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CMS “Competitive Bidding Program Continues to Maintain Access and Quality While Saving Medicare Billions”


Competitive Bidding Program Continues to Maintain Access and Quality While Saving Medicare Billions


The Centers for Medicare & Medicaid Services (CMS) today announced the new single payment amounts and began sending contract offers to successful bidders for Medicare’s Round 2 Recompete and the national mail-order recompete Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program. These new payment amounts and contracts go into effect on July 1, 2016. This program has been an essential tool to help Medicare set appropriate payment rates for DMEPOS items and 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 Competitive Bidding Program, DMEPOS suppliers compete to become Medicare contract suppliers by submitting bids to furnish certain items in competitive bidding areas.  After the first two years of Round 2 and the national mail-order programs (July 1, 2013-June 30 2015), Medicare has saved approximately $3.6 billion while health monitoring data indicate that its implementation is going smoothly with few inquiries or complaints and no changes to beneficiary health outcomes.   

The Round 2 and national mail-order program contract periods expire on June 30, 2016. Round 2 Recompete and the national mail-order recompete contracts will become effective on July 1, 2016 through December 31, 2018. The national mail-order recompete for diabetes testing supplies will be implemented at the same time as Round 2 Recompete and will include all parts of the United States, including the 50 States, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, and American Samoa. 

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 January 1, 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. CMS is currently evaluating bids received as part of the Round 1 2017 competition, which is scheduled to be implemented on January 1, 2017.

Round 2 and the national mail-order program for diabetes testing supplies was implemented on July 1, 2013. The supplier bidding period for Round 2 Recompete and the national mail-order recompete for diabetes testing supplies concluded on March 26, 2015. 

Contract Award Process 

The DMEPOS Competitive Bidding Program’s bid evaluation process ensures that there will be a sufficient number of suppliers to meet the needs of the beneficiaries living in a competitive bidding area. The new single payment amounts resulting from the competition replace the previous single payment amounts for the bid items in these areas. Small suppliers, those with gross revenues of $3.5 million or less, make up about 56 percent of the suppliers that will be offered contracts for Round 2 Recompete.  22 percent of national mail-order contract offers are going to small suppliers.  All suppliers that are offered contracts went through a thorough vetting process and are accredited and meet financial and applicable licensing standards. 
CMS will now begin offering contracts to winning bidders. 12,181 contract offers will be made to 637 Round 2 Recompete bidders.  Of these offers, 93 percent are to bidders who currently furnish items in the awarded area or within the product category. The winning suppliers have 2,341 locations to serve Medicare beneficiaries in the competitive bidding areas. CMS will offer 9 contracts for the national mail-order program.  CMS expects to complete the contracting process in time to announce the contract suppliers in the spring of 2016.  Bidders that are not offered contracts will be notified of the reasons why they did not qualify for the program when the contracting process is complete. Suppliers that are not contract suppliers for this round of the DMEPOS Competitive Bidding Program may bid in future rounds, unless they are precluded from participation in the program. 

Additional information on the distribution of contract offers is available at the following Web site: 

Real-Time Monitoring
Importantly, the program has maintained beneficiary access to quality products from accredited suppliers in all competitive bidding areas. 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-competitive bidding areas.  In addition to our 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 competitive bidding area 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 is used to inform beneficiaries, caregivers, and referral agents.  CMS will continue to employ the same aggressive program monitoring for future rounds. 


The Round 2 Recompete 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 the specific items in each product category, or for a list of the areas included in Round 2 Recompete, visit the Competitive Bidding Implementation Contractor website at 
Round 2 Recompete and National Mail-Order recompete Timeline of Events
March 15, 2016          CMS announces new payment rates for Round 2 Recompete and the national mail-order recompete and begins contracting process with winning suppliers
Spring 2016                CMS announces the Medicare contract suppliers for Round 2 Recompete and the national mail-order recompete; intensifies supplier, referral agent, and beneficiary education program
July 1, 2016                Implementation of Medicare DMEPOS Competitive Bidding Program Round 2 Recompete and national mail-order recompete contracts and prices
For additional information about the Medicare DMEPOS Competitive Bidding Program, please visit: