For Medical Devices

CMS Launches New Competitive Bidding Program for DMEPOS


Pros and Cons of New Competitive Bidding for DMEPOS

The Centers for Medicare and Medicaid Services (CMS) has opened the first round of competitive bidding for suppliers of Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) under a new acquisition program projected to save taxpayers $1 billion annually upon the program's full implementation in 2010.

The new competitive acquisition program will initially apply to 10 of the top DMEPOS product categories within the 10 largest Metropolitan Statistical Areas (MSAs), excluding New York , Los Angeles , and Chicago . By 2009, the program will cover 70 additional MSAs. After 2009, it will expand into additional areas and items.

The new bidding program is required by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. The single payment amounts established through competitive bidding will be lower than the current fee schedule amounts for the items affected. ?The savings this program will generate will directly translate to lower co-insurance for Medicare beneficiaries, thus significantly reducing their out-of-pocket costs for health care,? said Leslie V. Norwalk, CMS acting administrator.

Industry Concerns
Even with the program's apparent benefits, there are concerns that it could adversely affect patients, especially the aged and the disabled, by limiting their access to medical technologies they need.

Stephen J. Ubl, president and CEO of Advanced Medical Technology Association (AdvaMed), an advocacy group for manufacturers of medical devices, diagnostic products, and health information systems, expressed concern that patient access to medical technology could be compromised since the bidding structure outlined in the CMS rule could reduce the therapeutic choices available to patients. He also questioned the impact of the new program on small medical device companies and their ability to make their products under the program.

Matthew M. Lowe, MasterControl product manager and a mechanical engineer with almost a decade of product development experience in the medical device industry, said AdvaMed's concerns are valid.

?If you're a device manufacturer relying on certain DME distributors, and they're not selected under this new bidding program, you could be precluded from selling your product to all Medicare and Medicaid patients until you're able to align with a distributor that has been selected. That would be financially devastating,? Lowe said. He added that downward pricing pressure as a result of the bidding process could also render smaller companies incapable of manufacturing products in certain categories without suffering financial losses on each unit sold.

The first-round competitive bidding began in April and will last until July 13, 2007. For more information about submitting bids, check the CMS Web site (link below).

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