On April 5, 2011, CMS hosted a meeting of the Program Advisory and Oversight Committee (PAOC), a panel advising the HHS Secretary on the Medicare DMEPOS competitive bidding program. At the meeting, CMS presented an update on Round 1 Rebid implementation to date, and discussed the tentative timeline for Round 2. Most notably, CMS is pushing back its Round 2 implementation schedule roughly 6 months, and now plans to implement Round 2 and the national diabetes mail-order bidding program in the summer of 2013 (rather than January 1, 2013 as had been expected). CMS notes that the new schedule builds in time to go through the rulemaking process if the agency decides to make changes to the bidding process or pricing framework for Round 2.

The following is the current Round 2 timeline, which CMS stressed is subject to change:

  • Summer 2011: Announce Round 2 Product Categories; Begin Pre-Registration Education for Potential Bidders
  • Fall 2011: Announce Bidding Schedule/Schedule of Education Events; Begin Bidder Registration to Obtain User IDs and Passwords; Begin Bidder Education
  • Winter 2011/2012: Registration Ends; Open Bidding; Covered Document Review Process Begins
  • Spring 2012: Bidding Closes; Notify Suppliers of Missing Financial Documents; Begin Bid Evaluation
  • Fall 2012: Bid Evaluation Ends; Announcement of Single Payment Amounts; Begin Contract Process
  • Spring 2013: Contract Suppliers Announced; Begin Contract Supplier Education Program; Start Intensive Beneficiary, Referral Agent, and General Supplier Education Program
  • Summer 2013: Implement Round 2 and National Mail Order Program Contract and Prices

Note that under this schedule, there would be a roughly 6-month gap between when Round 1 mail-order diabetes contracts end and when Round 2 contracts take effect (the contract term for mail-order diabetes supplies is two years compared to three years for other items). Also with regard to Round 2, while CMS did not announce specific product categories, it did present information on those categories with high allowed charges in 2009 that are not currently subject to bidding, including infusion pumps and related drugs, manual wheelchairs, off-the-shelf orthotics, and negative pressure wound therapy pumps and supplies. Charges are not the only criteria for product selection, but they constitute one of the considerations listed in the statute. CMS also provided an update on the Round 1 rebid since implementation on January 1, 2011. CMS reported that, among other things:

  • After the bid review process, there were 96 inquiries by losing bidders and 7 were offered contracts after review.
  • 103 contract suppliers have submitted subcontractor disclosures.
  • CMS has taken enforcement actions against 9 contractors to date, and 3 contracts have been terminated (others are subject to corrective action plans).
  • CMS has approved 3 novation agreements to date. CMS noted that these have each been complex in different ways and review has been slow, but they are working on ways to improve the review process.
  • 67 new contract supplier locations were opened and 17 closed.
  • CMS has received only a handful of complaints about the program to date (although the level of complaints was a subject of debate).
  • CMS presented extremely detailed “real-time” monitoring data that it believes indicates that, to date, there has been very little change in product usage or outcomes since competitive bidding was implemented (although there have been some variances in diabetes claims).