Medicare Releases DME Rates Adjusted by Bidding Data

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By Mindy Yochelson

Nov. 25 — Medicare has released fee schedule reimbursement amounts for durable medical equipment prosthetics, orthotics and supplies (DMEPOS) that, for the first time, use information gathered from competitive bidding to affect amounts given suppliers in places in which the bidding hasn't taken place.

The Centers for Medicare & Medicaid Services, in a Nov. 23 fact sheet, said it has adjusted fee schedule payments using data gathered from the 99 competitive bidding areas for 11 items, including oxygen and equipment and infusion pumps.

Starting Jan. 1, 2016, the CMS will begin phasing in rates for suppliers outside of the 99 areas “based on information from competitive bidding programs conducted in each region” but limited by a floor and a ceiling.

Program Savings

“This requirement provides savings for the program and all beneficiaries without having to establish competitive bidding programs throughout the entire United States,” according to the fact sheet.

Examples from a chart indicate that under the 2016 fee schedule, the cost to purchase a walker would drop 26 percent from 2015 in urban areas and 24 percent in rural areas and that the cost to rent powered mattresses would decline 32 percent in urban areas and 30 percent in rural areas.

“The program is intended to set more appropriate DMEPOS payment amounts, which will reduce beneficiary out-of-pocket expenses and save the Medicare program money while ensuring beneficiary access to quality items and services,” the fact sheet said.

While the CMS contends that moving from a fee schedule to competitive bidding has saved hundreds of millions of dollars, bidding is disliked by some suppliers and beneficiary groups who say the lower rates have led to beneficiary access problems as suppliers are driven out of business.

The CMS published a final rule on the methodology in October 2014. A special provision was established for adjusting fee schedule amounts for suppliers in rural areas (25 MCR 1333, 11/7/14).

Phase-In Period

The phase-in period is from January to June, during which reimbursements will be based on a 50-50 blend of current rates and adjusted rates. During the six-month transition, “health outcomes and access to these items and services can be closely monitored,” the agency said.

In addition to oxygen and pumps, items affected are continuous positive airway pressure devices; standard manual and power wheelchairs, scooters and walkers; group 2 complex rehabilitative power wheelchairs; hospital beds, commode chairs, patient lifts and seat lifts; support surfaces or pressure reducing mattresses and overlays; enteral nutrients, supplies and equipment; negative pressure wound therapy pumps; transcutaneous electrical nerve stimulation devices; and standard nebulizers.


The change has drawn the attention of Congress.

Sen. John Thune (R-S.D.) introduced S. 2312 Nov. 19 “to address the problem caused by the national rollout of competitively bid DME prices to non-competitively bid areas.”

The bill, which has six co-sponsors, would increase adjustments for suppliers in non-bid, rural areas and, to a lesser extent, for suppliers in other non-bid areas. It also lengthens the phase-in period for bidding-derived pricing for non-bid areas, among other provisions.

The adjustment is particularly needed in rural areas because extrapolating rates from the competitively bid areas to non-competitively bid areas “will threaten beneficiary access to DME because of inherent differences in supply and delivery costs between metropolitan and rural areas,” Thune said in a statement.

Support for Bill

Tom Ryan, president and chief executive officer for the American Association for Homecare, urged support for the bill. The system subjects “suppliers who did not have the opportunity to participate in the bidding process to reimbursement reductions,” he said in a statement.

He told Bloomberg BNA that those in rural areas in particular “face significant challenges and additional expense servicing patients over a wide geographic area.”

He said “seniors and people with disabilities and chronic conditions will end up paying the price when some companies in these areas decide they need to cut back their offerings or no longer service Medicare patients.”

To contact the reporter on this story: Mindy Yochelson in Washington at

To contact the editor responsible for this story: Brent Bierman at

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