Background

10 - Background (Rev. 1502; Issued: 05-09-08; Effective/Implementation Date: 06-09-08) Section 1834 of the Social Security Act (the Act), as added by section 4062 of the Omnibus Budget Reconciliation Act of 1987 (OBRA ‘87), Public Law 100-203, provides for implementation of a fee schedule methodology for most durable medical equipment (DME), prosthetic devices, and orthotic devices furnished after January 1, 1989. The Medicare DMEPOS Competitive Bidding Program is required by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (the MMA) (Pub. L. 108-173), which amended section 1847 of the Act. Section 1847 of the Act, as amended, requires that competitive bidding programs be established and implemented in areas throughout the United States. In general, the statute requires that the Secretary implement a competitive bidding program that replaces the current DMEPOS fee schedule methodology for determining payment rates for certain DMEPOS items in competitive bidding areas. This fee schedule methodology will continue to be used for payment of Medicare covered DMEPOS non-competitively bid items or services. The payment rates for DMEPOS competitively bid items are determined by using bids submitted by DMEPOS suppliers. The intent is to improve the methodology for setting DMEPOS payment amounts. These payments will reduce beneficiary out-of-pocket expenses and save the Medicare program money while ensuring beneficiary access to quality DMEPOS items and services from qualified suppliers. The Medicare DMEPOS Competitive Bidding Program is being phased in, beginning in 2007 with 10 metropolitan statistical areas (MSAs) for certain DMEPOS items. The program will be expanded into 70 additional MSAs in 2009, and then into additional areas (MSAs or other defined areas) after calendar year 2009.