The Centers for Medicare & Medicaid Services on Tuesday announced the 70 new areas across the nation - including Chattanooga and Knoxville - that will be part of the second phase of a competitive bidding program designed to help lower Medicare beneficiaries’ out-of-pocket costs and improve their access to certain high quality durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS).

Ten areas currently participate in the program providing greater beneficiary access to certain DMEPOS, including standard and complex power wheelchairs, walkers, oxygen supplies and equipment, hospital beds and certain devices.

This expanded program also enables federal officials to prevent unscrupulous suppliers from participating in Medicare, it was stated.

Additionally, once the competitive bidding program is fully implemented nationally, it is expected to save beneficiaries and Medicare $1 billion annually.

“Competitive bidding means that Medicare beneficiaries will have access to these products at substantially lower costs,” said CMS Acting Administrator Kerry Weems.

“Since all successful bidders will be required to meet quality standards and be accredited by Medicare, people with Medicare in these 70 new areas can be assured of access, low prices and high quality. Through this accreditation process, our beneficiaries are also provided another layer of protection from fraud.”

Under the competitive bidding program, suppliers that wish to offer certain items and services to people with Medicare will have to submit bids to CMS, indicating the prices at which they are willing to supply these items to beneficiaries – prices that CMS believes will be closer to the prices charged in the current market. Currently Medicare – and beneficiaries – pay for items based on a fee schedule that, in general, is based on the average payments Medicare has paid for DMEPOS items in the past. Although the fee schedule is updated annually, CMS believes it is not representative of the true market prices of these items and services. Most beneficiaries pay 20 percent of the total cost for these items and services and should expect to see savings from this program because when the total cost decreases, beneficiaries’ coinsurance also decreases.

Suppliers must also meet high quality standards established by CMS and be accredited by one of ten organizations chosen by Medicare. CMS announced the standards in August, 2006, and the names of the accrediting organizations in November of that year. The final deadline for all suppliers to obtain an initial accreditation is September 30, 2009. However, suppliers that want to participate in this second phase of the competitive bidding program will have to be accredited well in advance of that deadline to be awarded a contract with CMS.

“I cannot stress enough the importance for all Part B DMEPOS suppliers to apply for accreditation early, and not wait until September 30, 2009,” Weems said. “Suppliers considering participating in the second phase of the competitive bidding program should apply for accreditation immediately.”

The competitive bidding program also includes special considerations for small suppliers, and options for beneficiaries in the competitive bidding areas (CBAs) who have existing rental agreements with suppliers that are not chosen as winning bidders in the competition.

In developing the DMEPOS competitive bidding program, CMS built on successful experiences gained during DMEPOS competitive bidding demonstrations conducted in Polk County , Fla. , and the San Antonio , Texas , areas from 1999 through 2002.

The CMS expects to begin pre-bidding activities of the second round, such as announcing the specific zip codes that constitute the CBAs, specific items in each product category, and bidder education and registration for user IDs and passwords, in the spring of 2008. The bidding period is expected to run 60 days and is planned to begin in the summer of 2008. A more detailed timeline will be provided as the pre-bidding activities begin.