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House committee looks at DME competitive bidding

by Astrid Fiano , DOTmed News Writer
The House Committee on Energy and Commerce, Subcommittee on Health held a hearing on Wednesday on Medicare's Competitive Bidding Program for Durable Medical Equipment, Prosthetics, Orthotics, and Supplies.

The hearing was to consider the conception and implementation of the competitive bidding program and the Round 1 rebid, as well as the effects on patients, providers and suppliers.

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The competitive bidding program was instituted to reduce costs and fraud in DMEPOS reimbursements. Commonly furnished DMEPOS items include standard and power wheelchairs, oxygen concentrators and tanks. Federal law mandated that CMS adopt competitive bidding-based pricing for DMEPOS on a phased-in basis.

The Centers for Medicare and Medicaid Services conducted the bidding for round one of the DMEPOS competitive bidding program in 2007, but had troubles, including delays of the bid window deadline and confusion over the guidance to bidders. Congress then enacted the Medicare Improvements for Patients and Providers Act, which delayed round one and dissolved contracts awarded to winning suppliers, and made several other changes to the competitive bidding program. For example, CMS was required to institute a document review process and establish an ombudsman for the competitive bidding program to respond to complaints from beneficiaries and suppliers.

CMS conducted the competition for the round one rebid in 2009, and in July 2010, CMS announced the payment amounts for each product category and commenced a contracting process with the initial batch of winning suppliers. Final contracts and lists of suppliers for each product category in each MSA will be announced in the fall. Contracts take effect on January 1, 2011, for a three-year period. While many hail the bidding program as a necessary means to reduce the growing costs of Medicare, DMEPOS suppliers have raised concerns over the effect on patients and ineffectiveness of the program. (See DM 11051, an interview with the Accredited Medical Equipment Providers of America, for details on these concerns.)


Daniel Levinson, Inspector General of the U.S. Department of Health and Human Services, was one of the government witnesses testifying at the hearing.

Levinson discussed the Office of Inspector General's efforts to combat health care fraud, waste and abuse, as relating to medical equipment and supplies. Levinson detailed Medicare enrollment standards that still have vulnerabilities to fraudulent suppliers who are participating in the system and defrauding Medicare. He described a particular case in which an individual used street gang members to pose as nominee owners of fraudulent DMEPOS companies.
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