Answers to Some of the Most Commonly Asked Medicare Questions

What is the new program beginning in July in certain areas across the nation where Medicare beneficiaries will pay less out-of-pocket for certain medical equipment and supplies if they purchase them through Medicare contract suppliers?

For years, Medicare and its beneficiaries have been paying too much for durable medical equipment, prosthetics, orthotics and supplies (DMEPOS). To reduce costs and the fraud resulting from excessive prices, the Centers for Medicare & Medicaid Services (CMS) introduced a competitive bidding program in nine areas of the country in 2011. People with Original Medicare who live in competitive bidding areas – or CBAs – will pay less for certain DMEPOS items and services such as wheelchairs, oxygen, mail order diabetic supplies and more. Competitive bidding for DMEPOS is proven to save money for taxpayers and people with Medicare while maintaining access to quality DMEPOS items.

The program has already been hugely successful, reducing money spent for equipment included in the program by over 42 percent in its first year of operation. Now the program’s benefits are coming to you, and there is some important information you need to know. Expansion of the program is scheduled to begin July 1, 2013, and extends it to 91 new areas across the country, including Denver, Colorado Springs and Salt Lake City. People with Medicare in these areas will save an average of 43 to 47 percent on certain DMEPOS items. Medicare will also be implementing a national mail-order program for diabetic testing supplies on July 1st, and beneficiaries nationwide will save an average of 72 percent on these supplies.

How the program works:

Medicare generally pays 80 percent of the costs for durable medical equipment, prosthetics, orthotics and supplies used in the home under Medicare Part B. The person with Medicare pays the remaining 20 percent. Before this new program, the costs for most of these items were based on historical charges, adjusted for inflation over time. 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 this program, suppliers of these types of supplies submitted bids for certain medical equipment and supplies that must be lower than what Medicare pays for these items currently. Medicare used these bids to set the amount it will pay for the competitively bid medical equipment and supplies and qualified, accredited suppliers with winning bids were chosen as Medicare contract suppliers. The good news is that since Medicare’s payment amount to suppliers will be less, people with Medicare who use the equipment and supplies under the competitive bid program will have a lower co-payment too.

If you have Original Medicare, and your permanent residence is in a ZIP code that is part of a Competitive Bid Area, CBA, and you use items in one of the program categories, you generally must use a Medicare contract supplier to have Medicare help pay for the item. If you currently receive oxygen/oxygen equipment or rent certain other items from a non-contract supplier, you may be able to continue renting these items from your current supplier when the program takes effect, if the supplier decides to become a grandfathered supplier.

All contract suppliers must comply with Medicare enrollment rules, be accredited, meet applicable licensing requirements, meet financial standards and meet stringent quality standards to ensure good customer service and high quality items. These standards help to deter unscrupulous providers from becoming Medicare contract suppliers. 90 percent of contract suppliers are already established in the competitive bidding area, the product category, or both. This means Medicare beneficiaries will be getting the same high quality products and services but at lower prices. And, small suppliers – those with gross revenues of $3.5 million per year or less – make up about 63 percent of the contract suppliers in new markets.

The federal agency that administers the Medicare program announced on April 9, that 799* suppliers have been awarded contracts as part of the expansion of the Medicare Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Competitive Bidding Program to provide certain medical equipment and supplies (such as scooters, wheelchairs and oxygen) to beneficiaries in 91 communities across the country. The winning contract suppliers have 2,988 locations to serve Medicare beneficiaries in these competitive bidding areas. Additionally, CMS announced 18 suppliers that accepted contracts to provide mail-order diabetic testing supplies at competitively bid prices nationwide. The National Mail-order Program contract suppliers have 52 locations to serve the entire country through mail or other home delivery.

This program really saves people with Medicare, and all taxpayers a lot of money. In just the first year, in just the first nine markets, the savings were over $200 million. The expanded program is expected to save Medicare more than $25 billion in the next ten years, and people with Medicare are expected to save $17 billion more in reduced out-of-pocket costs and premium payments.

CMS’s top priority is to ensure beneficiaries maintain access to high quality equipment and supplies at a fair price. Medicare contract suppliers signed contracts that included protections to ensure that they will furnish beneficiaries with necessary equipment and quality customer service. And, our extensive monitoring since the start of this program has shown that competitive bidding reduced spending without jeopardizing access to medical equipment and supplies.

Consumers, physicians and other providers can find a list of Medicare contract suppliers in their areas by visiting http://www.medicare.gov/supplier/home.asp 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 for help in finding a Medicare contract supplier, such as their State Health Insurance and Assistance Program, Administration or Community Living and a number of community organizations that can provide information on the program.

For additional information about the Medicare DMEPOS Competitive Bidding Program, including all of the products and items that are covered under the Competitive Bidding Program, please visit: http://www.cms.hhs.gov/DMEPOSCompetitiveBid/.

Expansion of the competitive bidding program and the national mail-order diabetic supplies program will go into effect July 1, 2013.