FACT SHEET

CMS Awards Contracts for the DMEPOS Competitive Bidding Program Round 1 2017            

Overview

The Centers for Medicare & Medicaid Services (CMS) today announced the Round 1 2017 contract suppliers for Medicare’s Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program.  This program has been in effect since 2011 and is an essential tool to help Medicare set appropriate payment rates for DMEPOS items, save money for beneficiaries and taxpayers, while ensuring access to quality items.

Prior to the DMEPOS Competitive Bidding Program, Medicare paid for these DMEPOS items using a fee schedule that is generally based on historic supplier charges from the 1980s. Numerous studies from the Department of Health and Human Services Office of Inspector General and the Government Accountability Office have shown these fee schedule prices to be excessive, and taxpayers and Medicare beneficiaries bear the burden of these excessive payments. 

Under the program, DMEPOS suppliers compete to become Medicare contract suppliers by submitting bids to furnish certain items in competitive bidding areas (CBAs).  Since implementation of the DMEPOS Competitive Bidding Program on January 1, 2011, CMS has saved approximately $220 million per year in the nine Round 1 metropolitan statistical areas (MSAs) due to competitive bidding and other CMS fraud, waste, and abuse initiatives. Health monitoring data indicate that the program implementation is going smoothly with few inquiries or complaints and no negative beneficiary health outcomes.  The Round 1 Recompete contract period expires on December 31, 2016, and Round 1 2017 contracts will become effective on January 1, 2017, through December 31, 2018.

Background

The Medicare DMEPOS Competitive Bidding Program was established by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“Medicare Modernization Act” or “MMA”) after the conclusion of successful demonstration projects.  Under the MMA, the DMEPOS Competitive Bidding Program was to be phased in so that competition under the program would first occur in 10 Metropolitan Statistical Areas (MSAs) in 2007.  The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) temporarily delayed the program in 2008 and made certain limited changes.  In accordance with MIPPA, CMS successfully conducted the supplier competition again in nine areas in 2009, referring to it as the Round 1 Rebid.

MIPPA also delayed the competition for Round 2 from 2009 to 2011 and authorized national mail-order competitions after 2010.  The Affordable Care Act of 2010 (ACA) expanded the number of Round 2 MSAs from 70 to 91 and specified that all areas of the country be subject to either DMEPOS competitive bidding or payment rate adjustments using competitively bid rates by 2016. 

Competitive bidding contracts and pricing have been in place in Round 1 areas since January 1, 2011, with the current Round 1 Recompete contracts and prices being in place since January 1, 2014.  Round 1 2017 will be implemented on January 1, 2017.

Contract Award Process

For Round 1 2017, CMS has executed 182 DMEPOS competitive bidding program contracts

(92 percent of contracts offered).  The Round 1 2017 contract suppliers have 534 locations to serve Medicare beneficiaries in these CBAs.  Contract suppliers are required to meet CMS’ quality standards, meet applicable state licensure requirements, and be accredited by a CMS approved independent accreditation organization.

The DMEPOS Competitive Bidding Program’s 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 CBAs.  In fact, 92 percent of contract suppliers are already established in the CBA, the product category, or both. CMS was required to include small supplier protections for the program, and instituted a 30 percent small supplier target in each CBA.  For Round 1 2017,

93 percent of small suppliers, those with gross revenues of $3.5 million or less as defined for the program, accepted their contract offer. 

Bidders that were not offered contracts were notified of the reason(s) why they did not qualify for the program. All suppliers that did not win contracts were provided a targeted period to ask questions or express concerns about the reason(s) why they were not awarded a contract.  Suppliers that are not contract suppliers for this round of the Program may bid in future rounds, unless they are precluded from participation in the program.

Contract supplier names and locations for each product category in each CBA can be found in the Supplier Directory at www.medicare.gov/supplier.

REAL-TIME MONITORING      

Importantly, the program has maintained beneficiary access to quality products from accredited suppliers in all CBAs. Extensive real-time monitoring data have shown successful implementation with very few beneficiary complaints and no negative impact on beneficiary health status based on measures such as hospitalizations, length of hospital stay, and number of emergency room visits compared to non-CBAs.  In addition to real-time claims monitoring, CMS also requested feedback from beneficiaries through consumer satisfaction surveys conducted before and after the rollout of the program.  CMS provides local, on-the-ground presence in each CBA through the CMS regional offices, local liaisons, and a Competitive Acquisition Ombudsman who closely monitors and responds to inquiries and complaints about the application of the program from beneficiaries who use items of DMEPOS under the program, contract suppliers who provide these items, and other stakeholders.  There is also a formal complaint process for beneficiaries, caregivers, providers, and suppliers to use for reporting concerns about contract suppliers or other competitive bidding implementation issues.  In addition, contract suppliers are responsible for submitting reports identifying the brands of products they furnish, which are used to inform beneficiaries, caregivers, and referral agents.  CMS will continue to employ the same aggressive program monitoring for future rounds.

ROUND 1 2017 PRODUCT CATEGORIES AND AREAS

The Round 1 2017 product categories are:

• Enteral Nutrients, Equipment, and Supplies
• General Home Equipment and Related Supplies and Accessories
  • includes hospital beds and related accessories, group 1 and 2 support surfaces, commode chairs, patient lifts, and seat lifts
• Nebulizers and Related Supplies
• Negative Pressure Wound Therapy (NPWT) Pumps and Related Supplies and Accessories
• Respiratory Equipment and Related Supplies and Accessories
  • includes oxygen, oxygen equipment, and supplies; continuous positive airway pressure (CPAP) devices and respiratory assist devices (RADs) and related supplies and accessories
• Standard Mobility Equipment and Related Accessories
  • includes walkers, standard power and manual wheelchairs, scooters, and related accessories
• Transcutaneous Electrical Nerve Stimulation (TENS) Devices and Supplies

For a list of specific items in each product category, or for a list of the areas included in

Round 1 2017, visit the Competitive Bidding Implementation Contractor website, www.dmecompetitivebid.com.

Round 1 2017 Timeline of Events

November 1, 2016     CMS announces the Medicare contract suppliers for Round 1 2017; intensifies supplier, referral agent, and beneficiary education program

January 1, 2017         Implementation of Medicare DMEPOS Competitive Bidding Program Round 1 2017 contracts and prices 

ADDITIONAL INFORMATION

For additional information, visit the Medicare DMEPOS Competitive Bidding Program homepage located on the CMS website.

###

Get CMS news at cms.gov/newsroom, sign up for CMS news via email and follow CMS on Twitter @CMSgovPress