CMS Awards Contracts for Round 2 Recompete

WASHINGTON, D.C. (May 5, 2016)—The Centers for Medicare & Medicaid Services (CMS) announced the Round 2 Recompete and national mail-order recompete contract suppliers for Medicare’s Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program. This program has been in effect since 2011 and is an essential tool to help Medicare set appropriate payment rates for DMEPOS items, save money for beneficiaries and taxpayers, and ensure access to quality items.

Prior to the DMEPOS Competitive Bidding Program, Medicare paid for these DMEPOS items using a fee schedule that is generally based on historic supplier charges from the 1980s. Numerous studies from the Department of Health and Human Services’ Office of Inspector General and the Government Accountability Office have shown these fee schedule prices to be excessive, and taxpayers and Medicare beneficiaries bear the burden of these excessive payments.

Under the program, DMEPOS suppliers compete to become Medicare contract suppliers by submitting bids to furnish certain items in competitive bidding areas (CBAs). After the first two years of Round 2 and the national mail-order programs (July 1, 2013–June 30, 2015), Medicare has saved approximately $3.6 billion while health-monitoring data indicate that its implementation is going smoothly with few inquiries or complaints and has had no negative impact on beneficiary health outcomes.

The Round 2 and national mail-order program contract periods expire on June 30, 2016. Round 2 Recompete and the national mail-order recompete contracts will be effective from July 1, 2016 through December 31, 2018. The national mail-order recompete for diabetes testing supplies will be implemented at the same time as Round 2 Recompete and will include all parts of the United States, including the 50 States, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, and American Samoa.

Background
The Medicare DMEPOS Competitive Bidding Program was established by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“Medicare Modernization Act” or “MMA”) after the conclusion of successful demonstration projects. Under the MMA, the DMEPOS Competitive Bidding Program was to be phased in so that competition under the program would first occur in 10 Metropolitan Statistical Areas (MSAs) in 2007. The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) temporarily delayed the program in 2008 and made certain limited changes. In accordance with MIPPA, CMS successfully conducted the supplier competition again in nine areas in 2009, referring to it as the Round One Rebid.

MIPPA also delayed the competition for Round 2 from 2009 to 2011 and authorized national mail-order competitions after 2010. The Affordable Care Act of 2010 (ACA) expanded the number of Round 2 MSAs from 70 to 91 and specified that all areas of the country be subject to either DMEPOS competitive bidding or payment rate adjustments using competitively bid rates by 2016.

Competitive bidding contracts and pricing have been in place in Round 1 areas since January 1, 2011 with the current Round 1 Recompete contracts and prices being in place since January 1, 2014. CMS is currently evaluating bids received as part of the Round 1 2017 competition, which is scheduled to be implemented on January 1, 2017.

Contract Award Process
For Round 2 Recompete, CMS has executed 586 DMEPOS competitive bidding program contracts (91 percent of contracts offered). The Round 2 Recompete contract suppliers have 2,200 locations to serve Medicare beneficiaries in these CBAs. CMS has also awarded 9 national mail-order recompete contracts (100 percent of contracts offered). Contract suppliers are required to meet CMS’ quality standards, meet applicable state licensure requirements, and be accredited by a CMS approved independent accreditation organization.

The DMEPOS Competitive Bidding Program’s bid evaluation process ensures that there will be a sufficient number of suppliers, including small suppliers, to meet the needs of the beneficiaries living in the CBAs. In fact, 92 percent of contract suppliers are already established in the CBA, the product category, or both. CMS was required to include small supplier protections for the program, and instituted a 30 percent small supplier target in each CBA. For Round 2 Recompete, 92 percent of small suppliers, those with gross revenues of $3.5 million or less as defined for the program, accepted their contract offer and make up 62 percent of all contract suppliers.

Bidders that were not offered contracts were notified of the reason(s) why they did not qualify for the program. All suppliers that did not win contracts were provided a targeted period to ask questions or express concerns about the reason(s) why they were not awarded a contract. Suppliers that are not contract suppliers for this round of the Program may bid in future rounds, unless they are precluded from participation in the program.

A list of Round 2 Recompete and national mail-order recompete contract supplier names is available at dmecompetitivebid.com. Current contract supplier locations for each product category in a CBA can be found in the Supplier Directory at medicare.gov/supplier.

PROGRAM MONITORING
Importantly, the program has maintained beneficiary access to quality products from accredited suppliers in all CBAs. Extensive real-time monitoring data have shown successful implementation with very few beneficiary complaints and no negative impact on beneficiary health status based on measures such as hospitalizations, length of hospital stay, and number of emergency room visits compared to non-CBAs. In addition to real-time claims monitoring, CMS also requested feedback from beneficiaries through consumer satisfaction surveys conducted before and after each round of the program. CMS provides a local, on-the-ground presence in each CBA through the CMS regional offices, local liaisons, and a Competitive Acquisition Ombudsman who closely monitors and responds to inquiries and complaints about the application of the program from beneficiaries who use items of DMEPOS under the program, contract suppliers who provide these items, and other stakeholders. There is also a formal complaint process for beneficiaries, caregivers, providers and suppliers to use for reporting concerns about contract suppliers or other competitive bidding implementation issues. In addition, contract suppliers are responsible for submitting reports identifying the brands of products they furnish, which is used to inform beneficiaries, caregivers, and referral agents. CMS will continue to employ the same aggressive program monitoring for future rounds.

ROUND 2 RECOMPETE PRODUCT CATEGORIES AND AREAS
The Round 2 Recompete product categories are:

• Enteral Nutrients , Equipment, and Supplies
• General Home Equipment and Related Supplies and Accessories
  •  includes hospital beds and related accessories, group 1 and 2 support surfaces, commode chairs, patient lifts, and seat lifts
• Nebulizers and Related Supplies
• Negative Pressure Wound Therapy (NPWT) Pumps and Related Supplies and Accessories
• Respiratory Equipment and Related Supplies and Accessories
  • includes oxygen, oxygen equipment, and supplies; continuous positive airway pressure (CPAP) devices and respiratory assist devices (RADs) and related supplies and accessories
• Standard Mobility Equipment and Related Accessories
  • includes walkers, standard power and manual wheelchairs, scooters, and related accessories
• Transcutaneous Electrical Nerve Stimulation (TENS) Devices and Supplies

For a list of specific items in each product category, or for a list of the areas included in Round 2 Recompete, visit the Competitive Bidding Implementation Contractor website, dmecompetitivebid.com.

Round 2 Recompete and National Mail-Order Recompete Timeline
April 28, 2016—CMS announces the Medicare contract suppliers for Round 2 Recompete and the national mail-order recompete; intensifies supplier, referral agent, and beneficiary education program
July 1, 2016—Implementation of Medicare DMEPOS Competitive Bidding Program Round 2 Recompete and national mail-order recompete contracts and prices