Fact Sheets

997 Contracts Awarded for the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies Competitive Bidding Program Round 1 Recompete

997 Contracts Awarded for the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies Competitive Bidding Program
Round 1 Recompete

OVERVIEW

The Centers for Medicare & Medicaid Services (CMS) today announced the Round 1 Recompete contract suppliers for the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program.  This program is an essential tool to help Medicare set appropriate payment rates for DMEPOS items and save money for beneficiaries and taxpayers. Traditionally, Medicare pays for 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.  The DMEPOS Competitive Bidding Program is projected to save $25.8 billion for Medicare over 10 years and save another $17.2 billion for beneficiaries through reduced coinsurance and the downward effect on premiums.  

Under the program, DMEPOS suppliers compete to become Medicare contract suppliers by submitting bids to furnish certain items in competitive bidding areas.  The new, lower single payment amounts resulting from the competition replace the fee schedule amounts for the bid items in these areas. The first round of the program, which went into effect in nine areas of the country on January 1, 2011, resulted in average savings of 35 percent below the fee schedule rates and has saved more than $400 million in the first two years of operation while preserving beneficiary access to quality items.  

CMS is required by law to recompete contracts for the DMEPOS Competitive Bidding Program at least once every three years. The Round 1 Rebid contract period for all product categories except mail-order diabetic supplies expires on December 31, 2013. The supplier bidding period for the Round 1 Recompete concluded on December 14, 2012; the Round 1 Recompete contracts and prices are scheduled to go into effect on January 1, 2014 in the same nine competitive bidding areas as the Round 1 Rebid. The single payment amounts from the supplier competition for the Round 1 Recompete are projected to result in average savings of 37 percent as compared to the current fee schedule prices.  

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 Metropolitan Statistical Areas (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.

The Round 1 Rebid contracts and prices became effective on January 1, 2011 in the nine areas.  CMS deployed a wide range of resources to monitor the program, including beneficiary surveys, active claims surveillance and analysis, contract supplier reporting, and tracking and analysis of complaints and inquiries.  To date, monitoring data have shown a successful implementation with very few complaints and no negative impact on beneficiary health status.  Health outcomes data are available on the CMS website at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/DMEPOSCompetitiveBid/Monitoring.html.

MIPPA also delayed the competition for Round 2 from 2009 to 2011 and authorized national mail-order competitions after 2010.  The Affordable Care Act 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 2016.  The Round 2 contracts and prices became effective on July 1, 2013 in 91 major metropolitan areas.  Round 2 of the program is estimated to save an average of 45 percent compared to the fee schedule rates for certain DMEPOS items.  In addition, the national mail-order program for diabetic testing supplies contracts and prices became effective on July 1, 2013.  The national mail-order program is estimated to save an average of 72 percent on diabetic testing supplies compared to the fee schedule rates.

CONTRACT AWARD PROCESS

For the Round 1 Recompete, CMS has awarded 997 DMEPOS competitive bidding program contracts to 282 suppliers.  The Round 1 Recompete suppliers have 620 locations to serve Medicare beneficiaries in these competitive bidding areas.  All contract suppliers are required to comply with Medicare enrollment rules, be accredited, meet applicable licensing requirements, and meet financial standards.  97 percent of contract suppliers are already established in the competitive bidding area, the product category, or both.   

The bid evaluation process ensures that there will be a sufficient number of suppliers, including small suppliers, to meet the needs of the beneficiaries living in the competitive bidding areas.  CMS is required to include small supplier protections for the program and instituted a 30 percent small supplier target in each competitive bidding area.  For the Round 1 Recompete, small suppliers, those with gross revenues of $3.5 million or less as defined for the program, make up about 58 percent of the contract suppliers.  

Bidders that were not offered contracts are being notified by mail of the reasons they did not qualify for the program and how they can inquire about their bid status. Suppliers that are not contract suppliers for this round of the DMEPOS Competitive Bidding Program may bid in future rounds.

A list of contract suppliers is available at www.dmecompetitivebid.com.

REAL-TIME MONITORING

The program has maintained beneficiary access to quality products from accredited suppliers in the Round 1 Rebid 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 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 a local, on-the-ground presence in each competitive bidding area through the CMS regional offices and local ombudsmen, who closely monitored implementation of the program.  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 quarterly reports identifying the brands of products they furnish, which is used to inform beneficiaries, caregivers, and referral agents.  Finally, CMS has appointed a Competitive Acquisition Ombudsman who responds to complaints and inquiries from beneficiaries and suppliers about the application of the program and issues an annual Report to Congress.  CMS will employ the same aggressive monitoring program for the Round 1 Recompete.

ROUND 1 RECOMPETE PRODUCT CATEGORIES AND AREAS

The Round 1 Recompete includes two program improvements: additional competitive bid items and new product category groupings of similar items and accessories.  These process improvements will provide larger, more consolidated product categories that promote one-stop shopping for beneficiaries, simplify the referral process and enhance opportunities for winning suppliers.  

The Round 1 Recompete product categories are:

• Respiratory Equipment and Related Supplies and Accessories
  • includes oxygen, oxygen equipment, and supplies; continuous positive airway pressure (CPAP) devices and respiratory assist devices (RADs) and related supplies and accessories; and standard nebulizers
• Standard Mobility Equipment and Related Accessories
  • includes walkers, standard power and manual wheelchairs, scooters, and related accessories
• General Home Equipment and Related Supplies and Accessories
  • includes hospital beds and related accessories, group 1 and 2 support surfaces, transcutaneous electrical nerve stimulation (TENS) devices, commode chairs, patient lifts, and seat lifts
• Enteral Nutrients, Equipment and Supplies
• Negative Pressure Wound Therapy Pumps and Related Supplies and Accessories
• External Infusion Pumps and Supplies

A list of the specific items in each product category is available on the Competitive Bidding Implementation Contractor (CBIC) website at www.dmecompetitivebid.com.

Lists of the nine Round 1 Recompete competitive bidding areas (CBAs) and the specific ZIP codes in each CBA are also available on the CBIC website.

TIMELINE OF EVENTS

ADDITIONAL INFORMATION

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

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