Competitive Bidding Round 2021 Updates

Published in Member Communities on October 28, 2020

The Round 2021 Competitive Bidding Program has (finally) offered an update as to its status. CMS released a notice that only two of the categories will move forward on schedule: knee and back orthotic braces (NIV was already out due to CMS’ decision on Covid-19). This means that 13 categories will not move forward in Round 2021.   

  In conjunction with this announcement, there was also a CMS release relative to a new proposed rule (CMS-1738-P), which, among other things, potentially affects reimbursement for competitively bid product category items on or after April 1, 2021 or “the date immediately following the duration of the emergency period” – or, simpler terms, when HHS declares the public health emergency over – whichever is later. 

We will review both of these issues. We will begin with the decision to not award contracts in 13 product categories at this time.   

CMS stated it had heard from a range of stakeholders requesting that the agency delay or cancel the Round 2021 program due to the ongoing COVID-19 Public Health Emergency (PHE).  Apparently CMS considered that feedback, and is not awarding competitive bidding contracts for the 13 product categories “because the payment amounts did not achieve expected savings.” CMS did move forward with the bracing categories, and made offers in 127 (out of 130) CBAs.  The release included that Medicare expects to save $600 million for the program and beneficiaries over the three year Round 2021 contract performance period.  

CMS has released the new single payment amounts (SPAs) and started sending contract offers to bidders for the OTS Back Braces and OTS Knee Braces product categories.  You may find the new SPAs here (and note the very large variance among the CBAs). These new payment amounts and contracts go into effect on January 1, 2021. Winning bidders for the OTS back and knee brace product categories have received Round 2021 contract offers in Connexion, the DMEPOS CBP's secure portal. Winning bidders need to respond to the contract offers before 9pm EST on November 10, 2020. 

Let’s move on the proposed rule. As noted, the CMS-1738-P includes more issues than payment for the competitively bid items; a complete summary via the CMS Newsroom may be found here.  The entire proposed rule may be found here.   

In short, the October 27 proposal is intended to establish payment methods for these items effective on or after April 1, 2021 or the end of the PHE, whichever is later.   

Rural Areas  

The COVID-19 public health emergency (PHE) resulted in legislative action that, among other things, was directed to allow DMEPOS suppliers with relatively better reimbursement from Medicare.  The legislation provided suppliers in designated rural areas with a fee schedule that was a 50/50 blend of the rates before competitive bidding and of the then-applicable adjusted rates due to competitive bidding.   

CMS-1738-P states “Under the proposal, CMS would continue paying suppliers higher rates for furnishing items and services in rural and non-contiguous areas (this is Alaska and Hawaii except for Honolulu) as compared to items and services furnished in other areas, informed by stakeholder input indicating higher costs in these areas, greater travel distances and costs in certain non-CBAs compared to CBAs, the unique logistical challenges and costs of furnishing items to beneficiaries in the non-contiguous areas, significantly lower volume of items furnished in these areas versus CBAs, and concerns about financial incentives for suppliers in surrounding urban areas to continue including outlying rural areas in their service areas. Previous feedback from industry stakeholders expressed concern regarding beneficiary access to items and services furnished in rural and remote areas.   

It goes further: 

“…we are proposing to continue paying the 50/50 blended rates in rural contiguous areas, but are proposing that the 50/50 blend will no longer be a transition rule under §414.210(g)(9), and will instead be the fee schedule adjustment methodology for items and services furnished in these areas under §414.210(g)(2) unless revised in future rulemaking. We are proposing that the fee schedule amounts for items and services furnished in rural contiguous areas on or after April 1, 2021 or the date immediately following the duration of the emergency period…whichever is later, be adjusted so that they are equal to a blend of 50 percent of 110 percent of the national average price for the item or service and 50 percent of the fee schedule amount for the area in effect on December 31, 2015, increased for each subsequent year beginning in 2016 by the annual update factors specified in sections 1834(a)(14)…” 

What does this mean?  It means rural areas (and Alaska/Hawaii) keep the 50/50 blend.  The “transition” (temporary) blend was set to expire on April 1 or the end of the PHE, but this proposal makes it permanent – unless changed by future rulemaking.   

Non-Rural Areas  

What about “non-rural” areas that are cities and large towns but not large enough to be competitively bid?  Prior to the CARES Act, they were reimbursed at a regional rate, or RSPA, which stands for “regional single payment amounts”. Effectively, these areas were reimbursed for items at approximately the same rate as the larger CBAs within their region.  However, Congress did approve a better benefit – that is, 75% of the RSPA and 25% of the much higher non-competitive bidding rate.  These amounts continue today and will continue until April 2021, or until the PHE is declared over. 

However, this proposed rule does not allow for a continuation of this 75/25 blend at this time.  It reads: 

“…for items and services furnished on or after April 1, 2021 or the date immediately following the duration of the emergency period whichever is later, in all other non-rural non-CBAs within the contiguous United States, we are proposing that the fee schedule amounts be equal to 100 percent of the adjusted payment amount established under §414.210(g)(1)(iv)”…which means these non-rural and non-bid areas revert to the lower-reimbursed RSPA amounts.   

13 Categories Not Included – Competitive Bidding Areas (CBAs) 

The proposal includes: 

“For items that were included in Round 2021 but have essentially been removed from Round 2021 of the CBP, we are considering whether to simply extend application of the current fee schedule adjustment rules… until new SPAs are calculated for the items once competitive bidding of the items has been resumed.” 

Effectively, the current reimbursement amounts in the 130 CBAs would remain the same until a new bidding program came into effect.   

What’s Next? 

CMS will publish a formal notice in the Federal Register shortly, which will include the offering of public comments and a deadline for submission.    

I urge all stakeholders to review the actual documents and proposed rule, of which I have included via hyperlink. 

 VGM Government Relations is working on additional Medtrade offerings on this subject, as well as a webinar exclusive to VGM members on Monday, November 2. Register today to get the latest information that matters to you! 

Please contact Mark Higley at [email protected] or at 319.504.9515 with any questions, or reach out to anyone on the VGM Government Team at 800.642.6065. 


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