1. Durable Medical Equipment, Prosthetics, Orthotics, and Supplies DMEPOS Competitive Bidding Program

2. Agenda Contract Supplier Obligations Payment Policies General Overview
During the next 45 minutes, I’m going to provide a brief overview of the Competitive Bidding Program, talk about the contract requirements, and finally, discuss some of the payment policies.
Everything I am discussing today as well as much more information may be found on the Competitive Bidding Implementation Contractor -- or the CBIC’s -- website. As a reminder, the CBIC website is the official source for bidders and contract suppliers for accurate, up-to-date information on the DMEPOS Competitive Bidding Program. Noncontract suppliers should visit the CMS website for information. So please visit these sites for assistance and additional information.
November 2010

3. Web Site See “What’s New” Find a CBA (Competitive Bidding Area)
Register for updates
See “What’s New”
Find a CBA (Competitive Bidding Area)
I want to point out a couple of important features on the CBIC website. First, if you have not already done so, please register on the website to receive updates. Go to Updates at the top of the homepage and follow the instructions. To see what’s new on the website, just click on the large blue bar in the center of the page. And to find out if a ZIP code is included in a Competitive Bidding Area or CBA, go to the CBA locator tool on the left side of the homepage. Simply enter a ZIP code or select a state and then a CBA. This feature will be very valuable once the program is implemented, and I’ll talk more about this later. A list of contract suppliers and grandfathering information have been recently posted to the website. You’ll also find useful information on the CMS website and I encourage you to register on that website for updates, too.
At the conclusion of my presentation, I’ll provide the web site addresses and contact information. You can also find contact information at the top of the homepage next to the Update feature. If you click on the CMS logo at the top of our website’s homepage, you will be linked to the CMS website. And after my presentation, I’ll be happy to take your questions.
November 2010

4. General Overview Program required by law
Round 1 Rebid contracts and prices become effective on January 1, 2011
Applies to Medicare beneficiaries with Original Medicare
First – just a little history about the program. The Medicare DMEPOS Competitive Bidding Program was established by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“Medicare Modernization Act” or “MMA”) after the conclusion of successful demonstration projects. Under the MMA, the DMEPOS Competitive Bidding Program was to be phased in so that competition under the program would first occur in 10 areas in As required by law, CMS conducted the Round 1 competition in 10 areas and for 10 DMEPOS product categories, and implemented the program on July 1, 2008, for two weeks before the contracts were terminated by subsequent law.
The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) temporarily delayed the program in 2008, terminated the Round 1 contracts that were in effect, and made other limited changes. As required by MIPPA, CMS conducted the supplier competition again in 2009, we refer to this competition as the Round 1 Rebid. MIPPA also delayed the competition for Round 2 until 2011 and in additional areas of the country until after Today we will only be talking about the Round 1 Rebid.
The Round 1 Rebid contracts and prices will go into effect on January 1, 2011, in nine competitive bidding areas (CBAs) for nine product categories.
Starting on January 1, Medicare beneficiaries with Original Medicare who obtain competitive bidding items in designated competitive bidding areas (CBAs) are required to obtain these items from a contract supplier, unless an exception applies. Medicare will not pay for competitively bid items furnished by non-contract suppliers to beneficiaries in CBAs unless there is an applicable exception. We will talk about all of these exceptions in detail later on in the presentation.
November 2010

5. Competitive Bidding Areas
Miami – Fort Lauderdale – Pompano Beach, FL
Orlando - Kissimmee, FL
Pittsburgh, PA
Riverside – San Bernardino – Ontario, CA
Kansas City, MO-KS
Cincinnati – Middletown, OH-KY-IN
Cleveland – Elyria – Mentor, OH
Charlotte – Gastonia – Concord, NC-SC
Dallas-Fort Worth-Arlington, TX
This slide lists the names of the areas for the Round 1 Rebid. As I mentioned before, these areas are required to be included in the Round 1 Rebid by MIPPA.
The names you see here are the official names of these metropolitan statistical areas (MSAs). MSAs are areas designated by the Office of Management and Budget that include major cities and the suburban areas surrounding them.
A Competitive Bidding Area or “CBA” is defined by specific zip codes related to an MSA. The CBA may be concurrent with, larger than or smaller than the related MSA, depending on a variety of considerations. For example, low population-density areas within an MSA that are not competitive can be excluded. The CBA is the area wherein only contract suppliers may furnish certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) items to beneficiaries with Original Medicare unless an exception is permitted by regulations.
You can find the zip codes for each of the CBAs on the competitive bidding implementation contractor (CBIC) website: . There is a CBA lookup tool right on the homepage that will take you to maps and ZIP codes for each of the CBAs. It will also let you check a particular ZIP code to find out if it is in a CBA.
Please turn to slide 6.
November 2010

6. Product Categories
Oxygen, Oxygen Equipment, and Supplies
Standard Power Wheelchairs, Scooters, and Related Accessories
Complex Rehabilitative Power Wheelchairs and Related Accessories (Group 2)
Mail-Order Diabetic Supplies
Enteral Nutrients, Equipment and Supplies
CPAP, RADs, and Related Supplies and Accessories
Hospital Beds and Related Accessories
Walkers and Related Accessories
Support Surfaces (Group mattresses and overlays) – Miami CBA only
This slide lists the names of the product categories for the Round 1 Rebid. These items are required to be included in the Round 1 Rebid by MIPPA.
As I mentioned earlier, these are the product categories that were selected for the initial Round 1, except for negative pressure wound therapy (NPWT), which is excluded from the Round 1 Rebid, and group 3 complex rehabilitative wheelchairs, which are excluded from the Round 1 Rebid as well as all subsequent rounds of competition.
A list of the Round 1 Rebid items contained in each product category and the associated Healthcare Common Procedure Coding System (HCPCS) codes is available on the CBIC website.
November 2010

7. Contract Supplier Obligations
Regulations require that a contract supplier comply with all terms of its contract for the full duration of the contract period. This means that contract suppliers must be ready to furnish all items in the product categories and CBAs for which they are awarded contracts and meet all program requirements on Day 1 of the contract period and then continue to meet all program requirements until the contract period ends.
The next few slides highlight contract supplier obligations – key contract terms all contract suppliers must meet for the duration of the contract period.
November 2010

8. Contract Terms Contract Period Comply for full contract period
Must be ready to perform on day one
Contract periods:
Diabetic Supplies – January 1, 2011, to December 31, 2012
All other product categories – January 1, 2011, to December 31, 2013
As I said earlier, contract suppliers must be ready to furnish all items in the product categories and CBAs for which they are awarded contracts on the first day of the contract period. Contract suppliers must continue to meet all program requirements until the contract period ends.
The final rule requires that contracts be re-competed at least once every three years. The contract period for mail order diabetic supplies as January 1, 2011, to December 31, The contract period for all other Round 1 Rebid product categories is January 1, 2011, to December 31, 2013.
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9. Contract Terms Furnishing of Items Cannot Discriminate
Furnish same items available to all customers
Must furnish competitively bid items to any beneficiary who maintains permanent residence in or visits CBA
Only Exception: SNF/NF as specialty supplier
The contract also specifies that contract suppliers must make available the same items to Medicare beneficiaries as they furnish to their non-Medicare customers. Medicare beneficiaries are entitled to the same items that suppliers furnish to any other customers.
Unless otherwise specified in the law or regulations, contract suppliers are required to provide bid items to any Medicare beneficiary who lives in or visits the CBA. This means that contract suppliers must furnish all items in the product category for which the supplier was awarded a contract to beneficiaries throughout the entire geographic area of the CBA.
The only type of contract supplier that is not be required to furnish competitively bid items to any beneficiary in the CBA who requests such items is a skilled nursing facility or nursing facility that is awarded a contract as a specialty supplier. SNFs or NFs that are awarded contracts as specialty suppliers may only provide bid items – and in the Round 1 Rebid that’s just enteral nutrition – to their own residents.
November 2010

10. Contract Terms Subcontracting Responsible for actions of subcontractor
Must be accredited as applicable
Must comply with supplier standards
Purchase of inventory (#4)
Delivery and instruction on the use of item (#12)
Repair of rented equipment (#14)
It’s very important that contract suppliers – as with any supplier – remember that they are responsible for the items and services they provide directly or through the use of a subcontractor. If a contract supplier decides to do business through the use of a subcontractor, the contract supplier needs to make sure that the subcontractor meet all requirements, including all applicable accreditation requirements. If a contract supplier’s subcontractor does not perform in compliance with the terms of the contract, then the contract supplier would be in breach of the contract.
Contract suppliers must comply with all federal laws and regulations, which includes the supplier standards. These standards allow subcontracting services for: 1) the purchase of inventory; 2) the delivery and instruction on the use of a Medicare covered item; and 3) repair of rented equipment. We expect that non-subcontracting functions and services will be provided by the contract supplier.
November 2010

11. Contract Terms Subcontracting
Must notify CMS of subcontracting arrangement(s) within 10 business days of contract award or of entering into an agreement
May use sample subcontracting disclosure form on the CBIC website (post link here)
Contract suppliers must notify CMS of any subcontracting relationships that they have entered into for purposes of furnishing items and services under the program. They must also disclose whether the subcontractor meets accreditation requirements necessary to furnish these services. After contracts are awarded, suppliers must notify CMS within 10 business days of entering into an agreement with subcontractors. is a sample subcontracting disclosure form on the CBIC website that can be completed and sent to the CBIC. If contract suppliers had a subcontracting agreement at the time the contracts were executed, which was on Wednesday, November 3, then they must submit the disclosure by Thursday, November 18.
For more information about subcontracting, there is a fact sheet and several FAQs on the CBIC website and also on the NSC website.
November 2010

12. Contract Terms Physician Authorization Process
Furnish what is prescribed by physician or treating practitioner OR
Consult with physician to find another appropriate brand of item or mode of delivery OR
Assist beneficiary in locating another contract supplier
The Medicare DMEPOS Competitive Bidding Program maintains a beneficiary safeguard to ensure that beneficiaries have access to specific brands or modes of delivery of competitively bid items when needed to avoid an adverse medical outcome. The safeguard is referred to as the Physician Authorization Process. A physician or treating practitioner may prescribe, in writing, a particular brand or mode of delivery if he or she determines that it is necessary to avoid an adverse medical outcome for the beneficiary. The physician or treating practitioner must document in the beneficiary’s medical record the reason why the specific brand or mode of delivery is necessary.
If this situation occurs, the contract supplier must do one of the following:
Furnish the particular brand or mode of delivery as prescribed by the physician or treating practitioner;
Consult with the physician or treating practitioner to find another appropriate brand of item or mode of delivery for the beneficiary and obtain a revised written prescription from the physician or treating practitioner; or
Assist the beneficiary in locating a contract supplier that can furnish the particular brand of item or mode of delivery prescribed by the physician or treating practitioner.
If the physician determines that another appropriate brand or mode of delivery is adequate, the contract supplier must obtain a revised written order from the physician.
It’s very important to remember that all suppliers are prohibited from submitting a claim to Medicare if they furnish an item different from that specified in the written prescription received from the beneficiary’ physician or treating practitioner.
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13. Contract Terms Maintain Medicare Billing Privileges and Accreditation
Maintain enrollment, accreditation, and licensure status
Notify CMS within five (5) business days of any changes to Medicare billing privileges or accreditation status
The contract requires that contract suppliers continue to satisfy all enrollment and quality standards throughout the contract period. This includes accreditation and state licensure requirements as well as general quality standards and product specific quality standards. You can find the supplier standards on the National Supplier Clearinghouse (NSC) website and the quality standards are available on the CMS website. I’ll give you both of these addresses at the end of the presentation.
Also, the contract requires contract suppliers to notify CMS in writing within five business days of any changes to their billing privileges or accreditation status.
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14. Payment Policies November 2010
Now we’ll discuss some key competitive bidding program policies -- such as grandfathering, traveling beneficiary, and repair and replacement of items. And there are other policies that are updated to include the Competitive Bidding Program such as the use of the ABN. Fact sheets and FAQs on many of these policies are posted on the both the CBIC and CMS websites.
November 2010

15. Grandfathering Provision
As I’ve said, starting on January 1, Medicare beneficiaries with Original Medicare who obtain competitive bidding items in designated competitive bidding areas (CBAs) are required to obtain these items from a contract supplier, unless an exception applies. One of the most important exceptions is the grandfathering exception.
Under the grandfathering exception, suppliers that are not awarded a contract under the competitive bidding program to furnish oxygen and oxygen equipment or rented durable medical equipment (DME) have the option to continue renting these items to beneficiaries to whom they are renting these items at the time the competitive bidding program begins. Non-contract suppliers that choose to continue renting these items are called “grandfathered suppliers.
All non-contract suppliers that furnish competitively bid rented durable medical equipment (DME) or oxygen and oxygen equipment to beneficiaries must (1) decide if they will elect to become grandfathered suppliers, (2) notify beneficiaries of their grandfathering decisions, and (3) fulfill other requirements. We will discuss these issues in detail in the next several slides.
Grandfathering information is available on the CBIC website by clicking on the button on the homepage and you can also find information on the CMS website.
November 2010

16. Grandfathering
Applies to oxygen and oxygen equipment and rented durable medical equipment (DME) only
Not applicable to enteral nutrition or diabetic supplies
Item must be under rental agreement at time program is implemented
The grandfathering provision applies to oxygen and oxygen equipment, capped rental DME and inexpensive routinely purchased (or IRP) DME furnished on a rental basis, such as a walker. The grandfathering provision also applies to DME requiring frequent and substantial servicing; however, none of the product categories for the Round 1 Rebid contain items in this DME category. Grandfathered suppliers may furnish competitively bid accessories and supplies used in conjunction with and that are necessary for the use of the grandfathered item.
Purchased items may not be grandfathered. Also, enteral nutrients equipment and supplies may not be grandfathered because they are not included in the DME benefit. By law, the grandfathering exception only applies to rented DME and oxygen and oxygen equipment.
The grandfathering process also only applies to those items that are being rented to beneficiaries who maintain a permanent residence in the CBA at the time the competitive bidding program is implemented. That’s January 1, Grandfathered suppliers may not furnish competitively bid items to new Medicare beneficiaries after January 1, 2011, unless there is another applicable exception.
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17. Grandfathering Must offer to grandfather all beneficiaries
Must grandfather all items in the product category
Beneficiaries may choose contract supplier or grandfathered supplier
Applicable to beneficiaries transitioning from Medicare Advantage plans
All non-contract suppliers that furnish competitively bid rented durable medical equipment (DME) or oxygen and oxygen equipment to beneficiaries must decide if they will elect to become grandfathered suppliers.
Once a supplier makes the decision to serve as a grandfathered supplier, the supplier must do so for all the beneficiaries to whom it is renting grandfathered items at the time the competitive bidding program begins, to the extent that the beneficiary chooses to stay with the supplier. In other words, a grandfathered supplier must provide the grandfathering option to all of its eligible beneficiaries and cannot turn a beneficiary away if he or she elects to continue receiving the item from the grandfathered supplier.
Also, if a supplier decides to become a grandfathered supplier for a product category, its decision applies to all rented competitively bid items in that product category the supplier currently provides. For example, a grandfathered supplier could not choose to keep renting oxygen concentrators but discontinue renting liquid oxygen systems.
Beneficiaries may choose to continue renting items from their current supplier -- with whom they began renting the equipment before the program goes into effect -- if that supplier chooses to be a grandfathered supplier or is awarded a contract. Or they may choose to switch to a contract supplier. A beneficiary may switch to a contract supplier at any time, and the contract supplier is required to accept the beneficiary as a customer.
The grandfathering provision also applies to beneficiaries who transition from a Medicare Advantage Plan.
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18. Grandfathering – Rented DME
Grandfathered supplier
Must accept assignment on claims
Payment for competitively bid item – fee schedule amount
Payment for competitively bid accessories and supplies – single payment amount
Payments continue until end of rental payment period or item no longer medically necessary
SEE SUPPLEMENTAL PAGES
It is important for noncontract suppliers that furnish competitively bid rented DME or oxygen and oxygen to Medicare beneficiaries to consider the key payment rules relating to grandfathering when making their grandfathering decisions. I’ll first discuss the grandfathering payment rules for rented DME.
If a supplier chooses to become a grandfathered supplier for rented DME items (such as wheelchairs, hospital beds, and CPAPs), the grandfathered supplier must accept assignment and will continue to be paid the rental fee schedule amounts established for the state in which the beneficiary maintains a permanent residence. The beneficiary’s permanent residence is the address on file with the Social Security Administration.
The grandfathered supplier will be paid the new single payment amount for accessories and supplies that are provided during the rental period and are necessary for the functioning of the equipment.
There are some differences in payment rules for capped rental DME and Inexpensive and routinely purchased items. I’ll go over them now. If you don’t catch everything, you can refer to the grandfathering information on the CBIC website and to the MLN Matters fact sheet I mentioned earlier.
Capped Rental DME
Grandfathered suppliers for capped rental DME are required to furnish the grandfathered item until ownership of the item is transferred to the beneficiary or the item is no longer necessary.  
Inexpensive and Routinely Purchased (IRP) DME
Grandfathered suppliers for IRP items are required to furnish the grandfathered item for the remaining rental months, unless the item is no longer medically necessary.
Grandfathered suppliers are paid the fee schedule amount established in the State where the beneficiary maintains permanent residency. Payments will continue until the item is no longer medically necessary or total payments for the item equal the fee schedule amount for the purchase of the IRP item.
A beneficiary who would otherwise be entitled to receive IRP items from a grandfathered supplier may elect to transition to a contract supplier at any time during the rental period. Rental payments would continue for a medically necessary item until total payments equal 100 percent of the single payment amount for the purchase of the item.
When a beneficiary switches from a contract supplier to another contract supplier, the new contract supplier is not entitled to a minimum number of months of payment and will be paid the single payment amount for the duration of the equipment rental period (i.e., until total payments equal 100 percent of the single payment amount for the purchase of the item).
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19. Grandfathering – Rented DME
New contract supplier
Must accept beneficiary as customer
New rental period for 13 months of payment for capped rental
Remainder of rental months for inexpensive routinely purchased (IRP) items
Accept assignment; paid single payment amount
For capped rental DME, if break in need/service greater than 60 days – contract supplier must provide item
SEE SUPPLEMENTAL PAGES
Under all circumstances, if a beneficiary decides to change to a contract supplier for rented DME, the contract supplier is required to accept the beneficiary as a customer.
A beneficiary who would otherwise be entitled to receive capped rental equipment from a grandfathered supplier may choose to switch to a contract supplier at any time before the 13th month of continuous use. For capped rental items, the contract supplier would be paid for a new 13-month capped rental period and payment would be based on the single payment amount for the equipment. When a beneficiary switches from a contract supplier to another contract supplier for a capped rental item, the new contract supplier is not entitled to a minimum number of months of payment and will be paid the single payment amount for the duration of the equipment rental period.
A beneficiary who would otherwise be entitled to receive IRP items from a grandfathered supplier may choose to switch to a contract supplier at any time during the rental period. Rental payments would continue for a medically necessary item until total payments equal 100 percent of the single payment amount for the purchase of the item.
When a beneficiary switches from a contract supplier to another contract supplier, the new contract supplier is not entitled to a minimum number of months of payment and will be paid the single payment amount for the duration of the equipment rental period (i.e., until total payments equal 100 percent of the single payment amount for the purchase of the item).
Contract suppliers must accept assignment all items included in their contracts.
One more important note about capped rental DME -- A new rental period begins if there is a break in medical necessity for more than 60 days plus the days remaining in the last paid rental month. When that occurs, a beneficiary must obtain new or additional equipment from a contract supplier. For example, a beneficiary has been renting a hospital bed for 3 months from his grandfathered supplier. The beneficiary becomes very ill and enters a SNF. The grandfathered supplier picks up the hospital bed upon the beneficiary’s admission to the SNF. When the beneficiary is discharged from the SNF four months later, he must obtain his hospital bed from a contract supplier. The new contract supplier would be paid for a new capped rental period.
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20. Grandfathering – Oxygen
Grandfathered supplier
Paid single payment amount
Must accept assignment on all claims
Must continue to provide medically necessary items for useful lifetime
Now let’s discuss grandfathering for oxygen and oxygen equipment.
Under Medicare Part B, oxygen is limited to 36 months of rental payments. All items – including accessories, delivery, back-up equipment, and so forth – are included in the rental payment.
Grandfathered suppliers in CBAs who furnish oxygen and oxygen equipment to beneficiaries will be paid the single payment amount for the duration of the 36 month rental period.
The grandfathered supplier must accept assignment on all claims for oxygen and oxygen equipment furnished to beneficiaries. And the beneficiary is only responsible for the 20 percent co-insurance and any unmet annual Part B deductible.
Grandfathered suppliers must also continue to provide oxygen services for the reasonable useful lifetime of the equipment.
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21. Grandfathering – Oxygen
New contract supplier
Paid at least 10 months of oxygen rental
Paid single payment amount
Break in need greater than 60 days PRIOR to 36 months – contract supplier must provide items
Must accept beneficiary as customer
A beneficiary who would otherwise be entitled to receive oxygen or oxygen equipment from a grandfathered supplier may choose to switch to a contract supplier at any time before the 36th month of continuous use, and the contract supplier would be required to accept the beneficiary as a customer. The contract supplier would be paid the duration of the 36-month rental period or at least 10 monthly rental payment amounts, whichever is greater. 
When a beneficiary switches from a contract supplier to another contract supplier, the new contract supplier is not entitled to a minimum number of months of payment and will be paid the single payment amount for the remaining months of the equipment rental period not to exceed 36 months of continuous use.
If there is a break in need, rather than just a break in service, of greater than 60 days prior to the end of the 36 month rental period, a contract supplier must provide the oxygen and oxygen equipment.
November 2010

22. Grandfathering – Oxygen
After Month 36
ALL suppliers
Must continue furnishing oxygen equipment and services for rest of reasonable useful lifetime
Cannot transfer obligation to continue furnishing oxygen to contract supplier or any other supplier
Paid for oxygen contents, if applicable, at single payment amount
•In general, suppliers that furnished oxygen and oxygen equipment to a beneficiary during the 36th month of continuous use are required by law to continue to furnish the equipment after the 36 months for any period of medical need during the remainder of the reasonable useful lifetime of the equipment, which is five (5) years. This requirement continues to apply under the DMEPOS competitive bidding program, regardless of the role of the supplier (i.e., contract supplier, grandfathered supplier, or non-contract supplier not electing to be a grandfathered supplier).
This obligation cannot be transferred to a contract supplier or any other supplier even in situations where a beneficiary relocates on a temporary or permanent basis outside the supplier’s service area.
November 2010

23. Grandfathering – Oxygen
Beyond Month 60
Beneficiary elects new oxygen equipment
Contract supplier
New 36-month rental period
Single payment amount
Beneficiary elects to keep original oxygen equipment
Grandfathered supplier may elect to continue furnishing equipment
Contents only
As I previously explained, the reasonable useful lifetime of oxygen equipment is five (5) years or 60 months. At the end of the reasonable useful lifetime of equipment, the beneficiary may receive new oxygen equipment. Only a contract supplier can replace oxygen equipment after the end of the reasonable useful lifetime of equipment (5 years).
If the beneficiary decides to obtain new oxygen equipment, the beneficiary must get the new equipment from a contract supplier. The contract supplier will receive a new rental period (36 months) and be reimbursed at the single payment amount.
If the beneficiary does not want to receive new oxygen equipment, the grandfathered supplier may continue to bill for oxygen contents until either the medical need ceases or the beneficiary chooses to obtain new equipment.
November 2010

24. Grandfathering Notifications
Grandfathered suppliers: Written notice to CMS and beneficiaries – November 17, 2010
Non-contract suppliers that do not become grandfathered suppliers: Initial written notice beneficiaries – November 17, 2010
Notification instructions/tools on CBIC website,
At the end of 2009, CMS published new rules on the grandfathering notification process. This process requires noncontract suppliers to provide written notification of their grandfathering decisions to all Medicare beneficiaries who reside in a competitive bidding area to whom they are renting DME or oxygen equipment.
Noncontract suppliers that chose to grandfather were required to notify CMS and beneficiaries of this decision. Noncontract suppliers that chose not to become grandfathered suppliers had to send written notifications to beneficiaries. November 17, 2010 was the deadline for all of these notifications.
Since the deadline has passed, I don’t want to spend a lot of time going over the notification requirements. Any non-contract suppliers that furnish rented DME or oxygen and oxygen equipment to beneficiaries in CBAs who have not yet sent their notifications need to do so immediately. Complete instructions and all the tools you need for the notifications are on the CBIC website.

25. Transitioning to a Contract Supplier
Non-contract suppliers that do not elect to be grandfathered suppliers must pick up their equipment
Suppliers cannot furnish equipment owned by a non-contract supplier acting as a subcontractor
Pickup of old equipment and delivery of new equipment must be coordinated among non-contract/ current supplier, contract supplier and beneficiary
If the non-contract supplier chose not to become a grandfathered supplier or the beneficiary chooses to switch suppliers at any time during the contract period, that supplier must pick up its equipment after proper notification.
Suppliers cannot furnish equipment that is owned by a non-contract supplier acting as a subcontractor.
The current supplier and the new contract supplier must coordinate the pick-up and delivery of the equipment with the beneficiary. There must be no interruption in service to the beneficiary. Under no circumstances should a supplier pick up the rented item prior to making arrangements with the new contract supplier for the delivery of the new equipment on the first anniversary date after the start of the competitive bidding program at a time suitable to meet the beneficiary’s needs.
As a term of their contract, contract suppliers are required to work with noncontract suppliers to make arrangements that are suitable to the beneficiary for the pickup and delivery of equipment.
November 2010

26. Transitioning to Contract Supplier
New contract supplier should obtain supporting documentation from current supplier
Pickup and delivery should occur on anniversary of delivery date of when item was first rented to beneficiary
Non-contract or current supplier cannot pick up equipment before the end of the last month for which that supplier is entitled payment
The new contract supplier should acquire all supporting documentation, such as the physician order or certificate of medical necessity, when applicable, from the non-contract supplier.
The pick-up and delivery should be on the first anniversary date that occurs after January 1, 2011, or another date agreed to by the beneficiary. The anniversary date is the date of the month on which the item was first delivered to the beneficiary by the non-contract supplier. It is the date when a new monthly rental period begins.
The non-contract supplier is responsible for submitting a claim to Medicare for any rental period that begins prior to January 1, 2011.
The non-contract or current supplier cannot pick up the equipment before the end of the month for which that supplier is entitled payment. The non-contract or current supplier will be paid for furnishing the equipment up to the first anniversary date after January 1, 2011.
November 2010

27. For example, if the last anniversary date of the rental of the equipment prior to the start of the program is December 20th, the non-contract supplier would submit a claim beginning December 20th and ending January 19th. The non-contract supplier would pick up the equipment on January 20th and the contract supplier would delivery new equipment on January 20th.
If the anniversary date is January 1, which is the beginning date for the competitive bidding program, the noncontract supplier should not pick up the equipment before January 1 and should not submit a claim for the January rental period. The new contract supplier should deliver the equipment on January 1 and submit a claim for this month.
November 2010

28. Additional Required Notices
Notification by non-contract supplier to beneficiaries switching to contract supplier
Ten (10) business days before scheduled pickup date
Two (2) business days before scheduled pickup date
If a supplier decides not to become a grandfathered supplier or a beneficiary chooses to switch to a contract supplier from a grandfathered supplier, the supplier must provide two notices in addition to the initial 30 day notice before picking up its equipment.
These notifications are to remind the beneficiary of the pick-up date and time and must occur 10-business days and 2-business days before picking up the equipment. These notifications should be made via direct contact such as a phone call with the beneficiary or the beneficiary’s caregiver. It is very important that the supplier ensure that the beneficiary or the beneficiary’s caregiver understands that the equipment will be picked up and that this should occur on the first anniversary date after January 1, 2011, or on another date agreed upon by the beneficiary.
November 2010

29. Exemptions Physicians and Other Practitioners Hospitals
No requirement to bid if bid item provided as part of professional services
Bid item limited to walkers
Hospitals
No requirement to bid if item provided to own patients during admission or on date of discharge
Hospital-owned DME suppliers not exempt from bidding
USE SUPPLEMENTAL PAGE:
First I’ll talk about the physician and other treating practitioner exception. For the Round 1 Rebid, this exception allows physicians and other treating practitioners who are enrolled Medicare DMEPOS suppliers to furnish competitively bid walkers in a CBA to their own patients without submitting a bid and being selected as a contract supplier. There are other types of items that can be included in this exception, but these items are not included in the Round 1 Rebid. The specific professionals who can qualify for this exception include: This includes physicians, including podiatric physicians; nurse practitioners; physician assistants; and clinical nurse specialists.
To qualify for this exception:
The walker must be furnished by the physician or treating practitioner DMEPOS supplier to his or her own patients as part of his or her professional service; and
The walker must be billed to a DME Medicare Administrative Contractor (DME MAC) using the DMEPOS billing number that is assigned to the physician, the treating practitioner (if possible), or a group practice to which the physician or treating practitioner has reassigned the right to receive Medicare payment.
It’s very important to remember that this exception does not affect the physician self-referral prohibition, which is also known as the Stark Law. All Stark Law requirements must be met.
Medicare pays the single payment amount established by the competitive bidding program for walkers furnished under this exception, and the physician or treating practitioner must accept assignment.
There is an MLN matters article fact sheet on this exception on the CMS website.
There is a very similar exception for hospitals. For the Round 1 Rebid, this exception allows hospitals to furnish competitively bid walkers in a CBA to their own patients without submitting a bid and being selected as a contract supplier. As with the physician and treating practitioner exception, there are other types of items that could be included in this exception, but they are not included in the Round 1 Rebid. For the Round 1 Rebid, the exception only covers walkers.
This exception applies to hospitals only. It does NOT apply to hospital-owned DMEPOS suppliers or DMEPOS suppliers that are only affiliated with a hospital.
To qualify for this exception the following requirements must be met:
The walker must be furnished by the hospital to its own patients during an admission or on the date of discharge; and
The walker must be billed to a DME Medicare Administrative Contractor using the DMEPOS billing number that is assigned to the hospital.
It is important to remember that separate payment is not made for walkers furnished by a hospital during an inpatient stay because payment for these items is included in the Part A payment for inpatient hospital services.
Medicare pays the single payment amount established by the competitive bidding program for walkers furnished under this exception, and the hospital must accept assignment.
There is also an MLN matters fact sheets on the hospital exception available on the CMS website.
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30. Other Exemptions Primary Insurance Supplier
May continue to receive secondary payment for an item
Paid in accordance with Medicare secondary payer requirements
As a final note about exemptions, a non-contract supplier that has a valid Provider Transaction Access Number (PTAN) may receive a Medicare secondary payment for a competitively bid item furnished to a beneficiary if the beneficiary is required to use that supplier under his/her primary insurance policy. This policy does not supersede any Medicare secondary payer payment laws, regulations, or policies. Payment will be calculated in accordance with Medicare secondary payer requirements.
November 2010 30

31. Advance Beneficiary Notice (ABN)
Non-contract supplier furnishes bid item to beneficiary in CBA:
Notice to beneficiary of non-contract status
Beneficiary may elect to sign ABN
No beneficiary notice (no signed ABN) = claim denied, no beneficiary liability
As I have discussed, starting on January 1, 2011, beneficiaries with Original Medicare who obtain competitive bidding items in CBAs are required to obtain these items from a contract supplier, unless an exception applies.
In general, if a non-contract supplier furnishes a competitively bid item to any beneficiary in a CBA and no exception applies, the beneficiary is not liable for payment.
However, if the beneficiary has signed an advance beneficiary notice (ABN) that indicates that Medicare will not pay for the item because the beneficiary is receiving it from a non-contract supplier and the beneficiary agrees to accept financial liability, then the non-contract supplier may charge the beneficiary for the item or service. Of course, in this circumstance, non-contract suppliers cannot bill Medicare to receive payment for the item or service.
You can find ABN forms on the CMS website or contact your DME MAC for assistance.
Remember, if a non-contract supplier furnishes a competitively bid item to a beneficiary in a CBA and no exception applies, and the noncontract supplier does not obtain a signed ABN, Medicare will deny the claim and the beneficiary will not have any financial liability.
November 2010

32. Repair and Replacement Part
Repair/Replacement
Repair ONLY
For beneficiary-owned
equipment
May be performed by
any Medicare-enrolled
supplier
Labor associated for
repair/replacement is
not a bid item, is paid
at fee schedule amount
Repair and Replacement Part
Furnished by any
Medicare-enrolled
supplier
If replacement part is bid
item, paid at single
payment amount
Must accept assignment
Replacement ONLY
Complete replacement
of an item
Must be provided by a
contract supplier
SEE SUPPLEMENTAL PAGES
Let’s talk about the payment for repairs and replacements for beneficiary owned equipment under the competitive bidding program.
Let me start by emphasizing that what I am about to say applies only to beneficiary owned equipment. Repairs to rented equipment are included in the rental payment. Also, Medicare does not pay for repairs that are covered by a manufacturer or supplier warranty – this will not change under the competitive bidding program.
For repairs only -
Medicare allows for the repair of beneficiary-owned items by any Medicare-enrolled supplier. Labor to repair equipment is not subject to competitive bidding and will be paid according to Medicare’s general payment rules.
If a replacement part that is a bid item is needed to repair an item, the part may be provided by either a contract supplier or a Medicare-enrolled, non-contract supplier.
The supplier will be paid the single payment amount for the replacement part and must accept assignment on the claim.
For example, Jake, a Medicare beneficiary, resides in a CBA and owns a standard power wheelchair. The wheelchair stops working and he takes it to ABC Medical, a non-contract supplier. ABC Medical examines the wheelchair and determines that the motor needs a new component to make the wheelchair work. ABC Medical may provide the component for the motor since it is part of the repair. ABC Medical will must accept assignment on the claim and will be paid the single payment amount for the replacement part.
If the beneficiary who lives in or travels to a CBA needs to obtain the complete replacement of an item, it must be provided by a contract supplier. This includes replacement of base equipment and replacement of parts or accessories for base equipment that are being replaced for reasons other than servicing of the base equipment. Equipment which is beneficiary owned may be replaced prior to the end of the reasonable useful lifetime of DME equipment (5 years) in cases of loss or irreparable damage. Irreparable damage refers to a specific accident or to a natural disaster such as fire, flood, or hurricane. Replacement of equipment for day-to-day wear and tear is not covered prior the end of the reasonable useful lifetime of the equipment, which is 5 years.
Routine supplies or accessories are NOT considered repairs; they are replacement items. A contract supplier must provide routine supplies and accessories to any Medicare beneficiary who permanently resides in or visits a CBA. Examples of routine supplies or accessories include items such as tubing for oxygen, CPAP masks, or filters. For example, Sue resides in the Cleveland CBA and owns a CPAP. CPAP masks may be replaced every three months. Sue must obtain her CPAP masks from a contract supplier. The contract supplier will be reimbursed the single payment amount for the masks.
November 2010

33. Traveling Beneficiary
Supplier
Yes
Beneficiary Travels to CBA
Contract
Is it a bid item?
Any enrolled No
You need to be aware of two important payment factors when a beneficiary travels:
1) Payment is always based on the permanent residence of the beneficiary. Remember, you can use the ZIP code look up tool on the website to find out if the beneficiary’s residence is within a CBA, and the beneficiary’s permanent residence is the address on file with the Social Security Administration.
And 2) The supplier who may provide the item depends upon whether the item is a bid item or not a bid item and where the beneficiary obtains the item.
The chart on this slide shows how the traveling beneficiary policy works.
Let’s say the beneficiary’s permanent address is in a CBA. Following the chart, if the beneficiary needs an item included in the Competitive Bidding Program for the CBA where he or she is visiting, the beneficiary must obtain the item from a contract supplier. If it is not a bid item, then the beneficiary may obtain the item from any Medicare-enrolled supplier. For example, Nell and her friends live in Charlotte, NC, and travel to Miami. Nell falls and the doctor orders a walker. Nell must obtain the item from a contract supplier in Miami. The Miami contract supplier will be paid the single payment amount for Charlotte.
In another scenario, Nell and her friends travel to Myrtle Beach, an area that is not a CBA, and she needs a walker, which is a bid item in her home CBA of Charlotte. She may obtain the walker from any Medicare-enrolled supplier and the supplier will be paid the single payment amount for the Charlotte CBA and must accept assignment for the item.
So what happens if the beneficiary’s permanent address is NOT in a CBA? Following the chart, if the beneficiary needs an item included in the Competitive Bidding Program for the CBA where he or she is visiting, the beneficiary must obtain the item from a contract supplier. If it is not a bid item, then the beneficiary may obtain the item from any Medicare-enrolled supplier. For example, John and his wife travel to Riverside, California, a CBA, from their home in Phoenix, which is not a CBA. John needs a new mask for his CPAP device. He must obtain the mask from a contract supplier for Riverside. The supplier will be paid the fee schedule amount for Phoenix and must accept assignment for the item.
If John travels to Seattle, another area that is also not a CBA, and needs a CPAP mask, he may obtain the mask from any Medicare-enrolled supplier. Remember, payment is always based on the beneficiary’s permanent residence.
There is a fact sheet on traveling beneficiaries on the CBIC and CMS websites.
Beneficiary Travels to Non-CBA
Any enrolled
November 2010 33 33

34. Mail-Order Diabetic Supplies
Ordered remotely and delivered by common carrier
Contract supplier
Mail-order diabetic supplies
Non-contract supplier
Non mail-order diabetic supplies
KL modifier
SEE SUPPLEMENTAL PAGES
The grandfathering option does NOT apply to the mail order diabetic supplies product category. Starting January 1, 2011, competitively bid mail-order diabetic supplies for Medicare beneficiaries with Original Medicare who live in CBAs must be furnished by a contract supplier for Medicare to make payment under Part B.
The term “mail-order” refers to items ordered remotely (e.g., by phone, , Internet, or mail) and delivered to a beneficiary’s residence by common carriers (e.g., U.S. Postal Service, Federal Express, United Parcel Service, or other shipping or courier service companies) and does not include items obtained by beneficiaries from local supplier store fronts. “Common carrier,” in its basic meaning, includes individuals or companies that transport goods or cargo (e.g., diabetic testing supplies) for compensation. This means that suppliers that pay a common carrier to transport diabetic testing supplies to Medicare beneficiaries’ homes are furnishing mail-order diabetic supplies even if the suppliers have contract arrangements with the common carrier to deliver these items.
I want to stress that it is solely up to the beneficiaries to decide whether or not they wish to obtain their diabetic testing supplies on a mail-order basis. If they wish to obtain their diabetic testing supplies through a storefront supplier, instead of on a mail order basis, they may certainly do so.
Suppliers that furnish non-mail order diabetic supplies will be paid the fee schedule amount based on the beneficiary’s permanent residence.
As a reminder, the KL modifier must be included on claims for mail-order diabetic supplies. Non-contract suppliers that furnish mail order diabetic to beneficiaries who live in an area that is not a CBA still have to use the KL modifier. Failure to include the KL modifier on claims for mail-order diabetic supplies may result in significant penalties for the supplier.
There is a mail order diabetic supply fact sheet on the CBIC and CMS websites.
November 2010

35. Enteral Nutrition Cannot be grandfathered
Nutrients and supplies must always be furnished by contract supplier
If pump furnished for less than 15 months
Must transition to contract supplier
Pickup of old pump and delivery of new pump should occur on first anniversary date after January 1, 2011
SEE SUPPLEMENTAL PAGES
The grandfathering option does NOT apply to the enteral nutrients product category. Non-contract suppliers will need to assist their patients in transferring to contract suppliers for most enteral nutrition services. After January 1, 2011, enteral nutrients and supplies must be furnished by contract suppliers. Pumps that have been furnished for less than 15 months must also be furnished by a contract supplier.
Medicare makes payment for nutrients for a 30-day supply based on the “from” date on the claim. If the “from” date on the claim is prior to January 1, 2011, CMS will allow non-contract suppliers to bill for the 30-day supply and will pay the fee schedule amount for the 30-day supply.
If the enteral nutrition pump was rented for less than 15 continuous months at the time of the implementation of the program, the rental of the pump must transition to a contract supplier. The contract supplier will be paid the remainder of the rental months and subsequent maintenance and servicing until a determination is made by the beneficiary's physician that the equipment is no longer medically necessary. The pick-up of the existing pump and delivery of the new pump should occur on the first anniversary date after January 1, As I discussed earlier, the anniversary date is the date of the month on which the item was first delivered to the beneficiary by the non-contract supplier. For example, if the equipment was rented on August 15th, the anniversary would be September 15th, October 15th, and on the 15th of each following month. The equipment in this example should not be picked up before January 15, A contract supplier may not refuse to furnish items to a beneficiary based on the number of rental months remaining in the 15-month rental period.
However, a non-contract supplier that has received 15 months of rental payments for an enteral nutrition infusion pump must continue to furnish, service, and maintain the pump as long as it is medically necessary. We’ll talk about that on the next slide.
November 2010 35 35

36. Enteral Nutrition If pump furnished for more than 15 months
Supplier that furnished pump in 15th month responsible for furnishing, maintaining, and servicing pump as long as medically necessary
Nutrients and supplies must be furnished by contract supplier
If the enteral nutrition pump was rented for at least 15 continuous months at the time of the program implementation – that’s January 1, 2011, the supplier (contract or non-contract supplier) that provided the item in the 15th month of the rental period is responsible for furnishing, maintaining, and servicing the enteral equipment as long as it is medically necessary. However, the beneficiary must obtain related enteral accessories, nutrients, and supplies from a contract supplier.
There is fact sheet on enteral nutrition on the CBIC and CMS websites.
November 2010 36 36

37. Resources
Competitive Bidding Implementation Contractor (CBIC) Customer Service Center: (877)
CMS Website:
Competitive Bidding Program (CBIC) Website:
NSC Website:
As promised, valuable contact information is provided on this slide. If you have any questions, concerns, comments, please call our customer service center between 9 am and 5:30 pm Eastern time Monday through Friday. Our representatives will be happy to assist you.
As I said throughout the presentation, you can find many resources on the CMS site, the CBIC site and the NSC site.
And you can us your questions by either going to the Contact Us feature on the homepage of the CBIC website or sending your to
This concludes my presentation and I will be happy to answer your questions now.
November 2010