CMS Generally Met Requirements in the Durable Medical Equipment Competitive Bidding Round 1 Rebid Program

We reviewed the Round 1 Rebid Program for Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS). We determined that CMS generally selected DMEPOS suppliers and correctly computed the sampled DMEPOS single payment amounts in accordance with its established procedures and applicable Federal requirements. Specifically, we determined that for 255 of the 266 DMEPOS winning suppliers associated with the sampled single payment amounts reviewed, CMS consistently followed its procedures and applicable Federal requirements.

While the overall effect on Medicare payments to suppliers was immaterial, we determined that for 11 of the 266 winning suppliers, CMS did not consistently follow its established procedures and applicable Federal requirements, which affected 19 of the 100 sampled single payment amounts. Specifically, nine winning suppliers did not meet financial documentation requirements, and CMS incorrectly used two suppliers in one single payment computation.

On the basis of our sample, we estimated that CMS paid suppliers $34,000 less than they would have received without any errors, or less than 0.1 percent of the $113 million paid under the Round 1 Rebid Program during the first 6 months of calendar year 2011. Hence, the overall effect on Medicare payments to suppliers was immaterial.

We recommended that CMS (1) follow its established program procedures and applicable Federal requirements consistently in evaluating the financial documents of all suppliers and

(2) ensure that all bids of winning suppliers are included in the calculation of single payment amounts before offering contracts. CMS concurred with our recommendations.