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CMS Generally Met Requirements in Round 2 of the DMEPOS Competitive Bidding Program

CMS usually selected DMEPOS suppliers, calculated the sampled Durable Medical Equipment Prosthetics, Orthotics, and Supplies (DMEPOS) single-payment amounts (SPAs), and monitored suppliers in accordance with its established procedures and applicable Federal requirements. We determined that CMS consistently followed its established program procedures and applicable Federal requirements for 192 of the 215 winning suppliers associated with the sampled SPAs reviewed.

While the overall effect on Medicare payments to suppliers was relatively small, we determined that the Centers for Medicare & Medicaid Services (CMS) did not consistently follow its established procedures and applicable Federal requirements for selecting suppliers during the bid process for 23 of the 215 winning suppliers. This affected 99 of the 240 sampled SPAs. Specifically, CMS awarded contracts to 10 suppliers that did not meet financial statement requirements and 13 suppliers that did not have the applicable license in at least 1 competition. Additionally, CMS did not monitor suppliers in accordance with established procedures and Federal requirements for another 31 suppliers that did not maintain the applicable license as required by their contracts for the last 6 months of 2013.

On the basis of our sample, we estimated that CMS paid suppliers $182,000 less than they would have received without any errors, or less than 0.03 percent of the $553.7 million paid under Round 2 during the last 6 months of 2013.

We recommend that CMS (1) follow its established program procedures and applicable Federal requirements consistently in evaluating the financial documents of all suppliers; (2) ensure that suppliers have the applicable licenses for the specific competitions in which they are submitting a bid by continuing to work with State licensing boards; and (3) monitor supplier licensure requirements by implementing a system to identify and address potential unlicensed suppliers. CMS concurred with our recommendations.

Filed under: Centers for Medicare and Medicaid Services