Chairman Herger Announces Hearing on the Medicare Durable Medical Equipment Competitive Bidding Program

From: Health Subcommittee, House Ways and Means Committee

House Ways and Means Health Subcommittee Chairman Wally Herger (R-CA) today announced that the Subcommittee on Health will hold a hearing to examine the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) competitive bidding program to understand how the program is impacting patients, suppliers, and program expenditures. This hearing will help the Subcommittee assess the Round 1 experience in nine Metropolitan Statistical Areas (MSAs) and the plans for its 2013 expansion into 91 additional MSAs.

The hearing will take place on Wednesday, May 9, 2012, in 1100 Longworth House Office Building, beginning at 9:00 A.M.
In view of the limited time available to hear from witnesses, oral testimony at this hearing will be from invited witnesses only. However, any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by the Committee and for inclusion in the printed record of the hearing. A list of witnesses will follow.

BACKGROUND

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The Medicare Modernization Act of 2003 (MMA) established the DMEPOS competitive bidding program to bring Medicare payments for certain high-cost and high-volume items—such as hospital beds and diabetic testing supplies—in line with actual market prices, as Medicare reimbursement rates often far exceeded retail rates. The Centers for Medicare and Medicaid Services (CMS) competitive bidding process entails DMEPOS suppliers submitting bids that include the price at which they are willing to sell a specific item in an MSA and the percentage of the market they would serve at that price. Contracts have been offered to the lowest bidders with sufficient capacity to serve the market.
MMA specified that Round 1 of the competitive bidding program was to begin in 10 MSAs in 2007. In response to concerns that the CMS handling of the process for awarding contracts to suppliers had significant flaws, Congress terminated Round 1 two weeks after the program began with passage of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA). In addition to making improvements to the program, MIPPA mandated that a modified version of Round 1 be re-bid and implemented in 2011, and that the number of MSAs be reduced to nine. The cost of this delay was offset by a 9.5 percent reduction in 2009 DMEPOS fee schedule payments for competitively bid items. Recently, the Medicare actuaries found that Round 1 has reduced program expenditures by $202 million in 2011.
The competitive bidding program will soon undergo significant expansion beyond the initial nine MSAs. The Affordable Care Act (ACA) expanded the program so that Round 2 includes an additional 91 MSAs. CMS is now assessing supplier bids for Round 2 with the intent that competitively bid prices in these 91 MSAs take effect in mid-2013. The ACA directed the Secretary of the Department of Health and Human Services to use competitively bid prices nationwide beginning in 2016. The Medicare actuaries expect the competitive bidding program to save $43 billion over the next 10 years, including saving beneficiaries $17 billion, relative to the prior fee schedule-based system.
In announcing the hearing, Chairman Herger stated, “Congress established the competitive bidding program in light of evidence that the Medicare fee schedule payments far exceeded retail rates, leaving the DMEPOS benefit prone to waste, fraud, and abuse. I believe strongly in the competitive forces of the private market and the first year of the program shows this process has resulted in lower costs for Medicare and its beneficiaries. While this is encouraging, it is important to ensure the process by which suppliers compete is fair and that beneficiaries receive needed care. This hearing will help the Subcommittee understand the successes and challenges with Round 1 before the program’s scheduled significant expansion next year.”

FOCUS OF THE HEARING:
The hearing will focus on the impact of the DMEPOS competitive bidding program on beneficiaries, suppliers, and Medicare expenditures and the implications for program expansion.

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:
Please Note: Any person(s) and/or organization(s) wishing to submit for the hearing record must follow the appropriate link on the hearing page of the Committee website and complete the informational forms. From the Committee homepage, http://waysandmeans.house.gov, select “Hearings.” Select the hearing for which you would like to submit, and click on the link entitled, “Click here to provide a submission for the record.” Once you have followed the online instructions, submit all requested information. ATTACH your submission as a Word document, in compliance with the formatting requirements listed below, by the close of business on Wednesday, May 23, 2012. Finally, please note that due to the change in House mail policy, the U.S. Capitol Police will refuse sealed-package deliveries to all House Office Buildings. For questions, or if you encounter technical problems, please call (202) 225-1721 or (202) 225-3625.

FORMATTING REQUIREMENTS:
The Committee relies on electronic submissions for printing the official hearing record. As always, submissions will be included in the record according to the discretion of the Committee. The Committee will not alter the content of your submission, but we reserve the right to format it according to our guidelines. Any submission provided to the Committee by a witness, any supplementary materials submitted for the printed record, and any written comments in response to a request for written comments must conform to the guidelines listed below. Any submission or supplementary item not in compliance with these guidelines will not be printed, but will be maintained in the Committee files for review and use by the Committee.
1. All submissions and supplementary materials must be provided in Word format and MUST NOT exceed a total of 10 pages, including attachments. Witnesses and submitters are advised that the Committee relies on electronic submissions for printing the official hearing record.
2. Copies of whole documents submitted as exhibit material will not be accepted for printing. Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material not meeting these specifications will be maintained in the Committee files for review and use by the Committee.
3. All submissions must include a list of all clients, persons and/or organizations on whose behalf the witness appears. A supplemental sheet must accompany each submission listing the name, company, address, telephone, and fax numbers of each witness.
The Committee seeks to make its facilities accessible to persons with disabilities. If you are in need of special accommodations, please call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four business days notice is requested). Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above.

Note: All Committee advisories and news releases are available on the World Wide Web at http://www.waysandmeans.house.gov/.