Important Medicare Update on Durable Medical Equipment Prosthetics, Orthotics and Supplies (DMEPOS)

If you are an original Medicare subscriber using durable medical equipment, prosthetics, orthotics and  supplies (DMEPOS) such as diabetic testing kits, there is an important change that may affect you financially.  Effective January 1,2011, Medicare will launch a new program where suppliers of durable medical equipment and supplies in select cities in 9 states must enter into a competitive bid arrangement in order for Medicare to pay for the product.  In time the program will be effective nationwide.

What is this all about?

The Balanced Budget Act of 1997 mandated Medicare to find a system of competitive bidding for durable medical equipment prosthetics orthotics and supplies in an effort to provide quality goods at lesser cost. In 2002 Medicare completed  demonstration studies to test the cost effectiveness and quality of competitive bidding with overwhelmingly positive results.  The study showed that with competition, Medicare subscribers received quality equipment and supplies at reasonable and fair prices.  Beneficiaries saved 20 per cent and remained highly satisfied.  About 77 percent of winning bidders were small business suppliers.

The Medicare Prescription Drug Improvement and Modernization Act of 2003 mandated a gradual phasing in of the competitive bidding process.  The first phase showed 26 per cent projected Medicare savings.  Implementation started in 2008 with notices going to interested bidders and in 2011, the plan will be in full swing in selected cities.


Who are affected?

This only involves original Medicare subscribers.  Medicare subscribers who belong to HMO's are not affected.  Initially the program will take effect only in the following states:

• California- Riverside, San Bernardino, Ontario
• Florida- Miami, Ft. Lauderdale, Pompano Beach, Orlando, Kissimmee
• Missouri and Kansas- Kansas City
• North and South Carolina- Charlotte, Gastonia, Concord
• Ohio- Cleveland, Elyria, Mentor
• Ohio, Kentucky, and Indiana- Cincinnati, Middletown
• Pennsylvania- Pittsburgh
• Texas- Dallas, Fort Worth, Arlington

How does this affect you?

• If you live in any of these cities and are an original Medicare subscriber, this may mean lower co-insurance when you buy or rent durable medical equipment from a participating provider because the cost of the equipment or supply will be lower.
• However, if you choose to use a non-participating or non-contract Medicare provider,you will be asked to sign an Advanced Beneficiary Notice (ABN) indicating you understand that Medicare does  not usually pay for this service with this provider and you agree to be liable for the entire amount.

What durable medical equipment and supplies are included?

• Oxygen equipment, oxygen and supplies 
• Mail order diabetic supplies 
• Wheelchairs, standard power wheelchairs, scooters and accessories
• Complex rehabilitative power wheelchairs and accessories (Group 2)
• CPAP- continuous positive airway pressure devices, respiratory assist devices and supplies
• Hospital beds and accessories
• Walkers and accessories
• Support surfaces (group 2 mattresses and overlays) in Miami, Fort Lauderdale, and Pompano Beach, FL only 

What do you need to do? 

• Check your zip code to see if you are affected. (This includes purchases or rentals you make while visiting any of the locations above.)
• Get a list of contract Medicare providers in your location to be sure that Medicare will help with these purchases. Use this link Contract Supplier Lists.
• You may also locate a contract provider by zip code through the Medicare website, Medicare.gov
• You may call Medicare at : 1-800-Medicare (1-800-633-4227); TTY users call 1-877-486-2048.

Basics About Medicare, the Nation’s Largest Health Insurance Plan

Medicare, the nation’s largest affordable health insurance plan, is a government health plan that insures citizens age 65 and over, qualifying disabled persons and persons with end stage kidney disease.

Centers for Medicare and Medicaid Services

Medicare pays 80 per cent of the allowable health care charge.  Medicare has agreement with participating providers for a lower allowable charge for each medically necessary medical procedure reducing the charges for Medicare allowed reimbursement.  You are responsible for the remaining 20 per cent.  For this reason, many purchase another health insurance plan known as the tie-in plan to pay for the 20 per cent remaining bill. Important note:  If your provider is not a participating Medicare provider, he is not obligated to accept reduced Medicare fees and you can be liable for a higher amount.

Types of Medicare coverage:

·         Part A-The part of the insurance health plan that pays for hospital charges.  All Medicare eligible persons are automatically enrolled in this.

·         Part B- The part of the insurance health plan that pays physicians and other outpatient providers including medically necessary ancillary procedures such as physical therapy, home health care and some preventive services.  You pay a monthly premium for this service which is a set amount each year plus additional amount depending upon your last two year income tax return.  Those whose income fall below a certain amount are eligible for government subsidy of all or part of their Part B premium.

·         Part C- Also called Medicare Advantage,  are private health insurance plans which provide Medicare mandated services and usually other services such as preventive and health education programs.  They are required by law to provide at least all services provided by the Original Medicare plan.  Some also offer dental, vision and prescription insurance. You may choose to participate in either the Original Medicare or in a Medicare Advantage plan.

·         Part D- The part of Medicare which pays for prescription drugs.  You may participate in this through 1. Medicare Prescription Drug Plans (PDP)  or 2. Medicare advantage mentioned above.  Again, you pay a monthly premium for this and the government subsidizes the premium for those who fall below a certain income bracket. 

Beware of the Donut Hole

Beware of the Donut Hole: Medicare prescription drug plans pay for prescriptions up to $2830 in 2010 and $2840 in 2011.  Once you hit this spending mark, you are in the coverage gap or “donut hole.”  You become liable for your medicine purchase until you have spent $ 4,550 for the year at which point catastrophic coverage kicks in and the health insurance picks it up again.

Medicare remains the largest affordable personal health insurance plan.  For more detailed information request the free Medicare and You 2010 handbook through www.medicare.gov or call the 24 hour interactive phone line at 1-800 Medicare (1-800-633-4227) and TDD users at 1-877-486-2048. Download the pdf version at http://www.medicare.gov/publications/pubs/pdf/10050.pdf