Medicare Advantage

Medicare Competitive Bidding Program for DMEPOS Contracts in 2017

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In 2011, the Centers for Medicare and Medicaid Services (CMS) created the Medicare DMEPOS Competitive Bidding Program to allow more competition in the pricing of Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS). It’s a tool designed to help taxpayers and beneficiaries access the best quality equipment at the most reasonable prices. Round 1 of 2017 contract suppliers’ bids for Medicare’s (DMEPOS) program begins on January 1, 2017.

Years of Demonstration Project Testing

Under the Medicare Modernization Act (MMA) of 2003, the bidding program was to be done in stages over a period of several years using 10 metropolitan statistical areas beginning in 2007, but it was delayed in 2008 when the Medicare Improvements for Patients and Providers Act (MIPPA) made some changes. In 2009, CMS successfully tested the program. The second test in 2009 was again delayed by MIPPA until 2011 because it added authorization for mail-order bids.

The Affordable Care Act (ACA) increased the number of metropolitan statistical areas and specified that either DMEPOS competitive bidding, payment rate adjustments, or a competitive fee schedule must be implemented nationwide by 2016.

Medicare previously paid for durable medical equipment and other medical supplies with a pricing schedule containing supplier fees from the 1980s that both the Office of Inspector General and the Government Accountability Office of the Department of Health and Human Services (HHS) found to be extreme. Taxpayers and Medicare beneficiaries were paying more than they could afford for these items, creating the need for the DMEPOS Competitive Bidding Program.

Suppliers now must compete to become Medicare contract providers by submitting bids to deliver certain equipment in competitive bidding areas. The CMS installed the bidding program in 2011, then added programs to minimize abuse, waste and fraud, enabling them to cut out roughly $220 million per year in spending. Studies show that the program has had very little issue with questions or complaints and no adverse consequences to beneficiary health.

Contract Guidelines

All bids made by contract suppliers must meet CMS guidelines for quality, licensing regulations and certification by a CMS-approved organization. There are 534 locations serving Medicare beneficiaries in the contract bidding areas, and the Centers for Medicare and Medicaid Services has already executed 182 contracts, 92 percent of which have been submitted for 2017. The bid evaluation guarantees enough supplies to meet beneficiary demands. Thirty percent of the program must contain small suppliers with a gross revenue of $3.5 million or less.

Not every supplier has an accepted bid or is offered a contract. It’s possible to bid in subsequent rounds unless prohibited from involvement in the program. Contract supplier names and locations for each product category in each competitive bidding area can be found in the Supplier Directory.

Monitoring System

The program maintains that beneficiaries receive much-needed quality products without any negative impact on their health status. They compare the amount and length of hospital stays as well as the number of visits to the emergency room from competitive bidding areas to non-competitive bidding areas. CMS real-time claims monitoring and feedback surveys provide local on-site monitoring, and respond to questions and complaints about the application of the program that come directly from contract suppliers, beneficiaries and other participants.

Beneficiaries, suppliers and other health service providers can report any concerns about bidding implementation issues. All contract suppliers are required to submit reports that list detailed information about the products they offer to inform beneficiaries, caregivers and referring entities. The website for Competitive Bidding Implementation Contractors has a specific list of items in each medical product category.

2017 Events

On November 1, Medicare contract suppliers were announced for Round 1 in 2017, and supplier, referral entities and beneficiary education programs were revised. Contracts and fees for the Medicare DMEPOS Competitive Bidding Program, Round 1, will commence on January 1 of next year.

For more information, visit Medicare DMEPOS Competitive Bidding Program or view a detailed list of revisions to DMEPOS policies for 2017. The policies are also described in the proposed rule for Medicare ESRD PPS in 2017.