Dive Brief:

• Four trade groups have created a website designed to help suppliers of durable medical equipment (DME) prepare for Medicare's new competitive bidding process.

• The website collates information from government sources and provides tools to help DME suppliers understand the effect of new CMS rules on bidding for lead and non-lead items.

• That knowledge could help companies as they prepare for the first round of DME contracts under CMS' revised rules, which will only source bids on the lead product in a category.

Dive Insight:

Congress mandated a competitive CMS bidding program for durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) in legislation adopted in 2003 and the initiative was implemented in 2011. Since then, CMS thinks the scheme has saved billions of dollars by enabling Medicare to set market-based payment rates for DMEPOS items.

Now, the bidding model CMS used over that period is changing. CMS plans to move to a lead item pricing model. This means suppliers will only bid on the lead items in the 16 DMEPOS categories. CMS will look at total national submitted charges for the preceding year to determine the lead item.

The bid on the lead item in each category will determine the rates for all other products. CMS will calculate the prices for these non-lead items based on the relative payment levels in the Medicare fee schedules for 2015. That means the bid on, for example, the nebulizer with the most national submitted charges in the previous will dictate the future prices of all other products in the category.

Moving to the new bidding model may simplify administration of the process but it is a significant change for companies that could create problems, according to associations of businesses affected by the revisions.

"If a bidder bids a lead item at today's Medicare payment rate, all the non-lead items payment will be reduced significantly, many over 50% from today's payment rates. In fact, virtually all non-lead items will be reduced significantly compared to today's rates," the trade groups wrote.

The four trade groups — the American Association for Homecare, the Council for Quality Respiratory Care, VGM & Associates and the Healthcare Nutrition Council — responded by creating a website designed to help DMEPOS suppliers avoid potential pitfalls of the process.