For taxpayers, the competitive bidding program means potentially significant savings for Medicare. When fully implemented in 2010, it is projected that these savings will amount to $1 billion annually.

"For DME items and services, beneficiary coinsurance is 20 percent of the total Medicare payment amount," said Norwalk. "The savings this program will generate will directly translate to lower coinsurance for Medicare beneficiaries, thus significantly reducing their out-of-pocket costs for health care."


CMS is creating a limited exception to the competitive bidding requirement that will allow certain treating professionals to furnish items on the competitive bidding list to their own patients without having to participate in bidding and without becoming a contract supplier. This exception would apply to certain specified items furnished by physicians, physician assistants, clinical nurse specialists, nurse practitioners, occupational therapists in private practice, and physical therapists in private practice. In addition, the item must be furnished as part of their professional services. CMS believes that allowing this type of arrangement to continue will promote the efficient and uninterrupted delivery of care to beneficiaries.

The rule also adopts some special protections for beneficiaries in the CBAs who are already renting certain DMEPOS items when the program becomes effective. For example, the final rule includes a grandfathering provision that may enable these beneficiaries to continue renting these items from their existing suppliers if the supplier chooses to continue renting the item under grandfathering rule (called "noncontract suppliers"), rather than having to switch to a contract supplier. If the beneficiary continues to need the item that they are renting from a non-contract supplier and switches to a contract supplier, access to items and services will be ensured because the contract supplier that assumes responsibility for serving the beneficiary will be able to take advantage of special payment provisions.

For suppliers of oxygen equipment, the final rule provides for a minimum of 10 months of payment to a contract supplier who assumes the responsibility for providing oxygen to a beneficiary who had been receiving services from a non-contract supplier. Similarly, if a beneficiary who is renting capped rental equipment switches from a noncontract supplier to one that has been awarded a contract under the competitive bidding program, the new contract supplier will receive 13 months of rental payments. These payment provisions apply without regard to the number of months of payments Medicare previously made to the noncontract supplier; however, payment can only be made if medical necessity for the equipment continues.

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