Final Competitive Bidding Information Published in Federal Register

The Centers for Medicare & Medicaid Services (CMS) has released outstanding information regarding the competitive bidding program due to start this year.

The announced information included the product categories to be competitively bid, plus a reiteration of the initial 10 metropolitan statistical areas (MSAs) that were initially posted on the Competitive Bidding Implementation Contractor (CBIC) Web site on March 30, then removed, then reposted.

The first 10 areas to participate in competitive bidding are Charlotte/Gastonia/Concord in North and South Carolina; Cincinnati/Middletown in Ohio, Kentucky and Indiana; Cleveland/Elyria/Mentor in Ohio; Dallas/Fort Worth/Arlington in Texas; Kansas City in Missouri and Kansas; Miami/Fort Lauderdale/Miami Beach in Florida; Riverside/San Bernardino/Ontario in California; Orlando/Kissimmee in Florida; Pittsburgh, Pa.; and San Juan/Caguas/Guaynabo in Puerto Rico.

CMS also named the 10 product categories that will be competitively bid. The mobility/rehab categories involved are standard power chairs, scooters and accessories; rehab power chairs and accessories; and walkers and accessories. The other DME categories are CPAP and respiratory assist devices and accessories; hospital beds and accessories; negative pressure wound therapy pumps and accessories; support surfaces (group 2 and 3 mattresses and overlays, Miami and San Juan only); oxygen supplies and accessories; mail-order diabetic supplies; and enteral nutrients, equipment and supplies.

The final rule was published in the Federal Register on April 10.

Key points in the final rule include the following:

ù Grandfathering: Beneficiaries who are currently renting certain types of DME may choose to continue to rent from their current suppliers, even if the suppliers are not "contract suppliers," i.e., suppliers who have furnished winning bids to CMS. The beneficiary could at any time elect to switch over to a contract supplier to rent the equipment. A supplier who agrees to be grandfathered on a certain rental item "must agree to be a grandfathered supplier for all beneficiaries who request to continue to use their service for that item," according to the final rule. CMS says it is offering this option to minimize the disruption of service to beneficiaries.

ù Anticipating manufacturer price hikes: CMS stated in the final rule that suppliers submitting bids are responsible for anticipating when and how often DME manufacturers and distributors will increase their prices, and how such price hikes will affect suppliers' businesses. Suppliers are therefore charged with factoring such price hikes into their bids so the suppliers can continue to provide the DME at their bid price for the entire contract period.

ù Traveling beneficiaries: Beneficiaries who are in a competitive bidding area and therefore are working with a contract supplier, but who travel to a different area will not be required to return home to obtain needed DME. Such beneficiaries can instead obtain the DME from a non-contract supplier (one who has not submitted a winning bid for the item) with a valid Medicare supplier number in the area the beneficiary is visiting, unless the area being visited is also a competitive bidding area. In that case, the beneficiary must obtain the DME from a contract supplier in the competitive bidding area being visited. CMS also warned it would carefully monitor such cases to ensure that beneficiaries and suppliers were not merely circumventing the competitive bidding policies by claiming that beneficiaries had traveled outside the competitive bid area and therefore needed to obtain equipment from non-contract suppliers.

ù Repair of DME: CMS will not require competitively bid items to be repaired by a contract supplier, because not all contract suppliers have the facilities, training or ability to conduct such repairs. Says the final rule: "We will pay for maintenance and servicing of competitively bid items, including replacement parts that may be needed, that are performed by any supplier as long as those repairs are made by suppliers that have a valid Medicare billing number that enables them to receive payment for covered Medicare services."

ù Long-term care facilities: CMS will give long-term care facilities such as nursing homes and nursing facilities the option of working with a contract supplier if the long-term care facility does not want to enter the competitive bidding program and directly supply DME to its patients/residents.

ù Physicians as suppliers: Specified medical professionals who supply certain types of competitively bid DME just to their own patients will be allowed to continue that practice, says CMS: "We will permit physicians and certain non-physician practitioners to furnish certain competitively bid items to their own patients without submitting a bid and being selected as a contract supplier." The exempted medical professionals would include physicians, nurse practitioners, physician assistants and occupational and physical therapists in private practice.

ù Businesses with multiple supplier numbers: To guard against a single business submitting bids using multiple supplier numbers and therefore compromising competition, CMS says such a business will need to disclose "as part of their bid whether they have an ownership or controlling interest in one or more other suppliers or if one or more other suppliers has an ownership or controlling interest in it." If the answer is yes, "CMS will reject multiple bids submitted by commonly owned or controlled suppliers for the same product category in the same CBA (competitive bid area) because we believe that allowing these suppliers to bid against themselves will undermine the integrity of the bidding process."

ù Power wheelchair rentals: CMS disagreed with a submitted comment that took issue with the need to rent rather than sell power wheelchairs to beneficiaries. The comment said suppliers would be hard pressed to keep a sufficient inventory of rental power chairs and that most power chair users have serious and/or degenerative medical conditions that require power chair use for long periods of time, thus rendering the rental policy inappropriate. In disagreeing, CMS said, "Power wheelchairs are very expensive and may only be needed on a short-term basis. The option for renting these items is necessary to enable beneficiaries to save money, and for this reason, we will allow them to be rented under the competitive bidding programs."

ù Quality standards: To participate in the competitive bidding program, DME suppliers will need to meet quality standards to be applied by the independent accrediting organizations chosen by CMS. But noting that suppliers may not have had enough time to become accredited before submitting a bid, CMS will not require suppliers to have achieved accreditation at the time they submit competitive bids.

ù Number of suppliers selected per competitive bidding area: In response to a comment that CMS should award contracts to more than just the minimum number of suppliers needed to meet the demand in a competitive bidding area, CMS said, "We anticipate that we will select a sufficient number of suppliers to ensure beneficiary access... We may make adjustments to a supplier's projected capacity in order to ensure that we award contracts to a sufficient number of suppliers... We are also modifying our proposed rule for participation by small suppliers to set a small supplier target which will be calculated by multiplying 30 percent times the number of winning suppliers at or below the pivotal bid for each product category. As a result, we will be able to ensure that small suppliers have an opportunity to participate in the programs." CMS added that it believes its supplier selection methodology will provide adequate geographical distribution of suppliers so beneficiaries will not be inconvenienced by having to travel long distances to find a contract supplier.

ù Change in ownership of business: Saying that it does not want "suppliers to adopt a strategy of circumventing the regular bidding process by gaining winning status through acquisitions of or mergers with contract suppliers or to violate any anti-competition prohibitions," CMS will require contract suppliers to notify them 60 days before a merger, change of ownership or acquisition is anticipated to take place so CMS can determine the company's ability to fulfill the competitive bidding contract. If the new business entity wishes to become a contract supplier, it will need to meet CMS quality, financial and other standards for contract suppliers.

ù Definition of "small" suppliers: CMS defines "small supplier" as one "that generates gross revenue of $3.5 million or less in annual receipts."

To read the final rule in its entirety as published in the Federal Register, go to and in the search field, type in "dmepos competitive bidding final rule."

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