Section 4319 of the Balanced Budget Act of 1997 (BBA 97) requires the Department of Health and Human Services to implement up to five demonstration projects of competitive bidding for Medicare Part B items and services, except physician services. Pursuant to this provision and to test the use of competitive bidding to set prices for durable medical equipment and prosthetics, orthotics, and supplies (DMEPOS), the Centers for Medicare & Medicaid Services planned and implemented the DMEPOS Competitive Bidding Demonstration. Section 4319 of BBA 97 further required that the demonstration be evaluated for its impact on Medicare program payments, access, diversity of product selection, and quality. The purpose of this report was to describe the results to date of the evaluation of the DMEPOS Competitive Bidding Demonstration. The impact of the demonstration was evaluated on (1) Medicare expenditures, (2) beneficiary access to care, (3) quality of care (including diversity of product selection), (4) competitiveness of the market, and (5) the reimbursement system. Based on approximately 2 years of operation, CMS’s Competitive Bidding Demonstration for DMEPOS showed the potential to decrease Medicare expenditures. Competitive bidding has lowered the prices paid by Medicare for the large majority of DMEPOS products and services. Because there is not yet data on utilization, it cannot be definitively concluded that total DMEPOS allowed charges (the product of price times utilization) fell. It is estimated that Medicare-allowed charges for demonstration products would fall by nearly $8.5 million over the course of the demonstration, a reduction of 20 percent.
PIC ID: 7173; Agency Sponsor: CMS-ORDI, Office of Research, Development, and Information; Federal Contact: Meadow, Ann, 410-786-6602; Performer: University of Wisconsin, Madison, WI