPA must submit a prior authorization request and receive a provisional affirmation before submitting the associated claim for payment.

DMEPOS suppliers planning an ownership change, acquisition, new location, or new Medicare enrollment should understand whether the transaction may trigger the PPA requirements and review whether they furnish any of the affected items. CMS explains that a CHOW can include a purchase, acquisition, merger, consolidation, lease, transfer, certain ownership/business-structure changes, TIN changes, or transfer of assets associated with the Medicare business. Ultimately, CMS determines through the enrollment process whether the transaction constitutes an applicable CHOW.

Starting October 15, 2026, CMS will require probationary prior authorization for certain DMEPOS items billed by newly enrolled suppliers and suppliers undergoing certain changes of ownership.

This program is authorized under Section 1866(j)(3) of the Social Security Act and 42 CFR §424.527, which establishes a one-year probationary period for newly enrolled and ownership-changing DMEPOS suppliers. This probationary period begins when a supplier submits their first bill for one of the DMEPOS items on the Probationary Prior Authorization List (PDF).

Prior authorization allows suppliers to ensure that a DMEPOS item meets applicable Medicare coverage, payment, and coding rules before items are delivered. This advance review helps to protect the Medicare Trust Fund from improper payments while ensuring that beneficiaries can receive the DMEPOS items they need in a timely manner.

CMS is adding eight HCPCS codes to the Required Prior Authorization List for DMEPOS. Beginning October 28, 2026, prior authorization will be required nationwide for L0456, L0457 and L0486 (thoracic-lumbar-sacral orthoses), L1833 (knee orthosis), E0194 (air-fluidized bed), and K0005 (ultralightweight wheelchair).

Two additional upper-limb orthoses, L3761 (elbow orthosis) and L3916 (wrist-hand orthosis), will be phased in geographically. Prior authorization begins October 28, 2026, in California, Florida, Michigan, and New York; expands January 26, 2027, to additional states, including Pennsylvania; and becomes nationwide April 26, 2027.

Suppliers furnishing these products should review their prior authorization processes now and ensure staff understand the effective dates applicable to their state.

FDA has extended certain Drug Supply Chain Security Act (DSCSA) exemptions for qualifying small dispensers through November 27, 2027, providing an additional year for smaller pharmacies to prepare for certain enhanced drug distribution security requirements.

For purposes of the exemption, FDA considers a dispenser "small" if, as of November 27, 2026, the company that owns the dispenser has 25 or fewer full-time employees who are licensed pharmacists or qualified pharmacy technicians. This can include independent pharmacies that meet the employee threshold. Qualifying small dispensers do not need to submit a request or notification to FDA to rely on the exemption.

The extension provides additional time but pharmacies should continue preparing for full DSCSA compliance. This includes evaluating systems and processes needed for interoperable, electronic tracing of prescription drugs at the package level and working with trading partners and technology providers to address remaining implementation needs.

Chikungunya vaccine (Ixchiq; Valneva), meant to protect against a virus encountered in tropical and subtropical areas of Asia and Africa, is being taken off the U.S. market in response to ongoing safety concerns. Multiple reports of chikungunya-like illness among recipients and one death due to vaccine-related encephalitis prompted the agency to suspend Ixchiq's biologics license last August. It also recently paused the investigational new drug application for a post-marketing study on a clinical hold after a separate, serious adverse event was reported in an individual overseas who received three concomitant vaccines, including Ixchiq. As FDA's investigation deepens, manufacturer Valneva has agreed to end the availability of the vaccine in the United States.

The Food and Drug Administration is investigating reports of adverse reactions consistent with endotoxin exposure in at least 30 patients linked to compounded IV glutathione products. The glutathione was labeled as dietary supplement-grade, which is not appropriate in compounding injectable drugs. It was compounded by different pharmacies, all obtaining their glutathione (Lot #229536) from Medisca Inc. The agency is urging compounders to immediately discontinue use of dietary supplement-grade glutathione in sterile injectables and to notify affected customers.

FDA is taking steps to support the availability of estradiol transdermal patches, the demand for which spiked after the agency removed a product warning related to breast cancer, cardiovascular disease, and dementia. The November 2025 label change updated patients and providers about the risk profile and potential benefits of estradiol used to manage hot flashes, bone loss, and other symptoms associated with menopause. As interest in the intervention returned, patients reported difficulty securing the patches. Drugmakers are adding manufacturing shifts and specialized equipment, increasing batch sizes, and otherwise prioritizing estradiol patch production. For its part, FDA has been working with the companies to boost production through accelerated review of related submissions and other measures. The supply of estradiol patches has nearly doubled over the last year as a result of these efforts, but FDA assures that it will continue monitoring the situation. In the meantime, patients who have trouble obtaining their usual patch should keep checking with the pharmacy for changes in availability, speak directly with the pharmacist, who can help identify potential substitute products, and reach out to their health care provider for alternatives.

The US Court of Appeals for the Seventh Circuit affirmed the dismissal of a challenge to the Arkansas Insurance Department Rule 128. It was issued by the Insurance Commissioner under a state law requiring health plans and their PBMs to reimburse pharmacies at no less than their acquisition cost plus a professional dispensing fee of at least $10.50 to support fair pharmacy reimbursement and maintain network adequacy.

Governor Matt Meyer (D) signed into law SB 271, PBM reform legislation with wide-ranging provisions. The new law provides audit protections for pharmacies, limiting audits to no more than once every 12 months, setting parameters for wholesale invoice audits, and requiring audit costs to be borne by the PBM. It also strengthens requirements for appeals processes, including how an unsuccessful appeal with the PBM can be taken to the Department of Insurance. SB 271 has new provisions to protect pharmacies from PBM retaliation for appeals and complaints and prohibits PBMs from amending contracts without providing 60 days’ notice. It also prohibits requiring pharmacies to dispense a therapeutically equivalent or therapeutically alternative drug that costs the enrollee more out-of-pocket than the prescribed drug, unless the substitution is made for medical reasons.

A Maryland-based long-term care pharmacy agreed to pay more than $5.3 million to resolve allegations that it violated the False Claims Act by billing Medicare and Medicaid for prescription drugs without valid prescriptions. According to DOJ, the alleged conduct occurred between January 2015 and March 2021 and involved drugs dispensed to assisted-living residents in multiple states. The settlement resolves allegations only; there was no determination of liability.

Compliance takeaway: The case is a good reminder that prescription validity and supporting documentation are not simply dispensing requirements, they can also have significant federal reimbursement and False Claims Act implications.

CMS recently barred 11 medical supply companies associated with more than $3.4 billion in suspected fraudulent billing during 2025 and 2026 from receiving future Medicare Advantage Part C and Part D payments. CMS reported allegations including billing for beneficiaries who were deceased and equipment beneficiaries said they never requested or received. Four of the suppliers had previously been revoked from Original Medicare and subsequently billed Medicare Advantage plans.

The action comes alongside a September HHS-OIG report identifying gaps in DMEPOS supplier screening within Medicare Advantage. OIG found that out-of-network suppliers generally receive fewer screening checks and that not every DMEPOS supplier billing Medicare Advantage is enrolled in Medicare. OIG recommended stronger screening and that all DMEPOS suppliers billing Medicare Advantage be required to enroll in Medicare, or that CMS seek authority to impose such a requirement. CMS concurred with or said it would consider the recommendations.

Compliance takeaway: CMS and OIG are signaling continued scrutiny of DMEPOS enrollment, supplier legitimacy, beneficiary authorization, documentation, and billing—particularly within Medicare Advantage.

The U.S. Department of Justice and DEA announced a $50 million settlement with Walmart to resolve allegations that its pharmacies violated the Controlled Substances Act by filling thousands of invalid prescriptions for opioids and other controlled substances. According to the government’s complaint, some of Walmart’s compliance personnel and pharmacists allegedly continued to fill prescriptions despite information suggesting that certain prescribers were operating improperly and despite reports highlighting concerns about prescription validity. The settlement resolves these allegations without further litigation and includes a memorandum of agreement with the DEA requiring Walmart to implement additional compliance measures, such as establishing a hotline for employees and patients to report suspected illegal dispensing of controlled substances, monitoring dispensing patterns for potential irregularities, and developing procedures to evaluate prescribers suspected of unlawful prescribing.

Compliance takeaway: Pharmacists share responsibility for making sure every controlled substance prescription is issued for a legitimate medical purpose. When something about a prescriber or prescription raises a concern, document it, escalate it and resolve it before dispensing.

The Trump administration broadened its voluntary Most Favored Nation pricing initiative by securing agreements with nine more drugmakers, bringing total participation to 26 pharmaceutical manufacturers. The White House fact sheet states that these 26 agreements cover 89 percent of the branded drug market.

Under these agreements, companies will offer undisclosed Medicaid discounts aimed at aligning certain U.S. drug prices more closely with lower international prices. However, industry observers note that these deals may exempt participating manufacturers from forthcoming Medicare drug pricing pilot programs, potentially leaving smaller and midsize companies to bear the impact of mandatory pricing reforms. As a result, questions are emerging about the overall savings potential, legal viability, and long-term effectiveness of the administration’s broader drug pricing strategy, particularly if major manufacturers are excluded from future models intended to lower Medicare spending.

Independent Pharmacy Cooperative (IPC) has acquired USave Pharmacy Group, effective September 1, 2026, combining two organizations dedicated to supporting independent community pharmacies. Founded more than 40 years ago, USave has provided pharmacy owners with purchasing opportunities, peer collaboration, and advocacy designed to help locally owned pharmacies succeed. IPC said the acquisition will preserve USave's identity, relationships, and community-focused approach while expanding access to additional resources and opportunities. The organizations have maintained a collaborative relationship since 2017, when IPC began connecting USave pharmacies with its purchasing and support services. IPC President and CEO, Marc Essensa, noted that the acquisition is intended to strengthen and preserve independent pharmacy ownership, while USave leadership noted that members will retain the aspects of the organization they value while benefiting from IPC's broader capabilities.