CMS DMEPOS Competitive Bidding Program Now in Effect; Round 2 to Include 91 Metropolitan Statistical Areas

February 28, 2011 1:28 PM Topics: Dmepos

Originally published in the March 2011 NABP Newsletter

With the contracts from the first round of the durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program now in effect, the Centers for Medicare & Medicaid Services (CMS) has begun to focus on the rollout of the second round of competitive bidding. Set to begin in the spring of 2011, Round 2 will include 91 metropolitan statistical areas (MSAs), expanding the total competitive bidding MSAs from nine in the first round to 100. CMS expects contracts and payment amounts for Round 2 to take effect January 1, 2013. To participate in the competitive bidding program, suppliers must be DMEPOS accredited.

Until results from Round 2 take effect, only those DMEPOS suppliers residing in the current competitive bidding areas (CBAs) designated by the nine MSAs in the Round 1 Rebid competition, are mandated to be contracted in order to furnish certain DMEPOS items to Medicare beneficiaries. Exceptions to this include if a noncontracted supplier has subcontracted with an approved contracted supplier or has become a grandfathered supplier.

Established in Section 302 of the Medicare Modernization Act of 2003 (MMA), the competitive bidding program for certain DMEPOS items has long been a topic of debate. Though some affected by the bidding program have expressed concern that the implementation has the potential to jeopardize access to necessary health care equipment and drive up health costs, CMS stresses that the DMEPOS competitive bidding program is designed to improve the effectiveness of Medicare’s DMEPOS payments, reduce beneficiary out-of-pocket costs, and save the Medicare program money while ensuring greater beneficiary access to quality items and services.

Prior to its inclusion by the MMA, the competitive bidding program underwent demonstration projects between the years 1999 and 2002. Proving successful and displaying a 20% savings for Medicare and beneficiaries with unchanged access to equipment and quality, in 2007 the program began Round 1 bidding competitions in 10 MSAs.

In July 2008, after two weeks of implementing the contracts obtained from the first round bidding competition, the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) modified the program mandating certain limited changes, but maintained the nature of the competitive bidding program. MIPPA terminated the Round 1 contracts, reinstating fee schedule payment rates and requiring a Round 1 Rebid in 2009 to include all 10 MSAs except Puerto Rico. In addition, MIPPA mandated a Round 2 competition to include an additional 70 MSAs in 2011. Later, the Affordable Care Act of 2010 expanded the number of Round 2 MSAs to 91.

A listing of MSAs to be included in Round 2 of the DMEPOS competitive bidding program are available on the CMS Web site. As of press time, CMS has yet to announce CBA specific zip codes for each MSA or the product categories to be included in the competitive bid. This information, along with additional MSAs, timelines, and fact sheets are expected to be available on the CMS Web site in the near future.