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DME Competitive Bidding Program Round Two Begins July 1, 2013

As of July 1, 2013, 799 suppliers will participate in Round 2 of the Competitive Bidding Program (CBP) for Medicare Durable Medical Equipment Prosthetics, Orthotics, and Supplies (DMEPOS), offering medical equipment and supplies to Medicare beneficiaries in the United States. The CBP has been in effect for one year in nine areas, and, according to the Centers for Medicare & Medicaid Services (“CMS”), has already resulted in $202 million in savings.

The CBP was established under Section 302 of the Medicare Modernization Act of 2003. Section 302 requires all DMEPOS entities within selected areas to compete to become Medicare suppliers by submitting bids to furnish equipment and supplies. The lower bids resulting from the competition replace the old Medicare DMEPOS fee schedule amounts for the bid items. Under the Act, the CBP must be phased in. Round 1 of the CBP occurred in 10 areas in 2007. The program was then implemented on July 1, 2008 for two weeks until the contracts were terminated by the Medicare Improvements for Patients and Providers Act of 2008. The program began again in 2009, as the Round 1 Rebid.

CMS granted 13,126 Round 2 DMEPOS CBP contracts to 799 suppliers, which collectively have 2,988 locations in 91 established communities across the United States. In addition to the 2,988 locations, the National Mail-order Program suppliers have 52 locations and have been contracted to serve the entire country by delivery. All suppliers must comply with Medicare standards. The Affordable Care Act expanded the program to require that all areas of the country are subject either to DMEPOS competitive bidding or payment rate adjustments using competitively bid rates by 2016.

CMS is required by law to recompete contracts for the CBP at least every three years. The contract period for the Round One Rebid expires on December 31, 2013, and CMS will be conducting the Round One Recompete in the same areas as the original Round One Rebid.

CMS expects the CBP to save $25.7 billion for the Medicare Part B Trust Fund between 2013 and 2022. In addition, CMS expects beneficiaries will save $17.1 billion, due to lower premium payments and co-insurance rates.

Beneficiaries living in one of the 91 communities participating in the CBP will be required to use a DME supplier from CMS’ list of approved vendors. Although DME suppliers argue that the CBP hurts small business by forcing suppliers to price DMEPOS too low, CMS claims that beneficiaries will see average prices that are 45 percent lower than what Medicare currently pays for the same items included in the Round 2 areas and 72 percent lower on mail-order diabetic testing supplies nationwide.

Wachler & Associates will continue to keep you updated on the DME CBP and other changes regarding the Medicare and Medicaid programs. If you need assistance or have any healthcare law related questions, please contact an experienced healthcare law attorney at Wachler & Associates at 248-544-0888.