MEDICARE ANNOUNCES OVER 320 WINNING SUPPLIERS SELECTED FOR COMPETITIVE BIDDING PROGRAM FOR DURABLE MEDICAL EQUIPMENT, PROSTHETICS, ORTHOTICS, AND SUPPLIES

The Centers for Medicare & Medicaid Services (CMS) today released the names of the 325 suppliers that have signed contracts with Medicare to provide certain medical equipment and supplies to beneficiaries in 10 communities across the U.S. at significantly lower prices than they are paying now.

"We are pleased that Medicare beneficiaries living in the 10 first round communities will continue to receive high quality service and supplies from the suppliers participating in Medicare's competitive bidding program," said CMS Acting Administrator Kerry Weems. "All of these contract suppliers have met our stringent standards, so beneficiaries can be assured they receive their equipment and supplies from legitimate suppliers."

The new competitive bidding program goes into effect on July 1, 2008, in 10 communities. This program uses the local, competitive marketplace to lower the costs for certain durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) for Medicare beneficiaries who use Medicare-contracted suppliers to obtain medical items and supplies. Because beneficiaries pay 20 percent coinsurance on the cost of DMEPOS, they will directly benefit from the savings.

Based on bids submitted by these suppliers, beneficiaries and Medicare will see prices, on average, 26 percent lower than Medicare currently pays for the same items. CMS received bids from 1,005 suppliers. There were just under 6,200 bids for one or more product categories in competitive bidding areas (CBAs) where the new program is being implemented. CMS offered contracts to 23 percent of suppliers that submitted bids. These suppliers were in the winning price range and met quality and financial standards and disclosure requirements. Sixty-one percent of the bids submitted were priced higher than the winning range, and just over half of these high-priced submissions were disqualified because they failed to meet other bid requirements. The remaining 16 percent of bids would have been in the winning range had they not been disqualified.

To participate in the competitive bidding program, suppliers are now required to meet Medicare's quality and financial standards that ensure participating suppliers are viable companies able to meet the needs of Medicare beneficiaries and the terms of their contracts with Medicare. In addition to those requirements, which were developed with input from suppliers, a Medicare-contracted supplier must:

• Be enrolled in and be approved - or accredited - by Medicare based on the specific products and services they offer;
• Be financially sound - as demonstrated by common standards in use by the financial community;
• Fill orders from their own inventory, or contract with other companies that can fill orders for beneficiaries;
• Provide access for beneficiaries to get the items they need; and
• Provide high quality customer service by ensuring that delivery of products is timely and complaints are resolved quickly and appropriately.

"Medicare-contracted suppliers submitted bids affirming they will ensure that beneficiaries receive necessary equipment and supplies with a high level of customer service," said Weems. "Medicare has the tools to ensure that the suppliers, as well as companies with which the suppliers subcontract, meet the needs of beneficiaries to guarantee continued beneficiary access to medical equipment and supplies. CMS may seek to terminate contracts with suppliers that don't meet these requirements."

As part of the competitive bidding program, suppliers submitted bids to CMS to supply certain items to beneficiaries that reflect the prices charged in the marketplace, which are lower than the prices under the current Medicare fee schedule. Bids were evaluated to ensure there would be a sufficient number of suppliers, including small suppliers, to meet the needs of beneficiaries living in the CBAs. Small suppliers were considered those with gross revenues of $3.5 million or less and make up approximately 50 percent of the suppliers that accepted contracts in this first round of the program. Suppliers that are not contract suppliers for the first round of DMEPOS competitive bidding program may be able to subcontract with winning bidders for certain items and may bid in Round two and in future rounds.

To take advantage of the lower prices for the items that were part of the competitive bidding program, Medicare beneficiaries living in one of the CBAs who have ongoing need for a DMEPOS supplier may need to choose a new supplier if their current supplier is not a contract supplier and they wish to have Medicare continue to cover their equipment and supplies. A beneficiary may, in some situations, also be able to continue to receive certain items from a grandfathered supplier. Grandfathered suppliers are non-contract suppliers that provide certain rented equipment under the terms of the program.

Consumers, physicians and other providers can find a list of Medicare contract suppliers in the 10 initial areas of the program by visiting www.medicare.gov (under "Search Tools" select "Find Suppliers of Medical Equipment in Your Area) or by calling 1-800-MEDICARE (TTY users should call 1-877-486-2048). People can also visit the local offices of the various partner groups, such as their State Health Insurance and Assistance Program, Area Office on Aging and a number of community organizations that can provide information on the program.

CMS today also announced that it is extending the deadline for suppliers in the 70 second round metropolitan statistical areas (MSAs) to become accredited. CMS is extending the deadline because a significant number of suppliers in those communities have not yet applied for accreditation. Similar to round one requirements, suppliers will need to be accredited to be awarded a contract. Suppliers must be accredited or have applied for accreditation by July 21, 2008, (formerly May 14, 2008), and the final accreditation deadline for the second round of competitive bidding is now January 14, 2009, a change from the October 31, 2008 deadline.

CMS is urging suppliers in the 70 MSAs to apply for accreditation immediately because if they do not meet these accreditation deadlines, they will not be able to compete for contracts to furnish competitively bid items to Medicare beneficiaries in these areas.

Additional information on the DMEPOS competitive bidding program is available at www.cms.hhs.gov/DMEPOSCompetitiveBid..

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