From the CMS Press Release:

Program To Purchase Durable Medical Equipment Beginning Second Phase

CMS announced the next steps for a major expansion of a competitive bidding program that helps lower costs for quality durable medical equipment, prosthetics, orthotics, and supplies. The competitive bidding program uses competitions between suppliers to set new, lower payment rates for certain medical equipment and supplies, such as oxygen equipment, walkers, and some types of power wheelchairs. The first phase of the program was successfully implemented for nine product categories in nine areas of the country on January 1, 2011.

To date, Round One of competitive bidding has yielded savings of 35% compared to the fee schedule, 51% of contracts awarded to small businesses, and no changes in beneficiary health status. Inquiries in the first quarter of 2011 totaled less than 0.9 percent of calls to the Medicare call center, and Medicare received only 45 complaints during that time.

As required by law, CMS will conduct the second phase of the program for a similar set of products in 91 major metropolitan areas. Competition begins this fall, and the new prices will be in effect on July 1, 2013.

From a beneficiary standpoint, there will be no immediate effect in areas where the program is expanding. These beneficiaries may continue to use their current suppliers at this time. Similar to the successful implementation of Round 1 of the program, CMS will conduct extensive outreach to beneficiaries in the Round 2 areas prior to the new program taking effect.

The expanded Round Two categories of products are:

• Oxygen, oxygen equipment, and supplies;
• Standard (Power and Manual) wheelchairs, scooters, and related accessories (a new category that combines all mobility devices);
• Enteral nutrients, equipment, and supplies;
• Continuous Positive Airway Pressure (CPAP) devices and Respiratory Assist Devices (RADs) and related supplies and accessories;
• Hospital beds and related accessories;
• Walkers and related accessories;
• Negative Pressure Wound Therapy pumps and related supplies and accessories (new category);
• Support surfaces (Group 2 mattresses and overlays).

CMS will now begin a pre-bidding supplier awareness program for Round Two, and conduct a national mail order competition for diabetic testing supplies at the same time as the Round Two competition. A list of ZIP codes included in Round Two and a list of the specific items in each product category are available on the website for the Competitive Bidding Implementation Contractor, www.dmecompetitivebid.com.

Additional information on the competitive bidding program is available at: http://www.cms.hhs.gov/DMEPOSCompetitiveBid/01_overview.asp#TopOfPage

View the entire press release here.