Medicare Compliance & Reimbursement

Bidding, new quality standards confront DMEPOS suppliers.

Suppliers of durable medical equipment, prosthetics, orthotics or other supplies need to get ready--and respond fast. The future success of their businesses depends on it.

That's the message from trade groups representing DMEPOS suppliers in the days following the recent release of a lengthy, long-awaited federal proposed rule, "Medicare Program, Competitive Acquisition for Certain Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) and Other Issues."

In the 200-plus-page rule, the Centers for Medicare & Medicaid Services gives the first details of how it plans to establish and implement competitive bidding programs for furnishing certain DME and associated supplies, enteral nutrition and associated supplies, and off-the-shelf orthotics.

The feds' goals include cutting DMEPOS spending by prompting a competitive marketplace, while at the same time ushering in new quality standards for DMEPOS suppliers, according to the agency.

But there's a potential drawback: Many suppliers view competitive bidding as a policy shift that threatens the livelihood of many small businesses.

"We're strongly encouraging our members to speak out about competitive bidding," says Heather Allan, executive director of the Florida Association of Medical Equipment Suppliers, a trade group based in Orlando. "It's premature to comment on the proposed rule at this point," Allan adds, echoing the response of national trade groups.

When contacted by Eli, DME trade groups declined to comment on the specifics of the rule, pending full review.

Beware The Devil In The Details

These competitive bidding provisions are among those spelled out in the proposed rule:

The feds won't tackle the biggest markets first. The three largest metropolitan statistical areas--New York, Los Angeles and Chicago--will not take part in competitive bidding next year, when the feds plan to phase in the program.

Instead, 10 smaller MSAs will lead the way in the first round of competitive bidding in 2007. In 2009, 70 more MSAs, including New York, Los Angeles and Chicago, will join the program, with more to follow in subsequent years.

But CMS fails to spell out which MSAs will be among the first 10. Instead, CMS invites comments on various methods for selecting them.

Although the feds won't target top MSAs in the first round of bidding, suppliers in some of those markets could face competitive bidding as early as next year. That's because CMS is "considering an alternative under which we would establish competitive bidding areas (CBAs) that include portions of one or more of these MSAs (for example, by county)," the rule stipulates.

Suppliers don't need to be physically located within a CBA to submit a bid to furnish items in that area, CMS says.

Some areas will be exempt from competitive bidding. CMS will exclude from bidding rural areas and areas with low population density within urban areas, the rule proposes. Specifically, CMS will exclude areas with relatively low utilization of items, low numbers of suppliers and low numbers of beneficiaries compared to other geographic areas.

But suppliers in low-utilization areas could be affected when there is "a significant national market through mail order for a particular item," the rule notes.

CMS will phase in high-volume items first. CMS also fails to spell out the specific items up for bid, notes the American Association for Homecare. But the agency does say high-volume items topping the preliminary list are oxygen concentrators; power wheelchairs with programmable features; blood glucose/reagent strips; semi-electric hospital beds; portable gaseous oxygen; enteral formula, category I equipment; enteral feeding supply kits, pump fed, per day; powered air mattresses; stationary liquid oxygen; continuous positive airway pressure devices; manual wheelchairs; lancets; and nebulizers with compressors.

CMS proposes defining groups of products that cluster related items together.

Quality will count. "All suppliers will have to meet these quality standards to be eligible to submit claims to the Medicare program, irrespective of the competitive bidding program," states the proposed rule.

Comments on the proposed rule are due by June 30. CMS will publish the final rule later this year, the agency pledges.

The next meeting of the Program Advisory and Oversight Committee on bidding will take place sometime in May, according to CMS.

Note: The proposed rule is in the May 1 Federal Register at www.cms.hhs.gov/CompetitiveAcqforDMEPOS/downloads/cms1270p_dme.pdf.