Health Law Daily Wrap Up, AGENCY NEWS— DMEPOS Suppliers Awarded Contracts for Round 2 of the Competitive Bidding Program, (Apr 10, 2013)

By Jenny M. Burke, JD MS

Nearly 800 Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) suppliers have been awarded contracts as part of Round 2 of the Medicare Competitive Bidding Program to provide certain medical equipment to beneficiaries in 91 communities across the country, CMS announced. Another 18 suppliers have accepted contracts to provide mail-order diabetic testing supplies at competitively bid prices nationwide. In its first year of implementation, this program has resulted in savings of over $200 million in nine areas, and it is expected to save the Medicare Part B Trust Fund an estimated $25.7 billion between 2013 and 2022. CMS expects the savings to be passed on to beneficiaries, who are expected to save an estimated $17.1 billion as a result of lower coinsurance and premium payments.

“The expansion of the competitive bidding program means more beneficiaries will benefit from fair pricing on included equipment and supplies,” said CMS Acting Administrator Marilyn Tavenner. “Each of these contract suppliers has met our stringent standards, so beneficiaries can be assured they will receive their equipment and supplies from accredited, qualified suppliers at significantly lower prices.”

There were 13,126 Round 2 contracts awarded, and the suppliers have 2,988 locations to serve Medicare beneficiaries in these competitive bidding areas, starting July 1, 2013. The National Mail-order Program contract suppliers have 52 locations to serve the entire country through mail or other home delivery. Every contract supplier must comply with Medicare enrollment rules, be accredited, meet applicable licensing requirements, and meet financial standards. According to CMS, 90 percent of contract suppliers are already established in the competitive bidding area, the product category, or both. Smaller suppliers, which are those with gross revenues of $3.5 million, make up about 63 percent of the Round 2 contract suppliers.

“CMS’s top priority is to ensure beneficiaries maintain access to high quality equipment and supplies at a fair price,” said Jonathan Blum, deputy CMS administrator and director of CMS’s Center for Medicare. “Medicare contract suppliers signed contracts that included protections to ensure that they will furnish beneficiaries with necessary equipment and quality customer service. And, our extensive monitoring in Round One showed that competitive bidding reduced spending without jeopardizing access to medical equipment and supplies.”

The DMEPOS Competitive Bidding Program was established to promote competition among suppliers who operate in a particular competitive bidding area (CBA). The DMEPOS suppliers must submit a bid for selected products, which are submitted electronically through a web-based application process and required documents are mailed. The bids are evaluated based on the supplier’s eligibility, its financial stability and the bid price. Supplier contracts are then awarded to those who offer the best price and meet applicable quality and financial standards. To participate, contract suppliers must agree to accept assignment on all claims for bid items and are then paid the bid price amount. The intent of the program is to improve the effectiveness of the Medicare methodology for setting DMEPOS payment amounts, thereby saving money.

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