The Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program, A Better Way for Medicare to Pay for Medical Equipment, ICN 903624 February 2015

DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services

The Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program A Better Way for Medicare to Pay for Medical Equipment

Medicare’s Competitive Bidding Program for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) is an essential tool that changes the amount Medicare pays for certain DMEPOS while maintaining beneficiary access to items and services and quality of care. The program replaces the outdated, inflated fee-schedule prices Medicare paid for these items with lower, more accurate prices to help Medicare and its beneficiaries save money while ensuring access to quality equipment, supplies, and services. It also helps limit fraud and abuse in the Medicare Program.

Except in areas of the country where the program has been implemented, Medicare pays for DMEPOS items (including oxygen equipment, walkers, wheelchairs, hospital beds, and devices used to treat sleep disorders) using a fee schedule that is generally based on historic supplier charges from the 1980s, adjusted for inflation at times, and not on current market prices. Numerous studies by the Office of Inspector General and the Government Accountability Office have shown that the fee schedule amounts for certain DMEPOS items are excessive—sometimes three or four times retail prices and the amounts paid by commercial insurers. Taxpayers and Medicare beneficiaries bear the burden of these excessive payments. Clearly, Medicare needed a better way to pay for DMEPOS items.

The Medicare DMEPOS Competitive Bidding Program was established by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 as a way to help Medicare set appropriate payment rates for DMEPOS items and services. The program was expanded by the Affordable Care Act in 2010. In January 2011, Medicare started the program in nine areas of the country. In July 2013, Medicare expanded the competitive bidding program to more areas of the country, called the Round 2 areas, and also implemented a national mail-order program for diabetic testing supplies.

How It Works

Under the DMEPOS Competitive Bidding Program, Medicare beneficiaries with Original Medicare who live in competitive bidding areas (CBAs) pay less for certain DMEPOS items and services. DMEPOS suppliers compete to become Medicare contract suppliers by submitting bids to furnish certain medical equipment and supplies in the CBAs. Medicare uses these bids to set a single payment amount, which replaces the fee schedule amount as payment for each item. The single payment amounts must be lower than the fee schedule amounts. All suppliers are thoroughly screened to make sure they meet Medicare requirements, including eligibility and financial, quality, and accreditation standards, before they are awarded contracts.

Beneficiaries who obtain competitively bid items in CBAs will need to get these items from contract suppliers if they want Medicare to help pay for the items unless an exception applies. In certain situations, beneficiaries in program areas who rent oxygen or certain other durable medical equipment may continue renting these items from their current suppliers if their current suppliers become grandfathered suppliers.

CMS is required by Section 1847(b)(3) of the Social Security Act to recompete contracts under the DMEPOS Competitive Bidding Program at least once every three years.

Proven Results

Competitive bidding for DMEPOS is proven to save money for taxpayers and Medicare beneficiaries while maintaining access to quality DMEPOS items and services.

The Medicare DMEPOS Competitive Bidding Program has saved more than $580 million in the nine markets at the end of the Round 1 Rebid’s 3-year contract period due to lower payments and decreased unnecessary utilization. Additional savings are being achieved as part of the Affordable Care Act’s expansion of the competitive bidding program—at the end of the first year of Round 2 and the national mail-order programs, Medicare has saved approximately $2 billion. Furthermore, the monitoring data show that the implementation is going smoothly with few inquiries or complaints and no changes to beneficiary health outcomes.

CMS employs a wide range of resources to monitor the program, including the 1-800-MEDICARE call center, an ombudsman program, local environmental scanning, secret shopping, and a sophisticated real-time claims monitoring system. Health outcomes data are available at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/DMEPOSCompetitiveBid.

CMS has been conducting the DMEPOS Competitive Bidding Program in 99 Metropolitan Statistical Areas (MSAs) throughout the country, which includes a national mail-order competition for diabetic testing supplies. As a result, millions of Medicare beneficiaries across the country will continue to save money from competitive pricing, while continuing to have access to quality medical equipment from accredited suppliers.

Round 1 MSAs:

Charlotte-Gastonia-Rock Hill (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)

Round 2 MSAs:

Northeast

Albany-Schenectady-Troy, NY

Allentown-Bethlehem-Easton, PA-NJ

Boston-Cambridge-Quincy, MA-NH

Bridgeport-Stamford-Norwalk, CT

Buffalo-Niagara Falls, NY

Hartford-West Hartford-East Hartford, CT

New Haven-Milford, CT

New York-Northern New Jersey-Long Island, NY-NJ-PA

Philadelphia-Camden-Wilmington, PA-NJ-DE-MD

Poughkeepsie-Newburgh-Middletown, NY

Providence-New Bedford-Fall River, RI-MA

Rochester, NY

Scranton – Wilkes-Barre, PA

Springfield, MA

Syracuse, NY

Worcester, MA

Midwest

Akron, OH

Chicago-Joliet-Naperville, IL-IN-WI

Columbus, OH

Dayton, OH

Detroit-Warren-Livonia, MI

Flint, MI

Grand Rapids-Wyoming, MI

Huntington-Ashland, WV-KY-OH

Indianapolis-Carmel, IN

Milwaukee-Waukesha-West Allis, WI

Minneapolis-St. Paul-Bloomington, MN-WI

Omaha-Council Bluffs, NE-IA

St. Louis, MO-IL

Toledo, OH

Wichita, KS

Youngstown-Warren-Boardman, OH-PA

West

Albuquerque, NM

Bakersfield-Delano, CA

Boise City-Nampa, ID

Colorado Springs, CO

Denver-Aurora-Broomfield, CO

Fresno, CA

Honolulu, HI

Las Vegas-Paradise, NV

Los Angeles-Long Beach-Santa Ana, CA

Oxnard-Thousand Oaks-Ventura, CA

Phoenix-Mesa-Glendale, AZ

Portland-Vancouver-Hillsboro, OR-WA

Sacramento – Arden-Arcade – Roseville, CA

Salt Lake City, UT

San Diego-Carlsbad-San Marcos, CA

San Francisco-Oakland-Fremont, CA

San Jose-Sunnyvale-Santa Clara, CA

Seattle-Tacoma-Bellevue, WA

Stockton, CA

Tucson, AZ

Visalia-Porterville, CA

South

Asheville, NC

Atlanta-Sandy Springs-Marietta, GA

Augusta-Richmond County, GA-SC

Austin-Round Rock-San Marcos, TX

Baltimore-Towson, MD

Baton Rouge, LA

Beaumont-Port Arthur, TX

Birmingham-Hoover, AL

Cape Coral-Fort Myers, FL

Charleston-North Charleston-Summerville, SC

Chattanooga, TN-GA

Columbia, SC

Deltona-Daytona Beach-Ormond Beach, FL

El Paso, TX

Greensboro-High Point, NC

Greenville-Mauldin-Easley, SC

Houston-Sugar Land-Baytown, TX

Jackson, MS

Jacksonville, FL

Knoxville, TN

Lakeland-Winter Haven, FL

Little Rock-North Little Rock-Conway, AR

Louisville/Jefferson County, KY-IN

McAllen-Edinburg-Mission, TX

Memphis, TN-MS-AR

Nashville-Davidson-Murfreesboro-Franklin, TN

New Orleans-Metairie-Kenner, LA

North Port-Bradenton-Sarasota, FL

Ocala, FL

Oklahoma City, OK

Palm Bay-Melbourne-Titusville, FL

Raleigh-Cary, NC

Richmond, VA

San Antonio-New Braunfels, TX

Tampa-St. Petersburg-Clearwater, FL

Tulsa, OK

Virginia Beach-Norfolk-Newport News, VA-NC

Washington-Arlington-Alexandria, DC-VA-MD-WV

Additional Information

For more information about the DMEPOS Competitive Bidding Program, visit http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/DMEPOSCompetitiveBid on the CMS website. Here you can find up-to-date information on the DMEPOS Competitive Bidding Program, such as fact sheets, program timelines, latest news and announcements, as well as specific information regarding each round of competition.

For additional resources on DMEPOS Competitive Bidding, view Medicare Learning Network® (MLN) Matters® article SE1244, “Medicare DMEPOS Competitive Bidding Program: Quick Reference Article” at http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/SE1244.pdf on the CMS website.

Beneficiary-related information can be found on the Internet at http://www.medicare.gov/supplier.

Disclaimers

This fact sheet was current at the time it was published or uploaded onto the web. Medicare policy changes frequently so links to the source documents have been provided within the document for your reference.

This fact sheet was prepared as a service to the public and is not intended to grant rights or impose obligations. This fact sheet may contain references or links to statutes, regulations, or other policy materials. The information provided is only intended to be a general summary. It is not intended to take the place of either the written law or regulations. We encourage readers to review the specific statutes, regulations, and other interpretive materials for a full and accurate statement of their contents.

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