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January 31, 2013

Lower prices for certain medical equipment and supplies set to begin on July 1, 2013

By Geri Szuberla, JD, LLM

New, lower Medicare prices will go into effect this July in a major expansion of the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program, CMS announced. The CMS Office of the Actuary estimates that the program will save the Medicare Part B Trust Fund $25.7 billion and beneficiaries $17.1 billion between 2013 and 2022. Medicare beneficiaries in 91 major metropolitan areas will save an average of 45 percent for certain DMEPOS items scheduled to begin on July 1, 2013.

In addition, Medicare beneficiaries across the country will save an average of 72 percent on diabetic testing supplies under a national mail-order program starting at the same time.

Medicare's competitive bidding program replaces its existing fee schedule amounts in selected areas with prices based on suppliers' bids, saving money for taxpayers and beneficiaries while preserving access to quality products from accredited suppliers. Small businesses represent over half of the winning suppliers in these 91 metropolitan areas, according to CMS.

Bidding process. Under federal legislation that established the Competitive Bidding Program, bidding was set to begin in 10 Metropolitan Statistical Areas (MSAs) in 2007, but the bidding was delayed and modified. CMS successfully conducted the supplier competition again in nine areas in 2009. The Round One Rebid contracts and prices became effective on January 1, 2011.

Additional federal legislation 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 2016. The supplier bidding period for Round 2 and a national mail-order program for diabetic testing supplies concluded on March 30, 2012; Round 2 and national mail-order contracts and prices are scheduled to go into effect on July 1, 2013, according to a CMS Fact Sheet.

As a result of the competitive bidding process, the amounts that Medicare will pay for the eight product categories included in Round 2 of the DMEPOS Competitive Bidding Program are on average 45 percent less than Medicare's current fee schedule amounts. The eight categories are these: (1) oxygen, oxygen equipment and supplies; (2) wheelchairs, scooters and accessories; (3) enteral nutrients, supplies and equipment; (4) Continuous Positive Airway Pressure (CPAP) devices and Respiratory Assist Devices (RADs) and related supplies and accessories; (5) hospital beds and related accessories; (6) walkers and related accessories; (7) negative Pressure Wound Therapy pumps and related supplies and accessories; and (8) support surfaces (Group 2 mattresses and overlays).

Prices for mail-order diabetic supplies are on average 72 percent less than the current fee schedule amounts.

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