Once the relevant  rental periods expire or a beneficiary decides to select a contract supplier,  the grandfathered supplier can no longer provide the CBP-covered items  and services to the beneficiary. Outcomes of CMS’s Implementation of the CBP Round 1 Rebid

The number of bidding suppliers and the number of contracts awarded in  the CBP round 1 rebid were very similar to CBP round 1. Nearly the Same Number of Suppliers Bid As in Round 1, and About the Same Percentage of Submitted Bids Resulted in Contracts

Nearly the same number of suppliers bid in both CBP round 1 (1,010  suppliers) and the CBP round 1 rebid (1,011 suppliers). While CMS improved the  CBP bidding process, many suppliers still had difficulty complying with bid  submission requirements, and had particular difficulty with financial  documentation requirements. Although the majority of suppliers with  disqualified bids that contacted CMS with questions were found to have  been correctly disqualified, some suppliers were later found to have  incorrectly disqualified bids and were offered contracts. Effects on Suppliers of the First Year of the CBP Round 1 Rebid

Both contract and non-contract suppliers have been affected by the first  year of the CBP round 1 rebid. In the first months of 2011, few CBP  contract suppliers had their contracts terminated by CMS, voluntarily  canceled their contracts, or were involved in ownership changes. Since  the CBP round 1 rebid began, many non-contract suppliers have chosen  to be grandfathered suppliers for certain CBP rental DME. Some contract  and non-contract suppliers have entered into subcontracting agreements  to provide certain services to beneficiaries in CBP competitive bidding  areas. 3.) Although some of these  efforts have limitations, in the aggregate, they provide useful information  to CMS regarding beneficiary access and satisfaction. CBP Inquiries and Complaints Decreased During CBP’s First Year 2011

Information collected from CMS’s monitoring of inquiries to   1-800-MEDICARE suggests that CBP has not adversely affected  beneficiary access to or satisfaction with DME. 4.) Early Data Indicate Some Decreases in DME Utilization

CMS data show that fewer distinct beneficiaries in competitive bidding  areas received CBP-covered DME items in 2011 than in 2010 for the six   However, we do not assume that  product categories that we analyzed.the utilization in 2010 was the appropriate level of Medicare utilization and  the decline in the number of beneficiaries served between 2010 and 2011  does not necessarily indicate that beneficiaries did not have access to  needed DME. The decrease is evident when comparing  changes in the number of distinct CBP-covered beneficiaries served in  2011 compared to 2010 in both the nine competitive bidding areas and  non-competitive bidding areas.beneficiaries served does not necessarily indicate beneficiaries do not  have access to needed DME as CMS told us that possible reasons for the  decline in utilization may be the result of:   However, such decline in the number of
CBP’s round 1 rebid competitive bidding areas were selected by  CMS, in part because they had high utilization, implying that some  utilization may have been unnecessary. However, CMS  estimates that CBP savings to Medicare and to beneficiaries are greater  than its costs. CMS also reported that CBP resulted in savings for  beneficiaries. First, HHS noted that the CBP  round 1 rebid resulted in savings of more than $200 million in its first year,  and that the Department anticipates additional savings of more than   $25 billion to the Medicare program between 2013 and 2022 as CBP  expands in round 2. Concluding Observations

Although the first year of the CBP round 1 rebid’s contracts has been  completed, it is important to continue to closely monitor the CBP as the  program expands into 91 additional areas in round 2. It is  too soon to determine the full effects the CBP may have on Medicare  beneficiaries and DME suppliers. We found that, in general, the round 1 rebid was successfully  implemented. Utilization of  selected DME items declined in the round 1 rebid competitive bidding  areas; however, we do not assume that all pre-CBP utilization was  appropriate and CBP may have reduced unnecessary utilization of DME,  particularly because CMS chose to implement the CBP round 1 rebid in  areas with what it suspected were relatively high levels of unnecessary  utilization. More experience with DME competitive bidding is needed, particularly to  see if evidence of beneficiary access problems emerges. We are sending copies of this report to the Secretary of Health and  Human Services. Medicare: CMS Has Addressed Some Implementation Problems from  Round 1 of the Durable Medical Equipment Competitive Bidding Program  for the Round 1 Rebid, GAO-10-1057T.
Why GAO Did This Study

To achieve Medicare savings for DME, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) required that CMS implement the CBP for certain DME. In 2008, the Medicare Improvements for Patients and Providers Act (MIPPA) terminated the first round of supplier contracts and required CMS to repeat the CBP round 1referred to as the round 1 rebid, resulting in the award of contracts to suppliers with payments that began January 1, 2011. CMS has estimated that the rebid will lead to significant savings for Medicare.
MIPPA requires GAO to examine certain aspects of the CBP. In this report, GAO reviews (1) the outcomes of the CBP round 1 rebid process; (2) the effect of the CBP round 1 rebid on DME suppliers; (3) how the CBP round 1 rebid has affected Medicare beneficiary access to and satisfaction with selected DME; and (4) the extent to which the CBP round 1 rebid has affected the utilization of selected DME items.
To examine CBP outcomes and effects, GAO analyzed data from CMS and its feedback provided to bidding suppliers, analyzed 2011 CBP data about different types of suppliers, and interviewed CMS and CBP contractor officials, DME industry groups, and suppliers. To examine CBPs effects on beneficiary access, GAO analyzed Medicare claims data for the first six months of 2011 because the data for those months were the most complete, and compared it to the same months in 2010.

What GAO Found

The Centers for Medicare and Medicaid Services (CMS), within the Department of Health and Human Services (HHS), implemented the durable medical equipment (DME) competitive bidding programs (CBP) bidding process for the round 1 rebid. Nearly the same number of suppliers submitted a similar number of bids for both the CBP round 1 rebid and round 1. Many suppliers continued to have difficulty complying with financial documentation requirements; however, the number of bids disqualified in the round 1 rebid was significantly less than for round 1. After being notified of their bid results, some suppliers were found to have bids that were disqualified incorrectly and were subsequently offered round 1 rebid contracts. About one-third of the bidding suppliers were awarded CBP contracts.
Relatively few CBP contract suppliers (those awarded CBP contracts) had their contracts terminated by CMS, voluntarily canceled their contracts, or were involved in ownership changes. Under the CBP, non-contract suppliers (those not awarded CBP contracts) can grandfather certain rental DME for beneficiaries they were servicing prior to the implementation of CBP until CBP-covered beneficiaries rental periods expire. Also, some CBP contract suppliers entered into subcontracting agreements with non-contract suppliers to furnish certain services to CBP-covered beneficiaries in the round 1 rebid.
CMSs ongoing multiple monitoring activities generally indicate that beneficiary DME access and satisfaction have not been affected by CBP. Although some of these efforts have limitations, in the aggregate, they provide useful information to CMS regarding beneficiary access and satisfaction.
Early data indicate that utilization has decreased in some CBP-covered DME categories. GAOs review of Medicare claims data found that fewer beneficiaries in competitive bidding areas received some CBP-covered items in any of the first six months of 2011 than in the same month of 2010.
Although the first year of the CBP round 1 rebid has been completed, it is too soon to determine its full effects on Medicare beneficiaries and DME suppliers. GAO found that, in general, the round 1 rebid was successfully implemented. GAO also found that utilization of selected DME declined in the CBP areas; while there are many possible reasons for this, it does not necessarily indicate that beneficiaries have not had access to needed DME. GAO does not assume that all pre-CBP utilization was appropriate and the CBP may have reduced unnecessary utilization of DME. More experience with DME competitive bidding is needed, particularly to see if evidence of beneficiary access problems emerges. For that reason, it is important to continue monitoring changes in the number of suppliers serving CBP-covered beneficiaries.
In commenting on a draft of this report, HHS noted that the CBP round 1 rebid resulted in savings of more than $200 million in its first year. HHS also cited the results of CMSs monitoring of beneficiaries access to DME in CBP areas as evidence that the CBP did not affect beneficiaries adversely.