Fact Sheets

ACCREDITATION OF DURABLE MEDICAL EQUIPMENT, PROSTHETICS, ORTHOTICS, AND SUPPLIES (DMEPOS) SUPPLIERS

Overview

Today the Centers for Medicare & Medicaid Services (CMS) issued a final rule that establishes requirements for accreditation of DMEPOS suppliers and lays the groundwork for timely implementation of the Medicare DMEPOS Competitive Bidding Program.  These new accreditation requirements will result in improved quality DMEPOS items and services for Medicare beneficiaries.

This final rule details the application process for independent accrediting organizations that would apply quality standards for all DMEPOS suppliers, including suppliers that would participate in the Medicare DMEPOS Competitive Bidding Program.  CMS expects to publish the quality standards in the near future.

The final rule also codifies a provision of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) that permits CMS to use contractors to assist in the implementation of the Medicare DMEPOS Competitive Bidding Program and describes CMS’ plans for a DMEPOS competitive bidding education and outreach campaign.

Background

Section 302(b) (1) of the MMA requires the Secretary to establish and implement the Medicare DMEPOS Competitive Bidding Program.    Suppliers in a competitive bidding area would submit bids for selected DMEPOS items, and CMS would use these bids to establish Medicare payment amounts for those items.  The purpose of the Medicare DMEPOS Competitive Bidding Program is to harness marketplace dynamics to create incentives for suppliers to provide quality items and services in an efficient manner at a reasonable cost.  Within five years of implementing the competitive bidding programs, savings to taxpayers are expected to exceed over $1 billion annually. 

On May 1, 2006, CMS issued a proposed rule to implement the Medicare DMEPOS Competitive Bidding Program and other issues (71 FR 25654).  The MMA requires competition under the program to be phased-in beginning in 2007 in 10 of the largest Metropolitan Statistical Areas (MSAs), in 80 of the largest MSAs in 2009, and in other areas after 2009.   To ensure timely implementation of the DMEPOS competitive bidding program, we chose to finalize certain provisions of the May 1, 2006 proposed rule in the final rule published today.  These provisions include accreditation of DMEPOS suppliers and DMEPOS competitive bidding implementation contractors.  This final rule also describes CMS’ plan for a DMEPOS competitive bidding education and outreach campaign.

Accreditation of DMEPOS Suppliers

Section 302(a)(1) of the MMA requires the Secretary to establish and implement quality standards for suppliers of certain items, including consumer service standards, to be applied by recognized independent accreditation organizations. Suppliers must comply with the quality standards in order to furnish any Durable Medical Equipment (DME), prosthetic device, prosthetic, or orthotic item or service for which Part B makes payment, and also in order to receive or retain a provider or supplier billing number used to submit claims for reimbursement for any such item for which payment can be made by Medicare.   The MMA explicitly authorizes the Secretary to establish the quality standards by program instruction or otherwise after consultation with representatives of relevant parties.  CMS expects to publish the quality standards in the near future.

All suppliers that furnish DME, prosthetic devices, prosthetics, and/or orthotics under Part B will need to meet quality standards and accreditation requirements. CMS hopes to minimize burden and duplication of effort for suppliers that have already been accredited, Medicare-certified, and/or licensed under state law, by taking into consideration any previous accreditation, certification, and/or licensure findings that indicate that quality standards are being met at the time the accreditation organization surveys the supplier.  CMS does not have the statutory authority to exempt any supplier that furnishes DME, prosthetic devices, prosthetics, and/or orthotics under Part B from meeting the quality standards and accreditation requirements. 

CMS is phasing-in the requirement for suppliers to become accredited consistent with the statutory phase-in of the Medicare DMEPOS Competitive Bidding Program.   Thus, those suppliers in the first phase of competitive bidding will need to be accredited in early 2007.  Those in the second phase will need to be accredited by the winter of 2007.  The statute does not establish further dates for implementation; thus, we will be providing future guidance as to the date by which all suppliers need to be accredited.

CMS is requesting accreditation organizations to prioritize their surveys based on the statutory requirements for phasing-in implementation of the Medicare DMEPOS Competitive Bidding Program.   The first priority will be to accredit suppliers in the MSAs for 2007. CMS expects to approve several accreditation organizations in order to meet the bidding dates.

CMS recognizes that becoming accredited imposes a burden on suppliers and has attempted to minimize the burden by taking the following actions:

1. 1.    Accreditation organization selection – We expect to select several accreditation          organizations, which will induce competition and assist in decreasing                             accreditation costs.
2. 2.   Plan for small business – During the application process we will ask accreditation organizations to include a plan that outlines their methodology to reduce accreditation fees for small/specialty suppliers and suppliers that have multiple locations.
3. 3.     Application of streamlined quality standards- We will encourage accreditation organizations not to expand on streamlined quality standards.
4. 4.   Streamlined processes – We have clarified in the final rule that the role of the accreditation organizations is to ensure compliance with the quality standards and that accreditation should not be contingent on using consultation services or purchasing manuals.
5. 5.   Unannounced survey process – Utilizing an unannounced survey process reduces “ramp-up” costs and survey preparation time.

Competitive Bidding Implementation Contractors

The MMA specifies that the Secretary may contract with appropriate entities to implement the Medicare DMEPOS Competitive Bidding Program.   It is our intention to contract with one or more Competitive Bidding Implementation Contractors (CBICs) to assist us with various tasks to implement this program efficiently.

We expect the CBIC(s) will conduct certain functions related to competitive bidding, such as preparing the request for bids (RFB), performing bid evaluations, selecting qualified suppliers, and setting single payment amounts for all competitive bidding areas.   In addition, the CBIC(s) would be responsible for overseeing an education program for beneficiaries, suppliers, and referral agents.  The CBIC(s) would monitor the program for effectiveness, access, and quality. 

Education and Outreach Campaign

Beneficiary Education

We expect to conduct an extensive education campaign to ensure that Medicare beneficiaries receive timely, accurate, reliable, relevant, and understandable information about the Medicare DMEPOS Competitive Bidding Program.   We expect to use resources such as 1-800-MEDICARE, www.medicare.gov, and other beneficiary-centered communications (e.g., publications, brochures, direct mail) and promote these information resources to educate consumers about DMEPOS Competitive Bidding.

Supplier Education

We are planning an extensive education campaign, including special bidders conferences, to provide information about the bidding process and to ensure that DMEPOS suppliers are fully aware of all aspects of the Medicare DMEPOS Competitive Bidding Program.   We will also be providing education to ensure that referral sources and staff who work for them are prepared to refer people with Medicare to DMEPOS contract suppliers.