Starting in April 2008, retailers and suppliers in 10 metropolitan areas who sell certain durable medical equipment will have to become accredited and enter a competitive bidding process, according to a final rule issued by the Centers for Medicare and Medicaid Services.
Unlike other entities, physicians may opt out of competitive bidding and accreditation, but they will still have to accept a single payment for the durable medical equipment (DME) item instead of a fee schedule-based payment, Acting CMS Administrator Leslie Norwalk said in a briefing with reporters.
The new competitive bidding program was developed to reduce Medicare's substantial DME expenditures and to decrease the out-of-pocket burden for beneficiaries, who are liable for copayments of 20%.
Ms. Norwalk estimated that Medicare could shave $1 billion a year off its DME tab by the time the program is fully implemented in 2010.
The final rule will apply initially only to 10 categories of supplies and only to suppliers in 10 competitive bidding areas (CBA) that have been established by CMS. Physicians, hospitals, and other entities that sell DME, prosthetics, orthotics, and certain other supplies have submitted bids to CMS proposing charges for the items.
CMS will evaluate the bids and then, probably in December, the agency will award contracts to a certain number of bidders in each CBA, Ms. Norwalk said in the briefing.
Beginning in April 2008, Medicare will pay a single amount for each item in those areas instead of basing payments on a fee schedule, as it has in the past.
CMS will expand the program to 70 bidding areas in 2009, and to more CBAs, and to cover more DME items after that, Ms. Norwalk said.
The new bidding process was required by the Medicare Prescription Drug Improvement and Modernization Act of 2003.
Suppliers in the following 10 areas will be the first subject to the new requirements: Charlotte-Gastonia-Concord, N.C./S.C.; Cincinnati-Middletown, Ohio/Ky./ Ind.; Cleveland-Elyria-Mentor, Ohio; Dallas-Fort Worth-Arlington, Tex.; Kansas City, Mo./Kans.; Miami-Fort Lauderdale- Miami Beach, Fla.; Orlando-Kissimmee, Fla.; Pittsburgh; Riverside-San Bernardino-Ontario, Calif.; and San Juan- Caguas-Guaynabo, Puerto Rico.
The 10 categories include: oxygen supplies and equipment; standard power wheelchairs, scooters, and accessories; complex rehabilitative power wheelchairs and accessories; mail-order diabetes supplies; enteral nutrients, equipment, and supplies; continuous positive airway pressure (CPAP) devices; respiratory assist devices and supplies and accessories; hospital beds and accessories; negative pressure wound therapy pumps and supplies and accessories; walkers and related accessories; and support surfaces (group 2 and 3 mattresses and overlays).