The Competitive Bidding Program replaces the outdated prices Medicare has been paying with lower, more accurate prices. Under this program, suppliers submit bids to provide certain medical equipment and supplies at a lower price than what Medicare now pays for these items. Medicare uses these bids to set the amount it pays for those equipment and supplies under the Competitive Bidding Program. Qualified, accredited suppliers with winning bids are chosen as Medicare contract suppliers.
DMEPOS Competitive Bidding
Under the program, a competition among suppliers who operate in a particular competitive bidding area is conducted. Suppliers are required to submit a bid for selected products. Not all products or items are subject to competitive bidding. Bids are submitted electronically through a web-based application process and required documents are mailed. Bids are evaluated based on the supplier’s eligibility, its financial stability and the bid price. Contracts are awarded to the Medicare suppliers who offer the best price and meet applicable quality and financial standards. Contract suppliers must agree to accept assignment on all claims for bid items and will be paid the bid price amount. The amount is derived from the median of all winning bids for an item.
Competitive Bidding Program areas
Contract Supplier Locations
Competitive bidding can help solve Medicare's fiscal crisis
1. Robert H. Miller and Harold S. Luft, “HMO Plan Performance Update: An Analysis of the Literature, 1997–2001,” Health Affairs 21, no. 4 (July/August 2002): 63–86. 2. US House of Representatives Committee on the Budget, “Wyden and Ryan Advance Bipartisan Plan to Strengthen Medicare and Expand Health Care Choices for All,” news release, December 15, 2011, www.budget.house.gov/bipartisanhealthoptions (accessed February 13, 2012). 3. Bipartisan Policy Center, Domenici-Rivlin Protect Medicare Act, December 16, 2011, www.bipartisanpolicy.org/sites/default/files/Domenici-Rivlin%20Protect%20Medicare%20Act.pdf (accessed February 9, 2012). 4. Robert Coulam, Roger Feldman, and Bryan Dowd, Bring Market Prices to Medicare: Essential Reform at a Time of Fiscal Crisis (Washington, DC: AEI Press, 2009). 5. Coulam, Feldman, and Dowd, Bring Market Prices to Medicare; Marsha Gold et al., “Medicare Advantage 2012 Spotlight: Plan Availability and Premiums,” Kaiser Family Foundation Data Spotlight (November 2011), www.kff.org/medicare/upload/8258.pdf (accessed February 9, 2012). 6. Patient Protection and Affordable Care Act, Public Law 111-148, 124 Stat. 119, 111th Cong. (March 23, 2010), amended by the Health Care and Education Reconciliation Act of 2010, Public Law 111-152, 111th Cong. (March 30, 2010). 7. The PPACA savings of 4.2 percent and the 5.6 percent additional savings from bidding are multiplied to get the total savings of 9.5 percent from bidding. 8. Ideally, we would like to estimate the savings from competitive bidding using actual PPACA spending as the baseline; however, data on MA plans’ bids are available only for 2009, before the PPACA was passed. This means we had to start by estimating the PPACA baseline. 9. Scott Harrison et al., “MIPPA MA Payment Report” March 12, 2009, www.medpac.gov/transcripts/MA%20pay%20rpt%203%2009%20final.pdf (accessed February 9, 2012). 10. Total benefit payments from the hospital insurance and supplementary medical insurance trust funds in 2009 were $239.3 billion and $202.6 billion, respectively, for a total of $442 billion, according to tables III.B4 and III.C8 in The 2011 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Supplementary Medical Insurance Trust Funds, May 13, 2011, www.cms.gov/ReportsTrustFunds/downloads/tr2011.pdf (accessed February 13, 2012). Our estimate of baseline Medicare spending is lower because we excluded certain expenses noted in our appendix. 11. Ibid. This projection is based on the trustees’ intermediate estimates of Medicare spending from 2011 through 2020.