National Competitive Bidding Overview

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In April of 2007, CMS formally launched the Medicare DMEPOS competitive bidding program through publication of its “Final Rule”.  Under the Final Rule, HME providers (“suppliers”) were required to be successful bidders and meet certain program standards in order to supply selected DMEPOS items to Medicare beneficiaries in selected competitive bidding areas (“CBAs”).

To kick-start the program, suppliers in 10 selected CBAs submitted bids for contracts during the summer of 2007 (Round 1).  Bidding entities were overwhelmed by flaws in the bid submission process, financial documentation review process and bid review process.   Ultimately, after reviewing approximately 6,500 bids, CMS offered contracts to 329 suppliers during spring of 2008. 

Contract suppliers in those 10 initial bidding areas saw average reimbursement cuts of 26 percent on the product categories covered under the program.  Contracts initially went into effect on July 1, 2008.  The July 15, 2008 implementation of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) terminated these contracts and immediately reinstated all suppliers of DMEPOS for all products in the competitive bidding areas, delayed the implementation of the program, and required certain amendments to the program upon re-implementation.  As a “pay-for” for the delay in the program, suppliers in all areas of the country saw a Jan. 1, 2009 9.5 percent reduction in reimbursement for those products included in the first round of the program.

CMS-1561-IFC, the interim final rule published in the Jan. 16, 2009 Federal Register, established regulations for the “rebid” of the first round and subsequent rounds of competitive bidding as mandated by MIPPA.  The program will begin again in 2009 in 9 CBAs, with contracts scheduled to go into effect in 2010.

Competitive bidding is a sealed-auction bid program being phased in by DMEPOS product category.  Suppliers can bid on one or more product categories, but must bid on all specified codes within the category.  Competitive bidding is being phased in geographically, and will take place in 9 CBAs in Round 1.  In 2011, the program will be expanded to 70 additional CBAs areas that were announced on June 1, 2008, in Round 2.

Contracted 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).  HME providers that do not bid, or are not successful bidders, will not be able to bill Medicare for new competitively-bid items once the program begins in their CBA.

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