Unless you’re a healthcare worker using durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) or are a home healthcare company, you probably have no idea what Medicare’s DMEPOS Competitive Bidding Program (CBP) is or how it affects healthcare equipment suppliers and patients.

Frankly, it’s been a thorn in the sides of many DMEPOS companies for years. Imagine their glee when the Centers for Medicare & Medicaid Services (CMS) proposed changes to the program.

The changes, if finalized, will make things easier for Medicare patients who rely on home healthcare supplies and for the companies who furnish those medical items, as there will no longer be a monopoly on who can sell certain medical equipment to Medicare patients in your area. Home health patients will have freedom to choose from more companies with Medicare contracts.

How Medicare Competitive Bidding Works

Congress mandated CBP through the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), which required CMS to replace the current fee schedule payment methodology for DMEPOS items with a competitive bidding process. When the program began, the intent was to improve the effectiveness of the Medicare methodology for setting DMEPOS payment amounts, which would reduce Medicare patient out-of-pocket expenses and save the Medicare program money while ensuring patients access to quality items and services.

The program created Medicare competition for DME suppliers in CBP areas. DME suppliers were required to submit a bid and meet quality and financial standards for selected products. The lowest bids would get the contract with Medicare and were paid the bid price amount. In other words, companies who gave Medicare the best (lowest) price, usually larger companies who can afford a low bid, would win the bid and a contract with Medicare. It was good for keeping certain healthcare equipment costs low for Medicare patients, but bad for finding a company to supply them.

Beth V. Mullen, RRT, vice president of home health equipment company Halprin Medical, Inc., in Rochester, N.Y., said, “Companies who had Medicare contracts provided lesser service, in reality, because there was no ‘competition’ for companies who had the contracts and there were so few of them in an area that beneficiaries had little choice of who they could get their DME from.”

Proposed Changes Are a Win/Win

According to a CMS Newsroom Fact Sheet, “Beginning on January 1, 2019, beneficiaries may receive DMEPOS items from any willing supplier (until new contracts are awarded under the DMEPOS CBP).”

Home healthcare supply companies are breathing a big sigh of relief about the proposed changes.

Mullen said, “The proposed changes will benefit Halprin and small DME companies by allowing them to market their products and company to providers, facilities, and nursing agencies without limiting their customer base to non-Medicare insurances.” This will increase Halprin’s ability to do business with Medicare beneficiaries, she said.

“Even though Medicare fee schedule is low, it opens up the market to more customers and creates a fairer playing field for all companies, which will result in better service to beneficiaries,” Mullen said.

For those companies who didn’t have contracts due to CBP, but now do, the only downside is they’ll need to jump back through the hoops of government regulations to get their Medicare claims paid.

Find Out More

CMS says it will provide additional information about the DMEPOS CBP in the future. For now, you can find detailed information about the program on the CMS website.

CMS Newsroom, “New CMS Proposals to Modernize and Drive Innovation in Durable Medical Equipment and End-Stage Renal Disease Programs”

Federal Register, proposed rule, July 11, 2018