CMS Announces Round 2 Re-Compete for DME Bidding Program

Last week, CMS announced plans to re-compete the supplier contracts awarded in Round 2 of the Medicare Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Competitive Bidding Program.

By law, CMS is required to re-compete contracts under the DMEPOS bidding program at least once every three years. Under the program, DMEPOS providers bid against each other in efforts to receive a CMS contract to provide their services within a certain metropolitan statistical area (MSA). Bids are evaluated based on the supplier’s eligibility, its financial stability and the bid price.

CMS will announce the bidding schedule for the Round 2 re-compete this Fall and will also begin its bidder education program and registration period during that time, the agency outlined on its website. Bidding for the re-compete is then slated for Winter 2015. 


The federal regulator is moving forward with the re-compete amid a rule proposed by the agency earlier this month that would cut Medicare reimbursements for DMEPOS equipment by more than $7 billion from 2016 to 2020, and would make changes to Medicare coverage and payment policies for DMEPOS.

DME industry advocates, as well as lawmakers in Washington, have long debated the credibility of the CMS competitive bidding program, arguing the program is wrought with flaws, particularly in regards to the way bids are structured and the threat of pushing providers out of the market.

A report from the Center for Regulatory Effectiveness published two years ago highlighted several issues with non-binding bids, specifically noting that bidders did not have to be willing to actually provide the specified equipment at the price they bid. 


Meanwhile, lawmakers on Capitol Hill have introduced several bills within the past months that aim to either delay the implementation of Round 2 or correct the program altogether by making all bids under the program binding.


While CMS is conducting the second round in the same geographic areas that were included in the initial Round 2 bidding stage, there is a slight difference in the number of competing areas this time around.

There are now 90 MSAs for the Round 2 re-compete, as a result of the Office of Management and Budget’s updates to the original 91 Round 2 MSAs, CMS noted. 

The Round 2 re-compete competitive bidding areas (CBAs) have nearly the same ZIP codes as the Round 2 CBSs, however, certain ZIP codes have changed since then and CMS has updated the CBAs to reflect the changes. 

Additionally, CBAs that were located in multi-state MSAs have been defined so that no CBA is included in more than one state. A list of the ZIP codes included in each CBA can be found on the Competitive Bidding Implementation Contractor website.

The Round 2 contract period for all product categories expires on June 30, 2016. A list of the specific DMEPOS items in each product category can be found on the CBIC site.

Written by Jason Oliva

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