II for additional  information about the CBP phases.) CMS’s CBP-related Monitoring Activities

CMS has implemented several activities to monitor whether beneficiary  access or satisfaction have been affected by the implementation of CBP  and to ensure that contract suppliers are meeting their contract  obligations. Health Status Monitoring Tool. CMS analyzes Medicare claims data  to monitor health measures, including encounters with the health care  system (such as hospitalizations, emergency room visits, and  physician visits) and one outcome (death) for beneficiaries in both  CBP-covered areas and non-CBP areas for both round 2 and the  national mail-order program. Number of Beneficiaries Receiving CBP- covered Items Generally Decreased after Implementation of Round 2 and the National Mail-Order Program

The number of beneficiaries receiving DME items covered under CBP  round 2 generally decreased after the implementation of round 2, and  these utilization decreases generally were larger than the decreases for  items or areas that were not included in CBP. However, CMS stated that CBP has helped limit  fraud and abuse and may have curbed unnecessary utilization of some  CBP-covered items in competitive bidding areas. 3.) Specifically, 95 of  the 100 round 2 areas experienced a decrease between 2012 and 2014  in the number of beneficiaries receiving CBP round 2 items, ranging from  2 to 42 percent. Number of Beneficiaries Receiving National Mail- Order Program Items Generally Decreased after Implementation, Though Utilization Increased for Some Items Acquired through Retail Outlets

The total number of beneficiaries receiving at least one diabetes testing  supply item covered under the national mail-order program decreased  after implementation of the program, although there was an increase in  the number of beneficiaries receiving some of these items through retail  outlets. CMS Reports That Available Evidence Indicates No Widespread Effects of Round 2 and the National Mail-Order Program on Beneficiary Access

Based on its monitoring of health measures, CMS reported that the  implementation of the CBP has not resulted in widespread beneficiary  access issues. CMS told us  that it investigates complaints using secret shopping calls and that its  post-implementation beneficiary satisfaction surveys remained positive. CMS uses the tool  to review Medicare claims data on a bi-weekly basis. Number of Round 2 and National Mail-Order Program Inquiries and Complaints to 1-800- MEDICARE Generally Decreased throughout the First 2 Years

The number of inquiries and complaints to 1-800-MEDICARE regarding  CBP round 2 or the national mail-order program represented less than 1  percent of all calls to 1-800-MEDICARE, and inquiries and complaints  generally decreased throughout the programs’ first 2 years of  implementation. 6.) CMS Investigates CBP Complaints Using Secret Shopping Calls, and Terminates Contracts of Suppliers That Remain Noncompliant after Targeted Education

CMS officials told us that the agency monitors contract suppliers to  ensure that they are complying with the terms of their contracts, such as  servicing all beneficiaries that reside in their competitive bidding areas  and furnishing the same items to Medicare beneficiaries that they make  available to other customers. However,  stakeholders from four beneficiary advocacy groups reported that their  members experienced several access issues with the implementation of  CBP round 2 and the national mail-order program. In addition, discharge planners and other stakeholders from  three state hospital associations reported that beneficiaries also  experienced delays in delivery of CBP-covered items, such as walkers  and wheelchairs, and had difficulty locating contract suppliers to provide  oxygen or service DME items when the beneficiaries were visiting in a  competitive bidding area but resided elsewhere. Most Round 2 and National Mail-Order Program Competitions Had Several Active Contract Suppliers in 2014, but Others Had Just One or a Few Active Suppliers

A large majority of the possible 801 individual competitions in which a  contract supplier could be awarded a contract had at least five contract  suppliers that were active in 2014, which we defined as having furnished  at least one covered item during 2014 in at least one of the competitive  bidding areas and product category competitions in which they were  awarded and accepted a contract. We found that 84 percent of the  competitions had at least five active contract suppliers; however, 11  percent of competitions had three or fewer active suppliers and 1 percent  had just one active supplier. Some Competitions Had a Single Supplier with a Large Market Share

While multiple suppliers had substantial shares of the market for most  competitions, in some competitions a single supplier had a majority. HHS provided  technical comments, which were incorporated as appropriate. Appendix II: Description of the Centers for Medicare & Medicaid Services’ Phase-In of the Competitive Bidding Program

Since the durable medical equipment (DME) competitive bidding program  (CBP) was implemented in 2008, the Centers for Medicare & Medicaid  Services (CMS) has phased in several additional CBP rounds and  programs. Round 1 rebid.
Why GAO Did This Study

To achieve Medicare savings for DME, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 required that CMS implement the CBP for certain DME, such as wheelchairs and oxygen, in phases, or rounds. Round 1 started in 2008, and round 2 and the national mail-order program started in 2013. CMS estimated that the first 2 years of round 2 and the national mail-order program saved Medicare approximately $3.6 billion. GAO has reported on several prior CBP rounds.
GAO was asked to continue to review the implementation of the CBP. In this report, GAO examines the extent to which round 2 and the national mail-order program have affected (1) utilization of CBP-covered DME items, and (2) beneficiaries' access to DME items. This report also (3) describes the number and market shares of the round 2 and mail-order program suppliers.
To examine the effect of CBP on utilization, GAO used Medicare DME claims data from 2012 and 2014—the year before and the year after implementation of round 2—to compare the number of beneficiaries who received CBP-covered DME items. To examine the effect of CBP on beneficiary access, GAO reviewed information about CMS's efforts to monitor the effects of the CBP, and interviewed selected Medicare beneficiary organizations and state hospital associations. To describe the supplier markets, GAO analyzed 2014 Medicare claims data, the latest year with complete available data when GAO began this engagement.

What GAO Found

The number of beneficiaries receiving durable medical equipment (DME) items covered under the competitive bidding program (CBP) generally decreased after implementation of two CBP phases that began July 1, 2013—round 2 and the national mail-order program for diabetes testing supplies. Under the CBP, (administered by the Centers for Medicare & Medicaid Services (CMS)), only competitively selected contract suppliers can furnish certain DME items at competitively determined prices to beneficiaries in designated competitive bidding areas. From the year before (2012) to the year after (2014) implementation, the number of beneficiaries receiving covered items in round 2 areas decreased 17 percent, compared with a 6 percent decrease for beneficiaries in non-CBP areas. The number of beneficiaries that received diabetes testing supplies through the national mail-order program also decreased 39 percent between 2012 and 2014, with a corresponding 13 percent increase in the number of beneficiaries receiving these items through retail outlets. CMS officials stated that CBP has helped limit fraud and abuse and may have curbed unnecessary utilization of some CBP-covered items in competitive bidding areas.
CMS reports that available evidence from the agency's monitoring efforts indicates that the implementation of round 2 and the national mail-order program have had no widespread effects on beneficiary access. In particular, CMS has reported that its health status monitoring tool has not detected any changes in health measures attributable to the CBP, and the results of its 2014 post-CBP beneficiary satisfaction surveys remained positive. In addition, the number of CBP inquiries and complaints generally decreased throughout the first 2 years of round 2 and the national mail-order program. CMS officials told GAO that CMS took measures to ensure that contract suppliers met their contract obligations, such as investigating complaints using secret shopping calls, and terminating contracts of suppliers that remained noncompliant after receiving targeted education. However, some beneficiary advocacy groups and state hospital associations reported specific access issues, such as difficulty locating contract suppliers that will furnish certain items and delays in delivery of DME items.
Round 2 and the national mail-order program included 801 separate competitive bidding area and product category competitions. Most of these competitions had at least five active contract suppliers in 2014. However, 11 percent of the competitions had three or fewer active contract suppliers and 1 percent had just one active contract supplier. In addition, while multiple suppliers had substantial shares of the market for most competitions, in some competitions a single supplier had a majority. For example, in 6 percent of the competitions, one contract supplier had at least 90 percent of the market. Conversely, 11 percent of contract suppliers did not furnish any CBP-covered items for any competitions in their contract. CMS officials told GAO that CMS monitors these suppliers to help ensure that they are meeting their contractual obligations, such as being willing to service all beneficiaries in their areas and to furnish the same items to Medicare beneficiaries that they make available to other customers.
The Department of Health and Human Services provided technical comments on a draft of this report, which were incorporated as appropriate.