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Round 2 Competitive Bidding for Oxygen: Continued Access for Vast Majority of Beneficiaries


The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 established the Competitive Bidding Program for durable medical equipment (DME). The program replaces a fee schedule with a competitive bidding process to set Medicare reimbursement amounts in certain areas. In a letter to OIG, Members of Congress expressed concerns about the program's effect on access to DME and requested that OIG study this issue.


We used Medicare claims to identify two populations of beneficiaries for whom Medicare paid claims before Round 2 of the Competitive Bidding Program started, but not afterward. The first population included those beneficiaries for whom Medicare had paid claims for oxygen equipment; the second, those for whom Medicare had paid claims for oxygen contents (compressed and liquid oxygen refills for oxygen equipment). We then drew two samples of beneficiaries for whom Medicare payments stopped after Round 2 began-one for whom equipment payments stopped, and one for whom contents payments stopped. We also analyzed Medicare claims data from 2012 to determine how often Medicare payments stopped for beneficiaries receiving oxygen equipment or oxygen contents in the last full year prior to Round 2 of the program. We then surveyed the physicians who had ordered equipment or contents for these beneficiaries. In cases in which physicians reported a continued beneficiary need, we surveyed the beneficiaries to learn about their experiences after Round 2 began.


The vast majority of beneficiaries who in 2013 used oxygen equipment and contents appeared to have continued access to them after Round 2 of the Competitive Bidding Program for DME began. Our surveys provided some anecdotal context for a sample of beneficiaries for whom payments for devices stopped. For example, physicians told us that the beneficiaries still needed oxygen equipment, and 5 of the 11 responding beneficiaries generally reported continuing to use them. For oxygen contents, the majority of physicians in both Round 2 competitive bidding areas (CBAs) and non-CBAs told us that the beneficiaries still needed oxygen contents after Round 2 began. All of the responding beneficiaries who reported needing contents received these supplies.


Round 2 of the Competitive Bidding Program did not appear to disrupt beneficiary access to oxygen equipment and contents. However, we did find that the percentage of beneficiaries for whom Medicare payments did not continue was slightly higher in Round 2 CBAs than in non CBAs. This difference may or may not indicate disruptions in receiving needed oxygen equipment and contents. For example, this difference may indicate that the program reduced the provision of unnecessary oxygen equipment and contents, as CMS determined to be the case with Round 1 of the program. In its comments on our report, CMS stated that it would take our findings and methods into account as it continues to review the Competitive Bidding Program.