For years, Medicare and its beneficiaries have been paying too much for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). To reduce costs and the fraud resulting from excessive prices, the Centers for Medicare & Medicaid Services (CMS) introduced a competitive bidding program in nine areas of the country in 2011. People with Original Medicare who live in competitive bidding areas – or CBAs – will pay less for certain DMEPOS items and services such as wheelchairs, oxygen, mail order diabetic supplies, and more. Competitive bidding for DMEPOS is proven to save money for taxpayers and people with Medicare while maintaining access to quality DMEPOS items.
Round 1 of the program has already been hugely successful, reducing money spent for equipment included in the program by over 42 percent in its first year of operation. Now the program’s benefits are coming to you, and there is some important information you need to know. Round 2 of the program is scheduled to begin on July 1, 2013, and expands it to 91 new areas across the country, including Colorado Springs, and is projected to save people with Medicare in Colorado Springs an average of 44 percent on certain DMEPOS items. Medicare will also be implementing a national mail-order program for diabetic testing supplies at the same time as Round 2, and beneficiaries nationwide will save an average of 72 percent on these supplies.
How the Program Works
Medicare generally pays 80 percent of the costs for DMEPOS used in the home under Medicare Part B. The person with Medicare pays the remaining 20 percent. Prior to competitive bidding, the costs for most of these items were based on historical charges, adjusted for inflation over time. Many studies have shown that the prices Medicare pays for certain medical equipment and supplies are excessive – sometimes three or four times retail prices and the amounts paid by commercial insurers.
Under this program, suppliers submit bids for certain medical equipment and supplies that must be lower than what Medicare pays for these items currently. Medicare uses these bids to set the amount it pays for the competitively bid medical equipment and supplies and qualified, accredited suppliers with winning bids are chosen as Medicare contract suppliers. The good news is that since Medicare’s payment amount will be less, your coinsurance amount will be less too.
If you have Original Medicare, your permanent residence is in a ZIP code that is part of a CBA, and you use items in one of the program categories , you generally must use a Medicare contract supplier to have Medicare to help pay for the item. If you currently receive oxygen/oxygen equipment or rent certain other items from a non-contract supplier, you may be able to continue renting these items from your current supplier when the program takes effect, if the supplier decides to become a grandfathered supplier.
Suppliers must be accredited and meet stringent quality standards to ensure good customer service and high quality items. This means you’ll be getting the same high quality products and services but at lower prices.
Medicare has resources to help you understand the new program, including www.medicare.gov and 1-800-MEDICARE (1-800-633-4227). TTY users call 1-877-486-2048. You can also call your local State Health Insurance Assistance Program (SHIP). In Colorado, call 1-888-696-7213. If you’re in a Medicare Advantage Plan (like an HMO or PPO), your plan will notify you if your supplier is changing. Contact your plan for more information.