The single payment amounts for Round 2 of the DME Competitive Bidding Program have been released and the results are staggering. Most providers with significant Medicare business that operate in any of the Round 1 or 2 MSAs will receive a significant hit to their revenues and bottom line starting this summer.
A few highlights of the contracting results (as presented by CMS) are listed below:
- Contract winners are beginning to receive notification via email and are receiving UPS packages with contracts for them to review and return to CMS should they choose to accept them
- A total of 14,654 contracts were issued to 867 Suppliers across the 90+ MSAs
- 60% of the contracts were awarded to “small suppliers”, those under $3.5M of total annual revenue
- 87% of the contracts were awarded to suppliers with a local presence in that category
- CMS stated yesterday that they are on track for a July 1, 2013 implementation date for Round 2
The implementation of Round 2 of the program will undoubtedly have an enormous impact on the industry in the months and years to come. Regardless of whether your DME was awarded a contract(s) or not, there is a lot of information to digest and a lot of planning and analysis to be done to determine the impact to your business and the best path for you moving forward. There will likely be significant consolidation in the industry if this program and these rates hold up so if you are on the buying or selling end of industry, call Somerset CPAs today to help plan accordingly.
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.
Single Payment Amounts
CMS’s Press Release
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 related supplies and accessories
Competitive Bid Round 2 Rates To Be Announced Soon
CMS is poised to announce the Single Payment Amounts for Round 2 before the end of January 2013 according to industry and CMS representatives. Winning suppliers will be notified privately by the CBIC and suppliers will have 7-10 days to accept offered contracts after they are received. No word yet on when exactly CBIC will notify the winners but CBIC will be in the contracting phase until enough suppliers sign contracts to meet the projected demand by category.
Does your current accounting firm truly understand the complexities of the DME industry and have the knowledge and experience to be a valued strategic partner? If you are like most DMEs, your current accountant probably does not fully understand your business and might not be helping you accurately account for your business activity or maximize your financial standing and tax position. Somerset CPAs understand the DME industry and is the only accounting firm with a national scope and specialized practice group focusing on DME. Call us for free consult to discuss any of your accounting, tax, financial or operational issues.
See us at the 2013 Brightree Users Summit in San Diego on February 21st, 2013 and at Medtrade Spring on March 21st 2013. Craig Hittle, MBA will be speaking about business valuation and M&A transaction considerations in the DME marketplace at both venues and is a valuable resource for anyone considering buying or selling their DME business. Hope to see you there.
Cathy Weaver, senior manager at Somerset CPAs, discusses five trends in Medicare reimbursement in the ambulatory surgery center setting over the past several years in this article in Becker’s ASC Review. Go to article…
Participation in the CMS Electronic Health Record (EHR) Incentive Program began as early as 2011; the incentive program ends in 2016. Providers can attest that they have adopted, implemented or upgraded certified EHR technology in their first year of participation to receive an incentive payment. Attestation has already started for some providers, with incentive payments now starting to be paid to eligible professionals (EPs) and eligible hospitals.
Incentive payments are phased out over time and replaced in 2015 with financial penalties for those who are not using EHR technology.
Nothing in the American Recovery and Reinvestment Act of 2009 excludes such payments from taxation or as tax-free income. Therefore, incentive payments would be treated like any other income. Providers should consult with a tax advisor or the Internal Revenue Service regarding how to properly report this income on their filings.
Please contact us for assistance.
Whether you are immersed in submitting an application for Medicare Bundled Payments, have agreed to a pilot with a commercial payer or have decided to wait and watch, experts agree that episode-based payments will be an important part of your practice’s financial success in the future. This webinar will be held on Wednesday, July 18 from 11:30 a.m. to 12:30 p.m. Eastern. Speakers will be Kara Wieckowski, Jeff Boomershine and Mary Knerr. Register today for this free webinar…
Our monthly Health Care Commentaries for June 2012 includes the following articles:
- Stay on Top of Denied Claims
- What Your Practice Needs to Know About Bundled Payments and Episode-Based Reimbursements
- Six Tax-Planning Moves for Midyear
- Taking Tax Write-Offs for Good Deeds
- IWL Women’s Leadership Conference 2012
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The May issue of our Health Care Team’s enewsletter has been published. Articles include:
- Protect Your Practice by Keeping Corporate Minutes
- Staying on Top of Staff Overtime Costs
- Bad Check Protocol
- Income Tax Filing Changes Coming for Indiana Fiduciaries
- Somerset Health Care Team News
We are pleased to announce that Abby Shorter has joined us as a supervisor. She is a licensed CPA with over six years of extensive tax knowledge. Abby most recently worked as a senior tax analyst preparing tax returns for a hospital system and subsidiaries. She was previously an accounting professor teaching undergraduate and graduate level accounting courses. Abby also has prior experience working for a wealth management firm as a client service manager providing comprehensive financial planning to high net worth individuals and their closely-held businesses. She is a graduate of Ball State University with a B.S. degree in accounting and Masters in education. She volunteered with the IRS Volunteer Income Tax Assistance (VITA) for the 2011 tax season, completing tax returns for low income individuals. Abby is a member of the Indiana CPA Society and the American Institute of CPAs.
>>Connect with Abby on LinkedIn
Our Health Care Team’s monthly e-newsletter for April has been published. Articles include: