DMEPOS rates drop significantly, reflecting competitive bidding amounts

CMS has updated the Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) fee schedule amounts, based on information from the DMEPOS Competitive Bidding Program. The new payment rates for many items, from walkers to power wheelchairs to hospital beds are dropping by half or more in both urban and rural settings.

Competitive bidding

The Medicare Prescription Drug, Improvement, and Modernization Act (MMA) established the competitive bidding program for certain items and services. Single payment amounts, determined by bids submitted by DMEPOS suppliers, replaced current fee schedule payment amounts in an effort to set more appropriate payments. These payments are intended to reduce out-of-pocket expenses, save money for the Medicare program, and ensure access to items and services. Bidding programs are established in 99 metropolitan statistical areas in the U.S.

July updates

The adjustments to the fee schedule began on January 1, 2016, establishing a payment rate comprised of an equal blend of current and adjusted rates, providing for a six-month transition period during which CMS assessed health outcomes and access to services. The July updates include fully adjusted rates, which include rate revisions updated to reflect additions and recompeted contracts under the bidding program.

DMEPOS suppliers accept adjusted fee schedule rates

Durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) suppliers in non-competitive bidding program areas are accepting adjusted payment rates that were phased in beginning in 2016. CMS posted quarterly monitoring data suggesting that the adjusted rates are adequate to cover the costs of furnishing DMEPOS and have had no negative impact on beneficiary access. The fully adjusted billing rates will take effect in non-competitive bidding areas beginning July 1, 2016.

Competitive bidding program

CMS has operated the DMEPOS competitive bidding program (CBP) since January 2011 to improve upon the prior DMEPOS fee schedule, which was based on historic supplier charges from the 1980s and resulted in excessive payments. Medicare saved more than $580 million upon the completion Round 1’s three-year contract period, which lasted from 2011 through 2013. After the first two years of Round 2 and the national mail-order programs, which began in July 2013, it saved approximately $3.6 billion.

Non-CBP areas

Section 1834(a)(1)(F) of the Social Security Act requires CMS to adjust fee schedule amounts for durable medical equipment (DME) on January 1, 2016, in non-CBP areas. Section 1842(s)(3)(B) authorizes adjustments to the fee schedule amount for enteral nutrients, equipment and supplies based on information from CBPs. To combat stakeholder concerns that the adjustment might negatively impact quality and access to items and services, CMS decided to phase in the adjustments to the fee schedule amounts for claims with dates of service January 1, 2016, through June 30, 2016, with each fee schedule amount based on a blend of 50 percent of the fee schedule amount that would have gone into effect on January 1, 2016, if not adjusted based on information from the CBP, and 50 percent of the adjusted fee schedule amount.


Suppliers in non-CBP areas are not required to accept assignment of Medicare claims for items subject to competitive bidding and may instead collect the extra money needed to cover their costs directly from the beneficiary. However, the data for 2016 show that suppliers in non-CBP areas have accepted the new, adjusted rates as payment in full. Overall, there was no change in the rate of assignment for the first four months of 2015 (99.87 percent) compared to the first four months of 2016 (99.88 percent). The data are also broken down by geographic regions, rural versus non-rural classification, and DMEPOS item category. CMS will continue to monitor data for the second quarter of 2016 and after the fully adjusted payment rates are implemented beginning in the third quarter.