The Centers for Medicare & Medicaid Services (“CMS”) has formally launched the Medicare durable medical equipment (“DME”), prosthetics, orthotics, and supplies (“DMEPOS”) competitive bidding program through publication of its final rule (“Final Rule”) and opening of the 60-day bidding period. The bidding deadline is July 13, 2007, although potential bidders must register to bid by June 30, 2007.
Under the Final Rule, suppliers will be required to be successful bidders and meet certain program standards in order to supply selected DMEPOS items to Medicare beneficiaries in 10 competitive bidding areas (“CBAs”) beginning April 1, 2008. Winning suppliers will be reimbursed based on the median of the winning suppliers’ bids for each of the selected items in the CBA (rather than the Medicare fee schedule or supplier bid amount). It is important to note that, subject to very limited exceptions, suppliers that do not bid, or are not successful bidders, will not be able to bill Medicare for competitively-bid items in the CBAs.
Competitive bidding is being phased in geographically, and initially will take place in the following metropolitan statistical areas (“MSAs”): (1) Charlotte-Gastonia-Concord, NC-SC; (2) Cincinnati-Middletown, OH-KY-IN; (3) Cleveland-Elyria-Mentor, OH; (4) Dallas-Fort Worth-Arlington, TX; (5) Kansas City, MO-KS; (6) Miami-Fort Lauderdale-Miami Beach, FL; (7) Orlando-Kissimmee, FL; (8) Pittsburgh, PA; (9) Riverside-San Bernardino-Ontario, CA; and (10) San Juan-Caguas-Guaynabo, PR. The program will be expanded to additional areas beginning in 2009.
Competitive bidding also is being phased in by DMEPOS product category. The program will apply initially to the following 10 categories of DMEPOS: (1) Oxygen Supplies and Equipment; (2) Standard Power Wheelchairs, Scooters, and Related Accessories; (3) Complex Rehabilitative Power Wheelchairs and Related Accessories; (4) Mail-Order Diabetic Supplies; (5) Enteral Nutrients, Equipment, and Supplies; (6) Continuous Positive Airway Pressure Devices, Respiratory Assist Devices, and Related Supplies and Accessories; (7) Hospital Beds and Related Accessories; (8) Negative Pressure Wound Therapy Pumps and Related Supplies and Accessories; (9) Walkers and Related Accessories; and (10) Support Surfaces (Group 2 mattresses and overlays), although this category will be subject to bidding only in Miami-Fort Lauderdale-Miami Beach, FL and San Juan-Caguas-Guaynabo, Puerto Rico. Suppliers can bid on one or more “product categories,” but must bid on all specified codes within the category.
Other key features of the Final Rule include the following:
- Quality Standards — Suppliers must be accredited as meeting supplier quality standards before the contract can be awarded (CMS subsequently set an accreditation deadline of August 31, 2007 for bidders in the first bidding cycle). A supplier’s accreditation must at least be pending before a bid can be submitted.
- Common Ownership — Commonly-owned or -controlled suppliers must submit a single bid to furnish a product category in a CBA, and each commonly-owned or controlled supplier that is located in the CBA must be included in the bid.
- SNFs/NFs — The competitive bidding rules generally apply to DMEPOS provided to Medicare beneficiaries in a skilled nursing facility (“SNF”) or nursing facility (“NF”), although CMS is adopting special provisions to allow a SNF or NF with a Part B supplier number to bid to serve its own residents exclusively (without having to meet the general requirement of serving the entire CBA). This provision applies only when the SNF or NF is the direct supplier; separate Part B supplier companies affiliated with a nursing home organization will be required to submit bids under the standard competitive bidding rules and will not be allowed to serve only nursing home residents. Moreover, if a SNF or NF is not a successful bidder, the facility will be required to use a winning bidder to furnish covered Part B items to its residents.
- Physicians — CMS is allowing physicians and certain other practitioners, along with physical therapists and occupational therapists in private practice, to furnish certain items exclusively to their patients at the single bid price without going through the bid process.
- Small Suppliers — The Final Rule implements a number of provisions to ensure small supplier participation and access to the competitive bidding market. CMS will set a target number for small supplier participation equaling 30 percent of the number of winning suppliers. If necessary, CMS may offer contracts to small suppliers that submitted bids higher than but close to the winning bids in order to reach that goal. CMS also will allow small suppliers to form networks if they cannot service the entire CBA independently.
- Other Key Provisions — CMS generally will select at least five winning bidders for each product category in a CBA, up from two in the May 1, 2006 proposed rule (“Proposed Rule”) . CMS is not adopting a controversial proposal to allow suppliers to offer rebates to beneficiaries if their bid price were below the single payment amount. CMS also is not adopting at this time a process to use competitive bidding pricing in non-bid areas, or reforms to the “gap fill” price methodology for all DMEPOS items.
- Bidding Timeline — CMS opened the bidding period on May 15, 2007. The bidding deadline is July 13, 2007, although there is a June 30 deadline to register with the competitive bidding implementation contractor (“CBIC”) in preparation for bidding. CMS intends to announce winning bidders in December 2007. Bid prices go into effect April 1, 2008. The mail order diabetes supplies contracts will run until December 31, 2009, while the contract period for the other first round product categories ends March 31, 2011.
The following is an overview of the major features of the Final Rule, focusing on key changes from the Proposed Rule. We would be pleased to provide you with additional information on any aspect of the program.
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