National Competitive Bidding: Cause & Effect
- By Jim Stephenson
- Nov 01, 2010
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 come January. The savings
will be realized through the first round of the
new competitive bidding program that will
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
in those nine areas.
The first round of the program is scheduled
to begin on Jan. 1, 2011, for beneficiaries in:
- Charlotte/Gastonia/Concord (North
Carolina and South Carolina)
- Cincinnati/Middletown (Ohio, Kentucky
- 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 product categories are:
- Oxygen, oxygen equipment & supplies
- Standard power wheelchairs, scooters & related accessories
- Complex rehabilitative power chairs & related accessories (Group 2 only)
- Mail-order diabetic supplies
- Enteral nutrients, equipment & supplies
- CPAP & respiratory assist devices (RADs) & related supplies & accessories
- Hospital beds & related accessories
- Walkers & related accessories
- Support surfaces (Group 2 mattresses & overlays in Miami/Ft. Lauderdale-
Pompano Beach, Florida, only)
Medicare claims that beneficiaries in these areas will see substantially lower
prices than they are paying now, and ensures continued access for beneficiaries
to high-quality products from accredited suppliers that meet stringent quality
and financial standards, which will help reduce fraud. The program is expected
to save more than $17 billion over 10 years.
Economists and a select number of members of Congress beg to differ with at
least part of that statement. Studies have shown that the program could have a
negative impact on price, quality, access and service for Medicare beneficiaries.
Freedom of choice will be challenged in terms of types of suppliers and equipment
that will be available. The number of DMEPOS suppliers could be reduced
by as much as 90 percent, which will limit choice as well as disrupt lifelong
relationships and continuity of care.
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, made up about 48 percent of the suppliers that were
Economists say that as the number of suppliers is reduced and payments are
lowered, beneficiaries may experience problems obtaining quality equipment
and services. There may not be sufficient protection from supplier unavailability
and delayed response times, which could lead to costly hospital discharge
delays and increased numbers of emergency room visits. Suppliers may not be
able to afford to continue providing high-quality products and services that
allow beneficiaries to maintain the mobility and the quality of life they have
grown to expect.
The Impact on Beneficiaries
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 healthcare
providers to inform beneficiaries about the changes. Suppliers that are not
contract suppliers may continue to provide certain rented medical equipment to
beneficiaries who are clients at the time the program begins — if the suppliers
elect to continue furnishing the items as “grandfathered” suppliers.
One important fact about being a grandfathered supplier: Part of the agreement
requires accepting the single-payment amount as payment in full for
services provided, which means as much as 32 percent less in reimbursement.
This is where disruption in long-term relationships begins, as non-contract
suppliers will have to determine whether they can afford to take that type of
reduction in payment to retain their customer. Furthermore, beneficiaries who
rely on equipment suppliers for more than one type of service may now be
subjected to utilizing multiple suppliers, since it is likely most contract suppliers
won’t be full-service providers under the competitive bidding program.
The Centers for Medicare & Medicaid Services (CMS) began mailing contract
offers to winning bidders in July 2010. For any contract offers not accepted,
CMS offered contracts to other bidders as needed to meet beneficiary demand.
Suppliers that were not contract suppliers for this round of the competitive
bidding program may bid in round two in 2011 and in future rounds.
For additional information about the Medicare DMEPOS Competitive Bidding
Program, visit cms.hhs.gov/DMEPOSCompetitiveBid/.
CMS has posted on the CBIC Web site the single-payment amounts for
round 1. To access the prices for the nine bid areas, go to dmecompetitivebid.com and click on “Single Payment Amounts” in the block on the left margin.
This article originally appeared in the November 2010 issue of Mobility Management.
Jim Stephenson is Reimbursement & Coding Manager for the Rehab Department
of Invacare Corp.