Publish Date : 04-Nov-2016
The Centers for Medicare & Medicaid Services (CMS) today announced the Round 1 2017 contract suppliers for Medicares Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program. This program has been in effect since 2011 and is an essential tool to help Medicare set appropriate payment rates for DMEPOS items, 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 program, DMEPOS suppliers compete to become Medicare contract suppliers by submitting bids to furnish certain items in competitive bidding areas (CBAs). 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, and Round 1 2017 contracts will become effective on January 1, 2017, through December 31, 2018.
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.
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 2016.
Competitive bidding contracts and pricing have been in place in Round 1 areas since January 1, 2011, with the current Round 1 Recompete contracts and prices being in place since January 1, 2014. Round 1 2017 will be implemented on January 1, 2017.
For Round 1 2017, CMS has executed 182 DMEPOS competitive bidding program contracts (92 percent of contracts offered). The Round 1 2017 contract suppliers have 534 locations to serve Medicare beneficiaries in these CBAs. Contract suppliers are required to meet CMS quality standards, meet applicable state licensure requirements, and be accredited by a CMS approved independent accreditation organization.
The DMEPOS Competitive Bidding Programs 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 CBAs. In fact, 92 percent of contract suppliers are already established in the CBA, the product category, or both. CMS was required to include small supplier protections for the program, and instituted a 30 percent small supplier target in each CBA. For Round 1 2017, 93 percent of small suppliers, those with gross revenues of $3.5 million or less as defined for the program, accepted their contract offer.
Bidders that were not offered contracts were notified of the reason(s) why they did not qualify for the program. All suppliers that did not win contracts were provided a targeted period to ask questions or express concerns about the reason(s) why they were not awarded a contract. Suppliers that are not contract suppliers for this round of the Program may bid in future rounds, unless they are precluded from participation in the program.
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