Competitive Bidding, Accreditation, and Pre-Auth News from CMS

What You Need to Know

Late last week CMS published a final rule addressing the next round of competitive bidding, DMEPOS supplier accreditation, and prior authorization.

- Competitive Bidding

• New Fee Schedule Methodology: CMS will use a new methodology to calculate Single Payment Amounts. Instead of using the highest winning bid to set SPA's as it did in Round 2021, it will now set SPA's based on the 75th percentile of all winning bids.
• Device Expansion: The next round of competitive bidding will include OTS upper extremity orthoses in addition to OTS knee and spinal braces. CMS has not yet published a definitive list of the L codes subject to competitive bidding, but we expect it to publish that information in the near future.
• Fewer CBA's: CMS has approved the creation of a single national Competitive Bidding Area, a significant change from the historical approach which defined roughly 130 CBA's across the U.S.
• Fewer Contract Awards: Based on 2024 claims data, CMS estimates that it will award 6 national contracts for OTS upper limb braces, 6 national contracts for OTS knee braces, and 4 national contracts for OTS back braces. If less than 30% of winning suppliers are small suppliers, additional contracts may be offered to meet the 30% small supplier target. (A small supplier is defined as a supplier with gross revenue of $3.5M or less, including both Medicare and non-Medicare revenue.)
• Remote Item Delivery: The next round of competitive bidding will allow mail order delivery of OTS orthoses.
• SPA Annual Updates: The new fees set as a result of the next competitive bidding round will get updated annually by an inflationary factor, an improvement over previous rounds that locked the reimbursement fee in at the SPA for the entirety of the three-year competitive bidding contract term.
• Timeline: The window for submitting bids will open in late summer/early fall of 2026. CMS will announce SPA's and award contracts in late summer/early fall of 2027. The next round of competitive bidding will take effect no later than January 1st of 2028. At this time, all of these dates are "target dates".
  
  -Accreditation
• Annual Site Visits: Citing concerns about fraud and abuse, CMS will now require all DMEPOS suppliers to undergo annual site visits/reaccreditation, a significant change from the once-every-three-years process currently in effect.

 -Prior Authorization

• Exemption from Pre-Auth. Suppliers with a 90% target approval rate of 90% or higher will be offered an exemption from required prior authorization. Suppliers accepting the exemption would have claims reviewed by the DME MACs on a post-payment basis to determine their continued eligibility for the exemption.

What This Means for You

If you are a DMEPOS supplier currently providing OTS spinal, knee, or upper limb orthoses to Medicare beneficiaries, you will have to be awarded a competitive bidding contract to continue doing so once the competitive bidding program takes effect. (Physicians providing OTS orthoses as part of the professional services offered to their own patients do not need to be awarded a competitive bidding contract to continue delivering these devices to their patients. They will, however, get paid the SPA arrived at as a result of competitive bidding.) With the likely transition to a single, national Competitive Bidding Area and a mail-order delivery model, larger suppliers will be in a better position to secure these contracts than small ones. Education about the next round of competitive bidding will begin in the near future, so you should closely monitor the CBIC website.

The new accreditation requirements will require any DMEPOS supplier location where patient care is delivered to get surveyed and reaccredited annually. It would not be surprising to see Accreditation Organizations charge more for their services given the significant increase in workload this will create. Physicians providing OTS orthoses or other DME to their own patients incident to their professional services are not subject to this new requirement.

Finally, the new prior authorization exemption option gives suppliers with the best claims processes the opportunity to opt out of prior authorization for specified products. However, a supplier is not required to do so and can elect to continue using prior authorization for its claims if it wants.

The provisions of the final rule take effect on January 1, 2026.