The Centers for Medicare & Medicaid Services (CMS) has announced its plans for Round 2021 of the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program (CBP), featuring new “lead item” bidding rules and new product categories.  Following on the heels of this announcement, the Trump Administration proposed additional legislative changes to the CBP that would cut Medicare DMEPOS spending by more than $7 billion over 10 years.

Round 2021 of the CBP

As previously reported, there has been a “temporary gap” in the DMEPOS CBP since the last round of contracts expired on December 31, 2018.  Last week CMS confirmed that it will launch a new competition – dubbed Round 2021 – for contracts that will run from January 1, 2021 through December 31, 2023.  The competition will cover geographic areas included in Round 1 2017 and the Round 2 Recompete, for a total of 130 competitive bidding areas (CBAs).

For Round 2021, CMS is adding three product categories that have never been subject to competitive bidding:  off-the-shelf (OTS) back braces, OTS knee braces, and non-invasive ventilators.  The full list of the 16 product categories included in Round 2021 is as follows:

  1. Commode Chairs
  2. Continuous Positive Airway Pressure (CPAP) Devices and Respiratory Assist Devices (RADs)
  3. Enteral Nutrition
  4. Hospital Beds
  5. Nebulizers
  6. Negative Pressure Wound Therapy (NPWT) Pumps
  7. Non-Invasive Ventilators
  8. OTS Back Braces
  9. OTS Knee Braces
  10. Oxygen and Oxygen Equipment
  11. Patient Lifts and Seat Lifts
  12. Standard Manual Wheelchairs
  13. Standard Power Mobility Devices
  14. Support Surfaces (Groups 1 and 2)
  15. Transcutaneous Electrical Nerve Stimulation (TENS) Devices and Supplies
  16. Walkers

The specific HCPCS codes subject to this round of bidding is posted on the Competitive Bidding Implementation Contractor (CBIC) website.  Note that CMS is not including a national mail-order program for diabetes testing supplies in Round 2021, since the agency is working to implement separate statutory requirements for those items included in the Bipartisan Budget Act (BBA) of 2018.

CMS will use a new “lead item” bidding methodology in Round 2021.  That is, instead of bidding on each item/HCPCS code within a product category, suppliers will submit a single bid for that item in the product category designated by CMS to have the highest total nationwide Medicare allowed charges.  CMS will calculate a single payment amount (SPA) for that lead item in the CBA based on the highest amount bid within the winning bids, rather than the median of winning bids.  The SPAs for non-lead items will be based on the relative difference in the fee schedule amounts for the lead and non-lead items.  A “Lead Item Calculator” is available on the CBIC site to show the impact of the lead item bid amount on the non-lead items in the product category.

The following is the schedule for the Round 2021 competition (dates are subject to change):

  • March 7, 2019 — CMS begins pre-bidding supplier awareness program
  • May 2019 — CMS announces specific dates for registration and bidding; CMS begins bidder education program
  • June 2019 — Bidder registration period to obtain user ID and passwords begins and bid window opens
  • January 1, 2021 — Contracts go into effect

Suppliers interested in bidding should ensure that their enrollment files at the National Supplier Clearinghouse and in the Provider Enrollment, Chain, and Ownership System (PECOS) are current in order to register and bid.  Suppliers also must be accredited, hold all necessary state licenses for any products for which they will bid, and obtain a $50,000 bid surety bond from an authorized surety for each CBA for which a bid is submitted (note that bid surety bonds are different than the surety bonds required for DMEPOS supplier enrollment purposes).

Trump Administration to Seek Legislative Changes to Bidding Rules

On March 11, 2019, the Trump Administration released its proposed fiscal year (FY) 2020 budget.  Among the recommendations is a proposal to move payment under the CBP from a single payment amount based on the maximum winning bid, to the winning suppliers’ own bid amounts.  A budget summary explains that DME suppliers currently “can submit very low bids during the competition to win a Medicare contract and still get paid a higher price even though their low bid reduced prices for all other suppliers in the competition area.”  Under this proposal, “low bidders will be paid their low bid amount.”  The Administration also wants to expand competitive bidding to additional geographic areas, including rural areas.  These provisions, which would require Congressional approval, would result in an estimated $7.1 billion in Medicare savings and $410 million in Medicaid savings over 10 years.