Medicare beneficiaries in nine areas of the country who use certain medical equipment and supplies will see average savings of about 32 percent off the current cost of those items.  The savings will be realized through the first round of a new Competitive Bidding Program that will be used to determine the price that Medicare pays for certain durable medical equipment, prosthetics, orthotics and supplies (DMEPOS).  The program replaces Medicare’s existing fee schedule amounts with market-based prices.

“When this program begins in January, Medicare beneficiaries in these nine areas will see substantially lower prices than they are paying now,” said CMS Deputy Administrator and Director for the Center for Medicare Jonathan Blum.  “The program also ensures continued access for beneficiaries to high quality products from accredited suppliers that meet stringent quality and financial standards which help to reduce fraud.  The program is expected to save more than $17 billion over ten years.”

The first round of the program is scheduled to begin on Jan. 1, 2011, for beneficiaries in Charlotte , Cincinnati , Cleveland , Dallas , Kansas City, Miami , Orlando , Pittsburgh and Riverside (more detail on locations below).  Suppliers that wished to participate in the program submitted bids last year.  CMS plans to announce the contract suppliers in September once all contracts have been finalized. 

As part of the first round of the Competitive Bidding Program, beneficiaries and Medicare will see significant savings on the cost of some medical equipment and supplies as shown by the examples of savings for three frequently used items (an oxygen concentrator, a semi-electric hospital bed, and a typical monthly supply of 100 diabetic test strips and 100 lancets) below.     

The 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 competitive bidding areas.  Small suppliers, those with gross revenues of $3.5 million or less, make up about 48 percent of the suppliers that will be offered contracts. 

To take advantage of these savings, beneficiaries living in the nine first round communities who use certain medical equipment and supplies may have to choose a new Medicare contract supplier if they want to have Medicare help pay for the item.  Medicare will work with local partners and health care providers to inform beneficiaries about the changes.  Suppliers that are not contract suppliers may continue to provide certain rented medical equipment and oxygen and oxygen equipment for those beneficiaries who are clients at the time the program begins if they elect to continue furnishing the items as “grandfathered” suppliers.   

CMS will now begin mailing contract offers to winning bidders.  If any contract offers are not accepted, CMS will offer contracts to other bidders as needed to meet beneficiary demand.  CMS expects to complete the contracting process in time to announce the contract suppliers in September.  Bidders that are not offered contracts will be notified of the reasons why they did not qualify for the program when the contracting process is complete.   Suppliers that are not contract suppliers for this round of the DMEPOS Competitive Bidding Program may bid in Round Two in 2011 and in future rounds.

            The Medicare DMEPOS Competitive Bidding Program was established by the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA), and the program was briefly implemented in 2008 in 10 areas. The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), enacted on July 15, 2008, terminated the supplier contracts in effect at the time, temporarily delayed the program and made certain limited changes to the program.  MIPPA

also required CMS to conduct the competition for the Round One Rebid in 2009, and delayed competition for Round Two in 70 additional metropolitan statistical areas (MSAs) until 2011 and in additional areas of the country until after 2011.  The Affordable Care Act of 2010 expands the number of Round Two MSAs from 70 to 91.

With the exception of Puerto Rico , the Round One Rebid affects the same areas in which the program was briefly implemented in 2008.  These areas are:

• Charlotte – Gastonia – Concord (North Carolina and South Carolina )

• Cincinnati – Middletown (Ohio , Kentucky and Indiana )

• Cleveland – Elyria – Mentor (Ohio )

• Dallas – Fort Worth – Arlington (Texas )

• Kansas City (Missouri and Kansas )

• Miami – Fort Lauderdale – Pompano Beach (Florida )

• Orlando – Kissimmee (Florida)

• Pittsburgh (Pennsylvania)

• Riverside – San Bernardino – Ontario (California)

            The Round One Rebid includes the same items as the 2008 program except that negative pressure wound therapy items and Group 3 complex rehabilitative power wheelchairs are excluded.  These items include:

• Oxygen, Oxygen Equipment, and Supplies

• Standard Power Wheelchairs, Scooters, and Related Accessories

• Complex Rehabilitative Power Wheelchairs and Related Accessories (Group 2 only)

• Mail-Order Diabetic Supplies

• Enteral Nutrients, Equipment and Supplies

• Continuous Positive Airway Pressure (CPAP) Devices, Respiratory Assist Devices (RADs), and Related Supplies and Accessories

• Hospital Beds and Related Accessories

• Walkers and Related Accessories

• Support Surfaces (Group 2 mattresses and overlays in Miami-Ft. Lauderdale-Pompano  

   Beach, FL only)

            For additional information about the Medicare DMEPOS Competitive Bidding Program, please visit:  http://www.cms.hhs.gov/DMEPOSCompetitiveBid/.

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