Competitive bidding program continues to maintain access and quality while helping to save Medicare millions

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FOR IMMEDIATE RELEASE
September 8, 2016

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Competitive bidding program continues to maintain access and quality while helping to save Medicare millions

Overview

The Centers for Medicare & Medicaid Services (CMS) today announced the new single payment amounts and began sending contract offers to successful bidders for Medicare’s Round 1 2017  Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program. These new payment amounts and contracts go into effect on January 1, 2017. This program has been an essential tool to help Medicare set appropriate payment rates for DMEPOS items and save money for beneficiaries and taxpayers while ensuring access to quality items.

Prior to the DMEPOS Competitive Bidding Program, Medicare paid for these DMEPOS items using a fee schedule that is generally based on historic supplier charges from the 1980s. Numerous studies from the Department of Health and Human Services Office of Inspector General and the Government Accountability Office have shown these fee schedule prices to be excessive, and taxpayers and Medicare beneficiaries bear the burden of these excessive payments.   

Under the Competitive Bidding Program, DMEPOS suppliers compete to become Medicare contract suppliers by submitting bids to furnish certain items in competitive bidding areas. Since implementation of the DMEPOS Competitive Bidding Program on January 1, 2011, CMS has saved approximately $220 million per year in the nine Round 1 metropolitan statistical areas (MSAs) due to competitive bidding and other CMS fraud, waste, and abuse initiatives. Health monitoring data indicate that the program implementation is going smoothly with few inquiries or complaints and no negative beneficiary health outcomes.   

The Round 1 Recompete contract period expires on December 31, 2016. Round 1 2017 contracts will become effective on January 1, 2017 through December 31, 2018.

Background

The Medicare DMEPOS Competitive Bidding Program was established by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“Medicare Modernization Act” or “MMA”) after the conclusion of successful demonstration projects. Under the MMA, the DMEPOS Competitive Bidding Program was to be phased in so that competition under the program would first occur in 10 MSAs in 2007. The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) temporarily delayed the program in 2008 and made certain limited changes. In accordance with MIPPA, CMS successfully conducted the supplier competition again in nine areas in 2009, referring to it as the Round 1 Rebid.

MIPPA also delayed the competition for Round 2 from 2009 to 2011 and authorized national mail-order competitions after 2010.  The Affordable Care Act of 2010 (ACA) expanded the number of Round 2 MSAs from 70 to 91 and specified that all areas of the country be subject to either DMEPOS competitive bidding or payment rate adjustments using competitively bid rates by January 1, 2016.

Competitive bidding contracts and pricing have been in place in Round 1 areas since January 1, 2011, and since July 1, 2013, in Round 2 areas. The national mail-order program for diabetes testing supplies was first implemented on July 1, 2013, with recompeted contracts and pricing being in place since July 1, 2016. Like Round 1 2017, Round 2 Recompete and the national mail-order recompete contracts will expire on December 31, 2018, at which point CMS will be implementing a consolidated round of competition to include all Round 1, Round 2, and national mail order competitive bidding areas.

Contract Award Process

The DMEPOS Competitive Bidding Program’s bid evaluation process ensures that there will be a sufficient number of suppliers to meet the needs of the beneficiaries living in a competitive bidding area. The new single payment amounts resulting from the competition replace the previous single payment amounts for the bid items in these areas. Small suppliers, those with gross revenues of $3.5 million or less, make up about 46 percent of the suppliers that will be offered contracts for Round 1 2017. All suppliers that are offered contracts went through a thorough vetting process and are accredited and meet financial and applicable licensing standards. 

CMS will now begin offering contracts to winning bidders. 1,523 contract offers will be made to 198 Round 1 2017 bidders. Of these offers, 97 percent are to bidders who currently furnish items in the awarded area or within the product category. The winning suppliers have 603 locations to serve Medicare beneficiaries in the competitive bidding areas. CMS expects to complete the contracting process in time to announce the contract suppliers in the fall of 2016. Bidders that are not offered contracts will be notified of the reasons why they did not qualify for the program when the contracting process is complete. Suppliers that are not contract suppliers for this round of the DMEPOS Competitive Bidding Program may bid in future rounds, unless they are precluded from participation in the program.

Additional information on the distribution of contract offers is available at the following Web site: www.dmecompetitivebid.com.

REAL-TIME MONITORING

Importantly, the program has maintained beneficiary access to quality products from accredited suppliers in all competitive bidding areas. Extensive real-time monitoring data have shown successful implementation with very few beneficiary complaints and no negative impact on beneficiary health status based on measures such as hospitalizations, length of hospital stay, and number of emergency room visits compared to non-competitive bidding areas. In addition to our real-time claims monitoring, CMS also requested feedback from beneficiaries through consumer satisfaction surveys conducted before and after the rollout of the program. CMS provides local, on-the-ground presence in each competitive bidding area through the CMS regional offices, local liaisons, and a Competitive Acquisition Ombudsman who closely monitors and responds to inquiries and complaints about the application of the program from beneficiaries who use items of DMEPOS under the program, contract suppliers who provide these items, and other stakeholders. There is also a formal complaint process for beneficiaries, caregivers, providers and suppliers to use for reporting concerns about contract suppliers or other competitive bidding implementation issues. In addition, contract suppliers are responsible for submitting reports identifying the brands of products they furnish, which is used to inform beneficiaries, caregivers, and referral agents. CMS will continue to employ the same aggressive program monitoring for future rounds.

ROUND 1 2017 PRODUCT CATEGORIES AND AREAS

The Round 1 2017 product categories are:

• Enteral Nutrients, Equipment, and  Supplies
• General Home Equipment and Related Supplies and Accessories
   o includes hospital beds and related accessories, group 1 and 2 support            surfaces, commode chairs, patient lifts, and seat lifts
• Nebulizers and Related Supplies
• Negative Pressure Wound Therapy (NPWT) Pumps and Related Supplies and Accessories
• Respiratory Equipment and Related Supplies and Accessories
  o includes oxygen, oxygen equipment, and supplies; continuous positive airway pressure (CPAP) devices and respiratory assist devices (RADs) and related supplies and accessories
• Standard Mobility Equipment and Related Accessories
  o includes walkers, standard power and manual wheelchairs, scooters, and related accessories
• Transcutaneous Electrical Nerve Stimulation (TENS) Devices and Supplies

For a list of the specific items in each product category, or for a list of the areas included in Round 1 2017, visit the Competitive Bidding Implementation Contractor website at www.dmecompetitivebid.com.

Round 1 2017 Timeline of Events

September 8, 2016     CMS announces new payment rates for Round 1 2017 and begins contracting process with winning suppliers

Fall 2016                     CMS announces the Medicare contract suppliers for Round 1 2017; intensifies supplier, referral agent, and beneficiary education program

January 1, 2017         Implementation of Medicare DMEPOS Competitive Bidding Program Round 1 2017 contracts and prices

ADDITIONAL INFORMATION

For additional information about the Medicare DMEPOS Competitive Bidding Program, please visit: http://www.cms.hhs.gov/DMEPOSCompetitiveBid/.