CMS announces payment amounts for Round 2

Wednesday, January 30, 2013

BALTIMORE – CMS announced today that reimbursement rates for certain home medical equipment will be, on average, 45% lower than the current fee schedule as part of Round 2 of competitive bidding.

Medicare beneficiaries will save, on average, 72% on diabetic testing supplies as part of the national mail-order program.

The CMS Office of the Actuary estimates that the program will save the Medicare Part B Trust Fund $25.7 billion and beneficiaries $17.1 billion between 2013 and 2022.

“This program has already saved millions for taxpayers and beneficiaries while maintaining access to care,” stated CMS Acting Administrator Marilyn Tavenner. “We look forward to building on this success by serving more beneficiaries, increasing savings and helping to ensure the long-term sustainability of Medicare.”

Round 1 of competitive bidding saved Medicare about $202.1 million.

CMS’s next steps:

•    It will now begin the contracting process.

•    In the spring of 2013, it plans to announce the contract suppliers.

•    On July 1, 2013, it plans to go live with the payment amounts and contract suppliers.

For single payment amounts:

For CMS’s press release:

For CMS's fact sheet:

Round 1 and Round 2: How do they stack up?


Round 1 of competitive bidding was implemented on Jan. 1, 2011, in nine cities for nine product categories. In Round 1, single payment amounts were, on average, 32%, below the current fee schedule. For oxygen concentrators, for example, the single payment amount was $116.16 per month, reduced from $173.17.


CMS plans to implement Round 2 on July 1, 2013, in 91 cities for eight product categories:

•    oxygen supplies and equipment;

•    standard manual and power wheelchairs and scooters and related accessories;

•    enteral nutrients, equipment and supplies;

•    CPAP devices, respiratory assist devices and related supplies and accessories;

•    hospital beds and related accessories;

•    walkers and related accessories;

•    support surfaces; and

•    negative pressure wound therapy pumps and related supplies and accessories).


CMS also plans to implement a Round 1 re-compete on Jan. 1, 2014, in the same nine cities as Round 1 but for an expanded number of product categories. The agency has combined several smaller product categories into larger categories—a general HME category, for example, covers everything from urinals to patient lifts to TENS devices.

See also: CMS changes name of bidding game

Repeal and replace

Industry stakeholders plan to reintroduce a bill to repeal and replace competitive bidding with a market-pricing program (MPP) in the coming weeks. A previous bill in the 112th Congress, H.R. 6490, garnered 94 co-sponsors.

See also: Price breathes new life into MPP


Just remember that when you shut your doors after many years of hard work in the DME industry, some idiot in Washington wrote Support Services in the excel spreadsheet tab for Support Surfaces. Its good to know the industry's in good hands with geniuses like that at the helm.

Finally, a reaason for those in Round 2 areas to stand up and fight. For years Round 1 and a few active souls have been warning of the destruciton of the industry. Well 45% will guaruntee the death of many companies and a clear destruction of patient care.

The time to act was 4 years ago, but now is the 11th hour ( plus 50 minutes). Providers, please turn on Word, open an new document and draft a letter to your congressman about this ridiculous program and hand deliever it to Washington, and while you are there, pay visits to your Senators, and why not be wise and join AMEPA and AA Home Care and donate real money to your association so they can keep sending people to Washington.

This is put up or shut up as it will not happen on its own.


Who bids these amounts?

The new prices only work for a one man shop. They are completely and utterly unsustainable for a small business company that has admin employees, delivery technicians, and marketing department. Many people will lose their jobs across the nation. The payments completly ignore company payroll, overhead, rent, accreditation fees, etc. They make work for internet but thet are a complete abomination for brick and mortar dme. I trully feel sad for all the employes that will lose their jobs as a result if this sick joke. And there will be tens of thousands of them.

This model does not work for any size company. We are a small company that has a model based on customer service to our patients but now we will be forced to rethink our model to survive in this new enviroment. 

CMS starts the announcement by mentioning the 27 billion dollars in savings in medicare between now and 2022, so this sets the tone to the great majority of the patients, because throughtout all the public publications CMS had created the idea that DME providers are not partners but rivals. For many, we had made too much money and we shuld afford this unreasonable large cuts in the fee schedule. This is the perfect song to play for the large majority of patients out there that supports the idea that governmment intervention is good because it will take from the DME suppliers and will distribute among the users. We are just 100,000 DME providers but we need to get united to be able to show the people that this is the path to an enviroment of very few providers left to provide to a very large number of consumers. Quality of service and quality of products will deminish to sad levels and those whom had contributed to the Medicare system for years, will be experiencing a sorry service and poor quality supplies. 

We need leadership in our DME community that can elevate our case to the right level in our government.

We need a plan of action, to whom should we all write? what should be our agenda?


I won a bid for all Standard  wheelchairs and scooters and was trying to figure out it payment will be lump sum or simply rental? I heard someone say that only a one man shop can this work for. I disagree and it depends on the product, but $376 for manual chair is too low and $55 for hospital bed is not going to happen and thats why i bid higher than the actual amount

Please explain on how you expect to receive a reasonable profit based on the new single payments rates,  Do you have delivery drivers, billing, marketing, administrative, etc. If so, I would love to hear your opinion on how you plan to pay your employees if K0001 manual wheelchair pays approximately $250 and E0260 hospital bed pays roughly $580 in some MSA.  Just the cost of the equipment alone erodes a healthy profit margin let alone all your fixed (rent, accreditation, payroll) and variable expenses.  Looking forward to your response:-) 

Lenoxmed, i mean no disrespect but the fact that you don't even know how you are to be reimbursed for certain items within the category only highlights the fact that the bids amounts that were submitted, by you and  many others, may not be accurate and are certainly unsustainable.  I would think a first month purchase option or required rental period would have been a major factor in calculating you bids.  

The best outcome for our industry is for this competitive bid program to fail miserably. 

My prediction is that within 90 days of implementation there will be total pandemonium and the legislators will be bombarded with complaints.   Then in their infinite wisdom the legislators will squeal to CMS how could they do this, when in fact they were the ones that approved this grossly incompetent plan. I predict that within 180 days from implementation that competitive bidding will be scrapped.  After we as taxpayers have spent a billion dollars to develop this moronic plan.  CMS and the legislators would never survive in private industry and should be held accountable for their gross incompetence.

CMS is incompetent and impotent to eliminate fraudulent providers like the Scooter Store that have stole our tax dollars and ruined the industry so they try to control fraud with this absurd plan.

Just one person’s opinion.