Medicare announces next steps for competitive bidding on orthotics

The Centers for Medicare & Medicaid Services (CMS) issued an interim final regulation with comment period that incorporates changes required by the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA).

This, along with a new Federal advisory committee, are the next steps before CMS restarts the Medicare Competitive Bidding Program for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) consistent with these regulations.

“Because of concerns about the implementation of the competitive bidding program, Congress called for a delay of the program and made certain changes, which this new regulation carries out,” said Kerry Weems, CMS acting administrator. “Implementing the law’s changes and appointing members to the program’s oversight committee are the first steps to take to restart the competitive bidding process.”

As part of MIPPA, Congress enacted a temporary delay in the competitive bidding program for Round One Competitive Bidding Areas. The law required CMS to terminate the existing contracts that were awarded in Round One and recompete the contracts in 2009. Additionally, the new law establishes a special document review process and a requirement for contracted suppliers to report relationships with suppliers with whom they subcontract. MIPPA also excluded certain DMEPOS items and areas from competitive bidding and provided an exemption to the program for hospitals that furnish certain types of DMEPOS items to their own patients. CMS plans to issue additional information about the program in the upcoming months, including a complete timetable of the Round One rebidding process.

The prior Round One of the DMEPOS competitive bidding program was implemented on July 1, 2008, in 10 competitive bidding areas, as mandated by the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA). Round One was projected to result in average annual savings of 26 percent when compared to payments under the traditional fee schedules, based on competitive bids submitted by equipment suppliers in the 10 areas. MIPPA delayed Round One of the program, but did not fundamentally change the nature of the competitive bidding program or the existing competitive bidding regulations.

In the lead up to Round One competitive bidding last year, many suppliers submitted bids outside of the competitive range, and there were many concerns about financial documentation and standards accompanying the bids. In addition, there were questions about contracting and subcontracting arrangements for winning suppliers and state licensure issues.

In addition, CMS announced the new Program Advisory and Oversight Committee (PAOC) members, who will provide advice to the Secretary on a number of issues related to the implementation of the program and will assist the Secretary focus on key operational issues because of their expertise in a broad range of issues, including quality standards, accreditation, and beneficiary issues.

“CMS is excited about the expertise our new PAOC members bring to the table,” said CMS Acting Administrator Kerry Weems. “Their broad range of knowledge and practical, ‘on the ground’ experience will be invaluable as we move forward with the competitive acquisition program.”

When combined with Medicare’s accreditation and quality standards efforts, the competitive bidding program will help to assure that high quality service and items continue to be available to beneficiaries who need medical equipment to use at home. The program will also assist CMS in addressing fraud and abuse issues in the current DMEPOS non-competitive system cited by the U.S. Department of Health and Human Services Office of Inspector General and the U.S. Government Accountability Office.