CMS Proposes Key Changes to Competitive Bidding

September 2018

HIDA Government Affairs Update

By Linda Rouse O'Neill
Vice President, Government Affairs

The Centers for Medicare and Medicaid Services (CMS) has released a proposed rule that would significantly change bidding and pricing methodologies under the durable medical equipment prosthetics orthotics and supplies (DMEPOS) competitive bidding program. CMS stated that the goal of the rule is to “relieve regulatory burdens for providers, support the patient-doctor relationship in healthcare, and promote transparency, flexibility, and innovation in the delivery of care.” Here is a look at what the change would mean for distributors and their provider customers.

The Affordable Care Act of 2010 implemented the competitive bidding program for DMEPOS nationwide beginning in 2016. The program fundamentally changed how Medicare reimburses DMEPOS suppliers, from fee schedules to a bidding process. The winning bids are used to establish a single Medicare payment for each item in each bidding area. The bidding process is repeated every three years.

Current DMEPOS competitive bidding contracts expire at the end of 2018. CMS has not yet begun the recompete process, which generally takes between 18 and 24 months. Because of this time lag, part of the proposed rule would put the competitive bidding program on hold starting January 2019 likely through the end of 2020. Beginning on January 1, 2019, beneficiaries may receive DMEPOS items from any willing supplier until new contracts are awarded under the DMEPOS competitive bidding program. CMS notes they will provide more information at a later date.

Proposed rule brings bidding, pricing methodology changes
The proposed rule released on July 11 would change bidding and pricing methodologies, if adopted. Changes under the proposed rule include:

  • Revising the DMEPOS competitive bidding program by implementing more streamlined pricing rules.
  • Establishing a new method for determining what DMEPOS suppliers are paid.
  • Establishing three different temporary fee schedule adjustment methodologies depending on the area in which the items and services are furnished:
    1. One set of payment rules for durable medical equipment furnished on or after January 1, 2019 in areas currently subject to competitive bidding.
    2. Another set of rules for items and services provided between January 1, 2019 – December 31, 2020 in areas that are currently not subject to competitive bidding rules, and are either rural areas or not part of the lower 48 states.
    3. Another fee schedule adjustment methodology for items and services provided between January 1, 2019 – December 31, 2020 in areas that are currently not subject to competitive bidding rules, are not rural, and are part of the lower 48 states.

Looking ahead
This proposed rule underscores the administration’s interest in changing the competitive bidding program. While the Medicare Payment Advisory Committee (MedPAC) recently recommended expanding the program, it is more likely that CMS will continue moving in the opposite direction.

The proposed rule could have a positive effect on suppliers and the post-acute providers and patients they serve. In addition to streamlining the current process, the recent delays indicate CMS may be willing to reevaluate the program. This provides HIDA Government Affairs the opportunity to advocate for additional changes sought by distributors, such as the exclusion of enteral nutrition products from the program.

At this point, there has not been any independent analysis on how the program has affected the availability of medical products and physician decisions when clinically preferred products are not available. Because of the potential impact any changes could have on the distributors and providers, along with the paucity of information, HIDA will continue to engage policymakers and our members as we work to submit comments to CMS. To learn more, please contact us at