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David McGill Blogger

Competitive Bidding Round 2: Key Facts

Posted by David McGill | April 22, 2013

​While your humble authors attended a meeting in Iceland last week, Medicare announced the contract suppliers for Round 2 of its Competitive Program. You can sum up Medicare's opinion about the program just by reading the title of its fact sheet: Contract Suppliers Announced for Expansion of Competitive Bidding Program That Will Increase Competition, Maintain Quality. Not included in the title but figuring prominently in Medicare's excitement about Competitive Bidding is another factor: cost savings. 

Without further ado, here's everything you need to know about Round 2 of Competitive Bidding.

What Products Does It Apply To?

 

  1. Oxygen, oxygen equipment, and supplies.
  2. Standard (power and manual) wheelchairs, scooters, and related accessories.
  3. Enteral nutrients, equipment and supplies.
  4. Continuous Positive Airway Pressure devices and Respiratory Assist Devices and supplies and accessories.
  5. Hospital beds and related accessories.
  6. Walkers and related accessories.
  7. Negative Pressure Wound Therapy pumps and related supplies and accessories.
  8. Support surfaces (Group 2 mattresses and overlays.)
For a more specific list of the items within each product category, click here​.

 

Where Does It Occur?

Competitive Bidding affects 91 major metropolitan areas. Medicare  decided to split NY, LA and Chicago into multiple competitive bidding areas because of their size. So the total number of "MSAs" subject to Round 2 wound up at 100.

In short, if you operate in/near a reasonably-sized US city, you're more than likely in a Competitive Bidding area. For a complete list of MSAs, click here.

When Does Round 2 Go Into Effect?

July 1, 2013. 

How Much Money Does Medicare Think It Will Save?

Medicare claims that Round 2 will save it 45% versus the current fee schedule.

How Many DMEPOS Suppliers Received Competitive Bid Awards?  

799. In other words, an average of 8 suppliers per Competitive Bidding area secured contracts from Medicare.

Medicare classifies 63% of these suppliers as "small suppliers" (i.e., annual gross revenues of $3.5M or less). 

What's The Impact on O&P?

As we write this, orthotics and prosthetics remain outside the scope of Competitive Bidding. However, future rounds may well include off-the-shelf orthotics. 

In addition, by 2016 Medicare must either (a) expand competitive bidding across the entire country for identified products or (b) adjust its national fee schedule for those products based upon competitively bid amounts. Bottom line: competitive bidding will ultimately result in significant payment reductions for all DMEPOS suppliers. The only question is which products will fall within the scope of the program.   

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