Some Details on the DMEPOS Competitive Bid Program - Round 2 Implementation

Medicare has issued a series of rules surrounding its Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Competitive Bid Program. These include straightening out issues concerning repairs, replacements, upgrades and so forth. The main purpose of these is to spell out whether a contract supplier must be used, or if the beneficiary has a wider choice of suppliers when they live in or travel to a competitive bid area (CBA), and to clarify the transition rules as Round 2 goes into effect on Monday, July 1, 2013.

The basic rules are:

Repair: If a beneficiary owns a piece of equipment, and it needs to be repaired, Medicare will pay for the labor and parts not otherwise covered under a manufacturer’s or supplier’s warranty. And regardless of where the beneficiary resides or travels to, Medicare will pay any Medicare-enrolled supplier for the repair, even if it is made to a competitively bid item. This is helpful for those beneficiaries who have used a particular supplier, even if they did not win in the competition and whom the beneficiary is familiar with, to make repairs to their item. But read the next paragraph.

Replacement: This gets a little tricky because of Medicare’s definition of “replacement.” Basically, if a part is needed to fix an item or component of an item, it’s considered a repair part, and the rule above holds. But if a whole component of an item is replaced, it may be considered not as a “repair,” but as a “replacement.” And if the replacement is made to an item subject to the competitive bid program in a competitive bid area, it must be made by a contract supplier. And in these circumstances, Medicare will not pay anything for a replacement made by a non-contract supplier.

But it’s really difficult to tell if something is a “repair” or a “replacement.” So, for example, certain, specific items (for example, tires, batteries, and wheels) which are replaced in their entirety are considered repairs. But if a seat cushion or some back cushions on wheelchairs are changed out, these are considered “replacements.”

One way to help sort these rather arbitrary distinctions is to list the items involved in the Round 2 competitive bid program and indicate whether they can ever be eligble for “repair.”

None of the following classes of items or supplies can be considered for “repair,” but only for replacement, and a contract supplier must always be used:

Diabetic supplies by mail
Oxygen, oxygen equipment, and supplies
Enteral nutrients, equipment and supplies
Continuous positive airway pressure (CPAP) devices, respiratory assist devices (RADs), and related supplies and accessories
Negative pressure wound therapy (NPWT) pumps and related supplies and accessories

These classes of items may be eligible for repair:

Standard (power and manual) wheelchairs, scooters, and related accessories
Complex, Rehabilitative Power Wheelchairs and Related Accessories (Group 2)
Hospital beds and related accessories
Walkers and related accessories
Support surfaces (Group 2 mattresses and overlays)

A beneficiary’s should either make certain that any work on one of these items is indeed a repair, which Medicare will pay for, or only use contract suppliers, as Medicare will pay either for a repair or a replacement if performed by one of these suppliers.

Upgrades: Medicare has a rather narrow definition of “upgrade,” and it characterizes an upgrade as a piece of equipment or a component to a piece of equipment that is not medically necessary for the beneficiary. Typically, these involve a deluxe model or feature. One example Medicare gives is that if the physician orders a wheelchair with fixed leg rests and the supplier furnishes medically unnecessary swing away elevating leg rests at the request of the beneficiary, the swing-aways would be an upgrade. Medicare does not cover upgrades under any circumstances. On the other hand, if a beneficiary’s medical condition changes such that he or she needs to have their standard joystick on their power wheelchair changes to a specialty sip and puff interface, this is seen as a “replacement.” And if the beneficiary is in a competitive bidding area, and they use a contract supplier, this is covered and would be paid for by Medicare.

One important beneficiary protection regarding upgrades is that a beneficiary is not liable for the additional cost of an upgraded item or component unless the beneficiary makes an informed decision by signing an Advance Beneficiary Notice of Noncoverage (ABN) to pay out of pocket for the cost of the upgrade. The beneficiary has no financial liability whether to a contract or non-contract supplier in a competitive bid area (CBA), or for that matter, to any Medicare-enrolled supplier anywhere, for the incremental cost of upgrading, unless prior to receiving the upgraded item, the supplier obtains a signed ABN from the beneficiary.

And note that Medicare requires that where upgrades are involved with competitively bid items (in a competitive bid area, of course), that these be done only by contract suppliers for it to make payment. At first this seems contradictory as Medicare won’t pay for these upgrades themselves, but it does pay for the basic, medically necessary item. So this rule was apparently put in place both to prevent any “gaming” of the system, and it is also used to establish the Medicare approved amount of the basic item. So beneficiaries in a competitive bid area should be certain, that if they are getting an upgrade to any of the items on the competitive bid program list, that the get this from a contract supplier.

Grandfathering: This is the term Medicare uses to describe the situation where a beneficiary’s current supplier of durable medical equipment or oxygen and oxygen equipment has failed to win in the competition, but has agreed with Medicare to become “grandfathered in,” so that they can continue to rent to or supply beneficiaries where they have already placed equipment with a beneficiary. If your current supplier is NOT “grandfathered in” they must make arrangements with you to pick up their equipment, and you have to make arrangements with a contract supplier to replace it. And Medicare wants to make it extremely clear that enteral nutrition items CANNOT be grandfathered. A Medicare beneficiary must obtain related enteral accessories, nutrition, and supplies only from a contract supplier for Medicare to pay. A special transitional rule is in effect for enteral pumps and supplies.

Enteral Transitions: Medicare uses a “15 month” rule regarding enteral nutrition (“tube feeding”) pumps. If a beneficiary had rented an enteral nutrition pump for at least 15 continuous months at the time Round 2 goes into effect on July 1, 2013, the supplier that provided the item in the 15th month of the rental period is responsible for furnishing, maintaining, and servicing the enteral equipment as long as it is medically necessary. (This is true whether or not that supplier becomes a contract supplier.) If the enteral nutrition pump was rented for less than 15 continuous months at the time of the implementation of the competitive bid program on July 1, 2013, the rental of the pump must transition to a contract supplier. Basically, the former supplier, unless they have become a competitive bid supplier, must pick up the pump in July. This pick-up should occur no earlier that the anniversary date of the pump, which is the date of the month on which the item was first delivered to the beneficiary. For example, if the equipment was first rented on October 15, 2012, the anniversary for pick-up would be July15, 2013, and the equipment in this example should not be picked up before July 15, 2013.

However, beginning July 1, 2013, the beneficiary living in or traveling to a competitive bid area must obtain all related enteral accessories, nutrients, and supplies from a contract supplier only.


If more information is needed on any of these topics, note that Medicare issued a series of helpful fact sheets in March of this year. Search www.cms.gov for “Billing Procedures for Upgrades 900983,” “Repairs and Replacements 905283,” or “Enteral Nutrition 901005,” for these.

Beneficiary Rights and Protections Regarding Durable Medical Equipment (DME)

One of the positive side-effects of the DMEPOS (durable medical equipment, prosthetics, orthotics and supplies) Competitive Bidding Program is that the Centers for Medicare & Medicaid Services (CMS) is using it as an opportunity to broadcast the message to ALL beneficiaries who use DME, no matter where they live, or no matter what equipment or supplies they use, that beneficiaries have clear-cut protections and rights concerning how they are to be supplied, treated, educated, supported, and kept safe regarding any piece of equipment, orthotic, prosthetic or supply Medicare covers and which is provided by a Medicare supplier.

More specifically, beneficiary protections and safeguards involving equipment and supplies include:

1. Beneficiaries must be treated with respect and their privacy assured.

2. Beneficiaries must be given suitable information about the set-up, safe and correct use, troubleshooting, cleaning and maintenance of their equipment.

3. Beneficiaries must be provided this information in accord with their abilities, learning preferences and language.

4. Beneficiaries must be instructed in effective infection control techniques appropriate to their equipment and supplies; this is critical for the health of the beneficiary.

5. Beneficiaries must be given, when needed, appropriate, knowledgeable, and professional assistance (including a home visit, if required) by the supplier, for example, if the equipment does not appear to be working properly, or having the desired result, or the beneficiary needs additional guidance in operating the equipment, or whenever it needs repair or maintenance.

6. Beneficiaries must be given a customer service phone number which is available both during and after regular business hours.

In addition, for certain types of equipment, such as respiratory equipment, power mobility devices (such as power wheelchairs), complex rehabilitative wheelchairs and assistive technology, additional safeguards and standards are in place.

For a more detailed statement of these rights and protections, go to www.cms.gov, search for “Supplier Quality Standards and Beneficiary Protections,” and click on the March 2013 document.

If the beneficiary believes, after contacting the suppler, that the supplier is not reasonable supportive of their rights and protections as enumerated above, they should call 1-800-Medicare and complain. Alternatively, beneficiaries may call their State Health Insurance Counseling Program (or SHIP, their number is on the back of the Medicare & You booklet) and ask for assistance. It may be that the SHIP will have to ask for a CMS Regional Office to intervene.

All Original Medicare Beneficiaries Are Actually or Potentially Affected by New Durable Medical Equipment and Supply Rules Effective July 1, 2013

Medicare is expanding its competitive bidding program for durable medical equipment (DME) and allied supplies. This program is formally called the Medicare’s Competitive Bidding Program for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). This expansion is called “Round 2” because the first round went into effect on January 1, 2011, and has been deemed a success in that it significantly lowered prices paid on these items and supplies. This competitive bidding program requires suppliers in a particular area to go through a bidding process to establish the prices that Medicare pays for certain durable medical equipment items and supplies rather than establishing the prices by the general method of using a fee schedule set by the Medicare program. And only those who successfully bid may be paid by Medicare. The entire issue of using competition or direct federal negotiation rather than the current regulatory processes to lower health care costs for Medicare beneficiaries is a controversial and rather politicized issue, but we will undoubtedly see more of it in the future.

Basically, beginning on July 1, 2013, anytime you rent or purchase an item or supply on the list of items and supplies involved in this program while you reside in or visit the areas mentioned, you will have to get it from a supplier which has a contract with Medicare under the Competitive Bidding Program. If you do not, Medicare will not pay anything. As with any Medicare activity, exceptions to this rule can apply, and these are discussed below. And it’s worth repeating, the place where you get the item or supply governs, so even if you travel to one of these areas and get an item or supply on the list there, you must use a contract supplier for Medicare to pay anything.

And, interestingly, the price you pay for an item or supply will depend on where you reside. Your residence is determined by what address is in the records of the Social Security Administration; you can contact it (1-800-772-1213) if you address is out-of-date or incorrect.

To simplify this as much as possible, I am dividing this into four audiences, but remember that all of this applies only to beneficiaries in Original (fee-for-service) Medicare. (Those of you in Medicare Advantage need to carefully check with your Plan before you purchase or rent any durable medical equipment or supplies and follow your Plan’s instructions, which you should do whenever you are in Medicare Advantage no matter what medical service, item or supply you use.)


Mail Order Diabetic Supplies

The first audience is everyone in Original (fee-for-service) Medicare no matter where you live. Effective with July 1, 2013, if you order your diabetic supplies by mail, and these include test strips for home glucose monitors and lancets, only certain mail order suppliers will be approved by Medicare. So use only these. And if you don’t want your diabetic testing supplies delivered to your home, you can go to any local store that’s enrolled with Medicare and buy them there. The amount Medicare pays will be the same for diabetic testing supplies you buy at the store or have delivered to your home. Local stores also can’t charge more than any unmet deductible and 20% coinsurance if they accept assignment, which means they accept the Medicare-approved amount as payment in full. Local stores that don’t accept Medicare assignment may charge you more than 20% coinsurance and any unmet deductible. If you get your supplies from a local store, check with the store to find out what your payment will be.


New Areas and Items (Round 2)

Second, if you live in or travel to any state except Alaska, Maine, Montana, the Dakotas, Vermont and Wyoming, at least part of your state will be coming into this program effective with July 1, 2013. You need to look at the list of metropolitan statistical areas (MSAs) which will be coming into this program on that date (It’s a long list, and it’s at the very end of this post.) to see if you are affected. You can also call 1-800-MEDICARE and ask if your home’s ZIP code, or the ZIP code you have traveled to, is in any of these areas. Alternatively, you can go onto www.medicare.gov/supplier and enter your ZIP code.

The following categories of items and supplies are the ones which will be included in the new Round 2. Items and supplies not on this list may be obtained from any Medicare approved supplier (except, of course, diabetic supplies by mail).

Oxygen, oxygen equipment, and supplies
Standard (power and manual) wheelchairs, scooters, and related accessories
Enteral nutrients, equipment and supplies
Continuous positive airway pressure (CPAP) devices, respiratory assist devices (RADs), and related supplies and accessories
Hospital beds and related accessories
Walkers and related accessories
Negative pressure wound therapy (NPWT) pumps and related supplies and accessories
Support surfaces (Group 2 mattresses and overlays)


Areas Already in the Competitive Bidding Program (Round 1)

And if you live in or travel to one of these eleven states California, Florida, Indiana, Kansas, Kentucky, Missouri, North Carolina, Ohio, Pennsylvania, South Carolina, or Texas – you may already be in a competitive bidding area. Specifically, this third audience is those of you who live in or travel to any of the metropolitan statistical areas (MSAs) listed below, all of which were in Round 1:

Cincinnati-Middletown, OH-KY-IN
Cleveland-Elyria-Mentor, OH
Charlotte-Gastonia-Concord, NC-SC
Dallas-Fort Worth-Arlington, TX
Kansas City, MO-KS
Miami-Fort Lauderdale-Pompano Beach, FL
Orlando-Kissimme, FL
Pittsburgh, PA
Riverside-San Bernardino-Ontario, CA

A new round of bidding will take place in these areas, and it will go into effect on July 1, 2014. It will use the list of items and supplies currently in effect for your area, with some modifications. This revised Round 1 list of items and supplies is shown below.

Oxygen, oxygen equipment, and supplies
Standard power wheelchairs, scooters, and related accessories
Complex rehabilitative power wheelchairs and related accessories (Group 2 only)
Enteral nutrients, equipment and supplies
Continuous positive airway pressure (CPAP) devices, respiratory assist devices (RADs), and related supplies and accessories
Hospital beds and related accessories
Walkers and related accessories
Support surfaces (Group 2 mattresses and overlays in the Miami–Fort Lauderdale–Pompano Beach, FL area only)

(For the Round 1 recompete both negative pressure wound therapy (NPWT) items and services as well as Group 3 complex rehabilitative power wheel chairs have been deleted from the list used in the original Round 1 bid. As had mail order diabetic supplies as of January 1, 2013, but these will be subject to the program no matter where you live effective with July 1, 2013.)

For those of you who are already renting an item of DME or using supplies in these areas, it is possible that your current supplier may not win this new round of competition. If so, your supplier will have to inform you of this. And it may be that the price for an item or supply you are using may change because of the rebid.

Puerto Rico

The fourth audience is those Medicare beneficiaries who live in or travel to Puerto Rico, which was also in the Round 1 competition. Your list of items subject to the program will not change, nor will there be any recompete in your area, so the suppliers which are currently in the program will not change, nor will the Medicare prices established by the bidding process. Of course, you will be included in the national mail order diabetic supplies program as of July 1, 2013. But if you begin to buy or rent any of these items, or use any of these supplies, you should use only a contract supplier.

To recap, these are the items covered by the competitive bid program in Puerto Rico:
Oxygen, oxygen equipment, and supplies
Standard power wheelchairs, scooters, and related accessories
Complex rehabilitative power wheelchairs and related accessories (Groups 2 & 3)
Enteral nutrients, equipment and supplies
Continuous positive airway pressure (CPAP) devices, respiratory assist devices (RADs), and related supplies and accessories
Hospital beds and related accessories
Walkers and related accessories
Negative pressure wound therapy (NPWT) items and services


Exeptions:

We mentioned above that there are exceptions to the rule that only contract suppliers can be paid by Medicare. Here is a recap of those exceptions.

Currently rented equipment If you’re currently renting durable medical equipment or oxygen and oxygen equipment, and your current supplier doesn’t bid successfully, you may be able to continue renting your equipment from that supplier if they decide to become a “grandfathered” supplier. Your supplier should already have notified you in writing if they’ll continue to rent you the equipment. If your supplier decides not to become a grandfathered supplier, they’ll notify you in writing to make arrangements to pick up the equipment. You should contact a contract supplier for new equipment.

If you continue to use a non-contract supplier that isn’t a grandfathered supplier for equipment or supplies that are part of the competitive bidding program, the supplier must give you an “Advance Beneficiary Notice” (ABN). This notice tells you that Medicare usually won’t pay for the item or service, and you may be responsible for paying the entire cost. If you don’t switch to a contract supplier, you will be responsible for the full cost of the item or/or supplies.

Repairs to already owned equipment If you already own medical equipment, you can use any Medicare-approved supplier for repairs. Before your equipment is serviced, make sure the supplier is Medicare-approved so the service may be covered. If your equipment needs to be replaced and it is one of the items subject to competitive bidding, you must use a Medicare contract supplier for Medicare to pay.

Certain walkers and wheelchairs furnished by certain practitioners and hospitals Medicare will pay for certain items, like a walker or folding manual wheelchair, furnished by your doctor or treating health care provider (including physician assistants, clinical nurse specialists, and nurse practitioners), even if he or she isn’t a Medicare contract supplier, as long as the item is supplied in the office during a visit for medical care and is medically necessary. If you’re hospitalized and need a walker or folding manual wheelchair, Medicare will also pay for these items furnished by the hospital while you’re admitted or on the day you’re discharged from the hospital. This does not apply to a skilled nursing facility or nursing home which supplies you with one of these items unless it is a contract supplier.

A specific brand or item is required by medical necessity If you need a specific brand of equipment or supplies, or you need an item in a specific form, your doctor must prescribe the specific brand or form in writing. Your doctor must also document in your medical record that you need this specific item or supply for medical reasons. In these situations, a Medicare contract supplier is required to furnish the exact brand or form of item you need, or help you find another contract supplier that offers that brand or form, or work with your doctor to find an alternate brand or form that’s safe and effective for you. But in these cases you must always use a contract supplier, even though the one you were originally referred to may not be able to obtain the specific item or supply for you.

Your primary insurance makes you use a supplier not in the bid program If your primary medical insurance requires you to use a supplier that doesn’t participate in the program, Medicare may make a secondary payment to that supplier. The supplier must meet Medicare enrollment standards and be eligible to get secondary payments. For more information, check with your benefits administrator, insurer, or plan provider.


Round 2 Areas

This is the list of all metropolitan statistical areas (MSAs) which are in Round 2; it is divided by area of the country: West, Midwest, South and Northeast:

West
Albuquerque, NM
Bakersfield - Delano, CA
Boise City-Nampa, ID
Colorado Springs, CO
Denver-Aurora-Broomfield, CO
Fresno, CA
Honolulu, HI
Las Vegas-Paradise, NV
Los Angeles-Long Beach-Santa Ana, CA
Oxnard-Thousand Oaks-Ventura, CA
Phoenix-Mesa-Glendale, AZ
Portland-Vancouver-Hillsboro, OR-WA
Sacramento-Arden-Arcade-Roseville, CA
Salt Lake City, UT
San Diego-Carlsbad-San Marcos, CA
San Francisco-Oakland-Fremont, CA
San Jose-Sunnyvale-Santa Clara, CA
Seattle-Tacoma-Bellevue, WA
Stockton, CA
Tucson, AZ
Visalia-Porterville, CA

Midwest
Akron, OH
Chicago-Joliet -Naperville, IL-IN-WI
Columbus, OH
Dayton, OH
Detroit-Warren-Livonia, MI
Flint, MI
Grand Rapids-Wyoming, MI
Huntington-Ashland, WV-KY-OH
Indianapolis-Carmel, IN
Milwaukee-Waukesha-West Allis, WI
Minneapolis-St. Paul-Bloomington, MN-WI
Omaha-Council Bluffs, NE-IA
St. Louis, MO-IL
Toledo, OH
Wichita, KS
Youngstown-Warren-Boardman, OH-PA

South
Asheville, NC
Atlanta-Sandy Springs-Marietta, GA
Augusta-Richmond County, GA-SC
Austin-Round Rock-San Marcos, TX
Baltimore-Towson, MD
Baton Rouge, LA
Beaumont-Port Arthur, TX
Birmingham-Hoover, AL
Cape Coral-Fort Myers, FL
Charleston-North Charleston-Summerville, SC
Chattanooga, TN-GA
Columbia, SC
Deltona-Daytona Beach-Ormond Beach, FL
El Paso, TX
Greensboro-High Point, NC
Greenville-Mauldin-Easley, SC
Houston-Sugar Land-Baytown, TX
Jackson, MS
Jacksonville, FL
Knoxville, TN
Lakeland-Winter Haven, FL
Little Rock-North Little Rock-Conway, AR
Louisville/Jefferson County, KY-IN
McAllen-Edinburg-Mission, TX
Memphis, TN-MS-AR
Nashville-Davidson-Murfreesboro-Franklin, TN
New Orleans-Metairie-Kenner, LA
Northport-Bradenton-Sarasota, FL
Ocala, FL
Oklahoma City, OK
Palm Bay-Melbourne-Titusville, FL
Raleigh-Cary, NC
Richmond, VA
San Antonio-New Braunfels, TX
Tampa-St. Petersburg-Clearwater, FL
Tulsa, OK
Virginia Beach-Norfolk-Newport News, VA-NC
Washington-Arlington-Alexandria, DC-VA-MD-WV

Northeast
Albany-Schenectady-Troy, NY
Allentown-Bethlehem-Easton, PA-NJ
Boston-Cambridge-Quincy, MA-NH
Bridgeport-Stamford-Norwalk, CT
Buffalo-Niagara Falls, NY
Hartford-West Hartford-East Hartford, CT
New Haven-Milford, CT
New York-Northern New Jersey-Long Island, NY-NJ-PA
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD
Poughkeepsie-Newburgh-Middletown, NY
Providence-New Bedford-Fall River, RI-MA
Rochester, NY
Scranton-Wilkes-Barre, PA
Springfield, MA
Syracuse, NY
Worcester, MA