Get ready for competitive bidding for DME

September 26, 2005

CMS is pursuing changes in the durable medical equipment (DME) benefit under the Medicare Modernization Act (MMA) that will have a profound effect on the way beneficiaries receive services and the way pharmacies and other DME suppliers provide those services. Laurence Wilson, director of the Chronic Care Policy Group for CMS' Center for Medicare Management, delivered this message to attendees of the National Association of Chain Drugstores Pharmacy and Technology Conference held recently in San Diego.

CMS is pursuing changes in the durable medical equipment (DME) benefit under the Medicare Modernization Act (MMA) that will have a profound effect on the way beneficiaries receive services and the way pharmacies and other DME suppliers provide those services. Laurence Wilson, director of the Chronic Care Policy Group for CMS' Center for Medicare Management, delivered this message to attendees of the National Association of Chain Drugstores Pharmacy and Technology Conference held recently in San Diego. He emphasized that retail pharmacies are important DME suppliers for beneficiaries at the local level for such products as diabetic supplies, canes, walkers, and infusion pumps.

"The MMA made many changes in the existing fee-for-service benefits under Medicare; among them was expanding the realm of competition in the fee-for-service benefit program," he said. He provided the following statistics:

Under the new DME program, CMS will conduct a competition among suppliers who operate in a particular service area and will award contracts to the Medicare suppliers who offer the best price and meet applicable quality and financial standards.

Noting that Congress established a program advisory and oversight committee to assist CMS in designing this new system, Wilson said the new competitive bidding program applies to DME, off-the-shelf orthotics, and enteral nutrition. "There is a fair amount of discretion in the law about what and when to bring things into this new program. We need to look at what types of products have DME potential," Wilson noted. CMS is required by law to begin competitive bidding in 10 metropolitan statistical areas in 2007. "That expands to 80 areas in 2009, and CMS can expand this program to additional areas in 2010."

In late October/early November, Wilson added, CMS expects to publish a proposed rule outlining the direction CMS anticipates taking with competitive bidding for DME. After a 60-day comment period, CMS will review comments and issue a final rule. CMS also expects to publish quality standards by late October or early November. Wilson went on to say that CMS can implement the competitive bidding process centrally through government staff, or the agency can provide for a contractor to manage the process to work with beneficiaries and suppliers at the local level.

Educating suppliers and beneficiaries is a priority. "In the past a beneficiary could work with any supplier to get the needed services; that will no longer be true. For competitively bid items and areas, beneficiaries will have to go to a winning supplier, and only those suppliers can bill Medicare for competitively bid items," stated Wilson. CMS may have bidding conferences via the Web or other electronic means. "Once we select the bidders, we will work with them to develop contracts. The statute talks about a period of three years before items are rebid."

Wilson continued, "Product category selection will be important. A number of different items and services could fall under this competition, such as diabetic supplies, lancets, blood glucose monitors, canes, walkers, and wheelchairs."

Wilson concluded that CMS wants to maintain a level playing field for providers. "There are many good suppliers/providers. We are looking at general standards for all DME providers and product-specific standards as well. With respect to product standards, we are looking at how products are inspected, prepared, delivered, and set up."