Medicare: The DME Competitive Bidding Program Explained
The Durable Medical Equipment (DME) Competitive Bidding Program was enacted by the U.S. Congress as part of the Medicare Modernization Act of 2003. It is the process in which medical equipment merchants compete for a position as an official Medicare supplier. The program is designed to save both Medicare and Medicare beneficiaries money by encouraging merchants to offer their lowest prices to Medicare in an effort to be awarded a contract.
What areas are covered by the DME Competitive Bidding Program?
The program currently only covers specific geographic areas. It covers nine Metropolitan Statistical Areas (MSAs) in North Carolina, South Carolina, Ohio, Kentucky, Indiana, Texas, Missouri, Kansas, Florida, Pennsylvania and California.
What types of equipment are covered by the DME Competitive Bidding Program?
The program covers many categories of supplies including oxygen and oxygen equipment, mail-order diabetic supplies, standard power wheelchairs and scooters, complex rehabilitative power wheelchairs, enteral nutrients, equipment and supplies, hospital beds, walkers, support surfaces, Continuous Positive Airway Pressure (CPAP) devices and Respiratory Assist Devices (RADs).
How does the program work?
Companies compete to become Medicare-approved medical equipment suppliers through a bidding process. More than one company can win the bid in any given equipment category, ensuring that beneficiaries in a particular region have choice over which supplier they want to use. In 2010, 1,217 contracts were awarded to 356 suppliers, which accounted for 92 percent of all suppliers submitting a bid.
What have been the results of the program to date?
According to the Centers for Medicare and Medicaid Services’ One Year Implementation Update, CMS saved a total of $202.1 million in the first year of the program. This amounts to a 42 percent reduction in costs from the previous year.
Beneficiaries saved as well, as the program reduced their out-of-pocket costs. For example, beneficiaries renting oxygen supplies saved approximately $10-$14 per month, amounting to a savings rate of $360-$504 over a 36 month period.
In addition, CMS reported minimal complaints during this same period. In all of 2010, CMS received 151 complaints, which is an minuscule rate considering that the DME program has 2.3 million participants.
What can we expect from the program in the future?
In 2013, the program will be expanded to 91 new MSAs across the country, and by 2016, law requires that it serve all Medicare beneficiaries. Savings to both the Medicare program and beneficiaries are projected to continue. The Medicare Part B Trust Fund is estimated to save $25.7 billion from 2013-2022, and Medicare beneficiaries are projected to save $17.1 billion in out-of-pocket costs during the same period.
The DME bidding process has saved both the government and Medicare beneficiaries money through its introduction of competition for medical equipment contracts. It has done so without sacrificing beneficiary choice and control or reducing the quality of the equipment purchased. The program is expected to expand over the next decade and reduce out-of-pocket costs nationwide.
Peter Wendt is a writer from Texas. He has several eldery family members that rely on durable medical supplies. They rely on Longhorn Health, who partners with Blue Cross Shield Texas, Unitedhealthcare Texas & Molina Healthcare Texas to provide DME supplies straight to their front door.