Competitive Bidding
Ready or not, here it comes
by Cara C. Bachenheimer

It’s been a while since we have focused on the implementation of Round 2021 of the competitive bidding program for durable medical equipment, prosthetics, orthotics and supplies (DMEPOS). Given that the bid window closed in September 2019 and we are in the middle of the second year of the “gap period” when there is no competitive bidding, this is understandable. Plus, there’s that small issue of the COVID-19 pandemic that has been consuming our collective attention.

Nonetheless, the Centers for Medicare & Medicaid Services (CMS) plans to move forward with implementing the program on Jan. 1, 2021. Now that we are less than five months away from the scheduled start of Round 2021, it’s time to dive back in and understand CMS’s expected next steps and what will be different and new for Round 2021—both in and out of competitive bid areas (CBAs).

What’s Next?

CMS says on its website that it will announce the Round 2021 single-payment amounts (SPAs) in summer 2020; in the fall, it will announce the contractors for the 130 CBAs that cover 100 metropolitan statistical areas across the country. If CMS is consistent with the timing of announcements for previous rounds of the bid program, it will announce the SPAs in mid-September and the contractors in October. (Summer technically ends Sept. 22, 2020.) Round 2021 was the first time that bidders were required to secure a bid bond of $50,000 for each area they submitted a bid.

Competitive bidding means that only contracted DME suppliers can provide beneficiaries residing in CBAs with items included in the bid program. Bidders submitted bids for one or more product categories in each of the 130 CBAs across the country. Contractors may win one or more product category contracts in each of the bid areas.

Here’s a look at four main things you need to know about competitive bidding:

1. Products

There are 15 product categories in the bid program since CMS agreed this April to remove non-invasive ventilators, which was a victory for respiratory providers. The product categories are: commode chairs, CPAPs and respiratory assistive devices, enteral nutrition, hospital beds, nebulizers, negative pressure wound therapy pumps, off-the-shelf back braces, off-the-shelf knee braces, oxygen and oxygen equipment, patient lifts and seat lifts, standard manual wheelchairs, standard power wheelchairs, support surfaces (Groups 1 and 2), TENS units and walkers. All of these have been included in the previous round except for the off-the-shelf knee and back braces.

2. Bid Areas

There are 130 competitive bidding areas that cover 100 metropolitan statistical areas comprising about half of Medicare DME utilization. All of the bid areas that include multiple states are divided into separate bid areas so that no single bid area crosses a state line. The beneficiary residence (by ZIP code) determines whether only contract suppliers can provide the beneficiary with the competitive bid item/service, not the location of the DME supplier. These are the same bid areas that have been included in previous rounds of the program. A complete list of all the bid areas by state and ZIP code is on the competitive bidding implementation contractor (CBIC) website.

3. Payment in CBAs

Payment in the bid areas will be restricted to contract suppliers, and the single payment amounts (SPAs) will be based on the new lead item pricing methodology that CMS has implemented for Round 2021. Under the lead item pricing method, bidders submitted a bid only on the lead item in each product category. The lead item is the item in the product category with the highest total national Medicare-allowed charges from the previous year. All other items in the product category will be priced from that lead item, based on the relative payment levels reflected in the 2015 Medicare fee schedules (prior to competitive bid-based pricing). There is speculation about whether the new lead item pricing methodology will result in better pricing since bidders were able to increase their lead item bid up to the 2015 unadjusted fee schedule level. The resulting impact on non-lead items, however, was one that bidders should have been mindful of when establishing their lead item bids.

4. Payment Rates Outside of the Bid Areas

At press time, there is complete uncertainty about the 2021 payment rates in non-bid areas due to two reasons: the COVID-19 public health emergency and the fact that CMS has not yet issued its Medicare DME proposed payment rule for 2021.

Under the CARES law, which passed on March 27, 2020, Congress set higher payment rates in non-rural, non-bid areas that will be in effect through the crisis. The Department of Health and Human Services (HHS) has extended the emergency to the end of October 2020. Depending on the COVID-19 situation in October, HHS may decide to extend it an additional three months. (Public health emergencies are established by the HHS secretary for three months and can be extended if the secretary chooses to do so.) If the emergency remains in effect past Jan. 1, 2021, then the CARES law rates in non-CBAs will be in effect through the duration of the crisis because the law takes precedence over CMS’s regulation establishing payment rates in non-bid areas.

The CARES law established higher rates for DME in non-CBAs for the duration of the emergency beginning March 6, 2020. In non-rural non-CBAs, the payment rates are set at a blended rate of 75% adjusted and 25% unadjusted of the 2015 fee schedule rates. In rural non-competitive bidding areas, the payment rates are set at a blended rate of 50% adjusted and 25% unadjusted of the 2015 fee schedule rates. The CARES law also eliminated the 2020 2% CMS sequestration cut through Dec. 31, 2020.

If the public health emergency is over by Jan. 1, 2021, then CMS’s rates that were established via regulation will be in effect. At press time, however, CMS had not yet published the proposed payment rule. During the last round of competitive bidding, CMS had established payment rates in non-bid areas based on an average of the competitive bid program’s SPA for the item in that region of the country. (CMS has divided up the country into eight regions for this purpose.) Payment rates in non-CBAs designated as rural for purposes of DME payment received a 10% increase over the average of the SPAs in that region. Whether CMS returns to that payment methodology or creates a new one will depend upon what is in CMS’s final payment rule later this year.

For more information, visit CMS’s website on competitive bidding at and the industry’s educational website at

Cara C. Bachenheimer, Esq., heads up the government affairs practice at Brown & Fortunato, a law firm with a national health care practice based in Texas. Her practice focuses on federal lobbying activities with Congress, the administration and federal regulatory agencies such as CMS, the Food and Drug Administration, the Internal Revenue Service and the Federal Aviation Administration. Bachenheimer has been closely involved with the home medical equipment industry for 30 years, working in Washington, D.C., as well as on a grassroots basis across the country. She is a member of HomeCare’s Editorial Advisory Board. She can be reached at (571) 643-1676 or