Evaluation of Medicare’s Competitive Bidding Demonstration for DMEPOS: Final Evaluation Report
The Balanced Budget Act of 1997 (BBA 97) (U.S. Congress, 1997) authorized the Secretary of the Department of Health and Human Services to implement up to five demonstration projects of competitive bidding for Medicare Part B items and services, except physician services. At least one of these demonstration projects had to include oxygen and oxygen services. On the basis of this authority, the Centers for Medicare & Medicaid Services (CMS)1 planned and implemented the DMEPOS Competitive Bidding Demonstration to test the use of competitive bidding to set prices for durable medical equipment (DME) and prosthetics, orthotics, and supplies (POS). Bidding in the first demonstration site, Polk County, Florida, was conducted in early 1999, and the resulting prices took effect on October 1, 1999. A second round of bidding was conducted in Polk County in 2001, with new prices taking effect on October 1, 2001. The second demonstration site included three counties in the San Antonio, Texas, metropolitan statistical area (MSA). Bidding in San Antonio occurred in 2000, and the resulting prices took effect on February 1, 2001. BBA 97 required that the demonstrations be evaluated for their impact on Medicare program payments, access, diversity of product selection, and quality. The purpose of this report is to describe the results of the evaluation of the DMEPOS Competitive Bidding Demonstration. We evaluated the impact of the demonstration on • Medicare expenditures • Beneficiary access to care • Quality of care (including diversity of product selection) • Competitiveness of the market • Reimbursement system Our First-Year Annual Evaluation Report evaluated the effects of the demonstration on the first demonstration site, Polk County, during the period before and the 9-month period after the demonstration prices took effect on October 1, 1999. The Second-Year Annual Report evaluated the effects of the demonstration on the Polk County site during the period between July 1, 2000, and September 30, 2001. The Second-Year Annual Report also covered the effects of the demonstration on the San Antonio demonstration site during the period before and the 8-month period after the demonstration prices took effect in San Antonio on February 1, 2001. This Final Evaluation Report summarizes evaluation results for the entire demonstration, which continued until September 30, 2002, in Polk County and until December 31, 2002, in San Antonio.