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American Academy of Family Physicians
Tuesday May 14, 2013

Changes coming to Medicare payments for durable medical equipment

If you prescribe durable medical equipment (DME) for your Medicare patients, you should be aware that, effective July 1, Medicare will expand its competitive bidding program for DME, prosthetics, orthotics, and other supplies. The expansion may affect where your patients can fill their prescriptions and how much they and Medicare end up paying for the DME.

The Centers for Medicare & Medicaid Services (CMS) introduced its competitive bidding program in nine areas of the country in 2011. Based on the program's success in those areas, CMS is extending it to 91 new areas across the country. CMS will also implement a national mail-order program for diabetic testing supplies on July 1.

The program affects Medicare payments for wheelchairs, oxygen, mail-order diabetic supplies, and more. Historically, Medicare based its payment for most of these items on historical charges, adjusted for inflation over time. However, many studies have shown that the prices Medicare has paid for certain medical equipment and supplies are excessive – sometimes three or four times retail prices and the amounts paid by commercial insurers.

Under the competitive bidding program, suppliers submit bids for certain medical equipment and supplies that must be lower than what Medicare pays for these items currently. Medicare then uses the bids to set the amount it will pay for those items and chooses the qualified, accredited companies with winning bids as Medicare contract suppliers. The lower Medicare payment amounts also lower a Medicare beneficiary’s co-payment.

The competitive bidding is part of CMS's efforts to fight fraud and waste in the Medicare program. Media reports have noted that, from 2009 to 2012, Medicare paid $43 billion for DME, more than 60 percent of which may have been improper. Similarly, CMS has introduced a pilot program that requires approval before Medicare will pay for power wheelchairs and scooters for beneficiaries in seven states with high rates of fraud and errors: California, Illinois, Michigan, New York, North Carolina, Florida, and Texas.

You and your patients can find a list of Medicare contract suppliers in your area by visiting Medicare's supplier directory tool or by calling 1-800-MEDICARE. For additional information, visit the Medicare DME Competitive Bidding Program's website, which includes all of the products and items that are covered under the program.

– Kent Moore, Senior Strategist for Physician Payment for the American Academy of Family Physicians

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