Medicare Competitive Bid FAQ’s

ACT Call Questions and Answers – June 18, 2013

The DME MAC Jurisdiction A quarterly ACT call was conducted Tuesday, June 18, 2013 as a teleconference/webinar and was based on current updates. A brief presentation was provided followed by an operator assisted Q&A session.

*Note: Individual claim specific questions, questions not general in nature, and questions that did not make sense are not included in this document. In addition, some questions may be rewritten to establish clarity. As advised during the call, please contact Customer Service to address individual questions.


Q1: Please explain vendor quarterly reporting?
A1: Contract suppliers are required to complete Form C quarterly to indicate the brands of competitively bid items they intend to furnish during the next quarter. This information is used by beneficiaries, customer service representatives at 1-800-MEDICARE, and referral agents to locate suppliers of specific brands on the Medicare Supplier Directory.

Each contract supplier is required to complete Form C no later than 10 calendar days after each of the following dates: March 31, June 30, September 30, and December 31, throughout the entire contract period. If the form is not completed, the contract supplier may be found in breach of contract.


Q2: There is only 1 company out of 20-30 in our area that won any bids. How are our clients going to be served?
A2: Regardless of the contract supplier’s location, they are obligated to meet contract requirements for each Competitive Bidding Area, including meeting beneficiary demand, on the first day of the program. Contract suppliers that are not local may use subcontractors to assist with meeting beneficiary demand.


Q3: Are there any changes in the delivery of diabetic strips and lancets for regular DMEPOS suppliers?
A3: Mail-order diabetic testing supplies billed to Medicare Part B must be furnished by a contract supplier if they are delivered to a Medicare beneficiary’s residence. The term “mail-order” means items shipped or delivered to the beneficiary’s residence by any method, including delivery driver, the United States Postal Service (USPS), FedEx, or UPS.


Q4: Will grandfathered suppliers be getting reimbursed the Single Price Amount (SPA) of the bid wins, or the standard fee schedule amount?
A4: Grandfathered suppliers for oxygen and oxygen equipment will be reimbursed the SPA. Grandfathered suppliers for capped rental DME will be reimbursed the fee schedule for the rented item, and the single payment amount for supplies and accessories related to the item.


Q5: Why was Enteral therapy pumps excluded from Competitive Bidding? And why is the new provider not responsible for servicing pump?
A5: Items are phased in to the Competitive Bidding Program beginning with the highest cost and highest volume items and services or those items and services determined to have the largest savings potential. Enteral therapy (pumps) are not considered a high cost, high volume item with a large savings potential at this time.


Q6: Do contract suppliers need to notify beneficiaries?
A6: No, contact suppliers should not notify beneficiaries. The Supplier Standards prohibit a supplier from contacting a beneficiary unless the beneficiary has given written permission for the supplier to contact him/her, if the supplier has already provided a covered item to the beneficiary and the supplier is calling the beneficiary about such covered item, or if the beneficiary has already received a covered item from the supplier in the last 15 months. Otherwise, contact may represent a violation of the Medicare DMEPOS Supplier Standards and result in a breach of the competitive bidding contract.


Q7: Do we have to submit the signed grandfather letter in order to bill a claim?
A7: No. Keep a copy of the letter and documentation of any response or communication resulting from the letter in the patient’s file.


Q8: What is the status of Face-to-Face requirement?
A8: Information on the new Face-to-Face requirement is available on the DME MAC A Web site. Additional educational articles will be posted in the near future.


Q9: Will there be a new modifier for Round 2 that will allow repair-only service organizations to be paid the regular, full allowance?
A9: No, there is not a new modifier for Round 2 for repair-only service organizations.


Q10: Medicare.Gov lists Competitive Bid & Non-Competitive categories, the same DME items can be found under each, what is the difference?
A10: Some items listed as competitively bid items are also listed as non-competitively bid items because they can be used with base items that are not affected by the competitive bid program. For example, E0776 is an IV pole that is listed as a competitively bid item in the Enteral Nutrients, Equipment and Supplies product category; however, E0776 may also be furnished by a non-contract supplier when used for parenteral nutrition, as parenteral nutrition is not a product category affected by competitive bidding.


Q11: How should suppliers advise beneficiaries that do not understand the competitive bidding process?
A11: Medicare beneficiaries may be referred to 1-800-MEDICARE for assistance with the Competitive Bidding Program.


Q12: Why did so many out of state providers win the bid when most don’t plan on supplying equipment for patients?
A12: Contract suppliers must meet beneficiary demand beginning on the first day of implementation. If a contract supplier does not meet beneficiary demand, they may be found in breach of contract. If a supplier breaches the contract, CMS has the right to take corrective action. For example, CMS may require a corrective action plan, suspend or terminate the contract, preclude the contract supplier from participating in the competitive bidding program, or revoke the contract supplier’s billing number.


Q13: Will a contract supplier pick up where the rental left off or will the new supplier start a new capped rental period?
A13: If a Medicare beneficiary who is otherwise entitled to remain with a non-contract supplier, transitions to a contract supplier, the new contract supplier will receive:

  • A new 13-month rental period for rented DME,
  • The remaining number of months in the rental period or 10 months rental payments, whichever is greater, for oxygen and oxygen equipment, or
  • The remaining number of rental payments until the point at which the total payments for the item equal 100 percent of the single payment amount for the purchase of the item.


Q14: Is there special modifiers we will need to bill for grandfathering & competitive bid items after 07/01/13?
A14: There are not any modifiers for grandfathering.


Q15: If a beneficiary chooses to remain with a noncontract provider as they have a secondary insurance and the provider obtains a valid ABN, what remark code will we receive?
A15: Either of the following remark codes will be on the remittance advice. Remember, if you obtain an ABN, a PR (Patient Responsibility) denial will replace the CO (Contractual Obligation).

CO-96, N211, MA113, M114, M115 – This item is denied when provided to this patient by a non-contract or non-demonstration supplier.
CO-96, N211, M114, M115 – This service was processed in accordance with rules and guidelines under the DMEPOS Competitive Bidding program or a Demonstration project. For more information regarding these projects, contact your local contractor.


Q16: Why couldn’t Medicare use MPP instead of Competitive bidding?
A16: The DMEPOS Competitive Bidding Program was mandated by Congress through the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA). The statute requires that Medicare replace the current fee schedule payment methodology for selected Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) items with a competitive bid process.


Q17: As a noncompetitive bid provider, are we able to still complete wheelchair repairs and replacement parts?
A17: Repairs for beneficiary-owned equipment may be performed by any Medicare-enrolled supplier. Replacement parts associated with repairs of beneficiary-owned equipment may be provided by any Medicare-enrolled supplier. If a competitive bidding item needs to be replaced, and there is no repair associated with the replacement, the replacement item must be furnished by a contract supplier.


Q18: Is there any news about when PECOS denials will begin? Please clarify if they are based on date of service or submission.
A18: Currently, there has been no update to the next step in PECOS implementation. NHIC does have a section on its web site dedicated solely to PECOS: Please be sure you are signed up for the NHIC ListServe for the most recent updates and reminders.


Q19: With competitive bid, if a patient chooses to stay with a grandfathered supplier, can they then change to a contract supplier 4 months later?
A19: Yes, a Medicare beneficiary may choose to switch to a contract supplier at any time during the rental period.


Q20: Can a non-contract supplier provide replacement oxygen equipment to grandfathered oxygen patients at the end of the reasonable useful lifetime?
A20: A non-contract supplier cannot provide replacement oxygen equipment to a grandfathered patient. If replacement equipment is provided, the beneficiary must receive it from a contract supplier.


Q21: Is there any time frame as to how long the 2% reduction will last?
A21: There is no current time frame as to how long the Mandatory Payment reduction will last. More information along with FAQs on the Sequestration can be found on the DME MAC A web site at the following


Q22: If the beneficiary does not meet coverage and we do not have the bid, what type of denial will we receive? We need to know in order to bill the secondary insurer.
A22: If the beneficiary does not meet coverage criteria, you will receive a not reasonable and necessary denial or a noncovered denial depending on the item.


Q23: Can you please verify Supplier Standards 7 and 30 and how it affects contract suppliers shipping from Warehouses?
A23: Each supplier location where Medicare beneficiaries are served must have billing privileges with the exception of warehouses or repair facilities. If the warehouse is serving as a storage only facility for equipment and supplies, the warehouse is not required to have billing privileges. If beneficiaries are being served in any capacity at a warehouse or repair facility, including being fitted or picking up products, the location should be enrolled with billing privileges. For additional questions about the supplier standards, please contact the National Supplier Clearinghouse (NSC) at 1-866-238-9652.


Q24: Will a Grandfathered supplier be able to provide parts/supplies for equipment after the 13 month rental period?(CPAP masks/PMD parts)
A24: After the 13 month rental period is over, ownership for the item transfers to the beneficiary and the grandfathering relationship ends. The accessories and supplies must be furnished by a contract supplier.


Q25: There is an article that “300 of the companies that won the competitive bid are not accredited,” do they get to supply anyway?
A25: Any contract supplier who is not properly accredited, for the product category in which they won a contract, may be found in breach of contract. If a supplier breaches the contract, CMS has the right to take corrective action. For example, CMS may require a corrective action plan, suspend or terminate the contract, preclude the contract supplier from participating in the competitive bidding program, or revoke the contract supplier’s billing number.


Q26: How are licensure and state requirements being handled that may have been overlooked?
A26: Suppliers who do not have the appropriate licensure for a Competitive Bidding Area will not be able to perform as a contract supplier.


Q27: We are a noncontract supplier. Can we keep our Medicare advantage patients who convert to Medicare in the middle of a rental?
A27: Beneficiaries who are enrolled in a Medicare Advantage plan at the time of implementation, and later transition to Original Fee-for-Service Medicare are eligible for the grandfathering provision until the rental period ends or until medical necessity ceases.


Q28: Confusion remains on what can be “repaired” or “replaced” by a non-contract supplier.
A28: Medicare allows for repair and replacement of beneficiary-owned items by any Medicare enrolled supplier. Beneficiary-owned competitively bid items that are replaced, with no associated repair, must be furnished by contract suppliers when beneficiaries obtain these items in a CBA.


Q29: If tires, casters etc. need to be replaced because they are worn, can a non-contract supplier replace them? Or can a non-bid winner only repair if the tire tube was damaged?
A29: For items that are normally replaced due to wear (e.g., power wheelchair battery, tires, or walker tips); these items may be replaced if there is an acute identifiable incident resulting in damage to the part. In this situation, replacement of the part would be considered a repair. For example, if a wheelchair frame and battery are damaged after the wheelchair falls down a flight of stairs; any supplier can perform the repair, which would include repair of the damaged frame and replacement of the damaged battery. However, if the wheelchair battery is being replaced simply because of a gradual loss of power due to wear, the replacement battery is not a replacement part being furnished as part of the repair of base equipment and must be obtained from a contract supplier.


Q30: If an oxygen patient changes to a new provider during the cap rental period, does the new provider need an initial, revised, or recertification CMN?
A30: A revised CMN must be kept in the new supplier’s files.


Q31: Patient wants to remain with non-contract winner. Can patient pay out of pocket? How does a provider record this? ABN?
A31: If a non-contract supplier that furnishes a competitive bid item in a CBA obtains a signed Advance Beneficiary Notice of Noncoverage (ABN) indicating that the beneficiary was informed in writing prior to receiving the item or service that there would be no coverage due to the supplier’s non-contract status, and the beneficiary agrees to be liable for all costs, the non-contract supplier may charge the beneficiary for the item or service. In this circumstance, non-contract suppliers cannot bill Medicare to receive payment for the item or service. A copy of the ABN should be kept in the patient’s file.


Q32: Oxygen cap rental period between months 36-60; If the current provider is no longer providing Medicare services, what happens to the patient’s cap rental period?
A32: In general, if a Medicare beneficiary in a CBA switches suppliers after 36 months of rental have been paid, additional rental months are not payable unless the oxygen equipment is lost, stolen, irreparably damaged, or bankruptcy situations. If oxygen contents are required, the beneficiary would need to obtain the contents from a contract supplier.

Medicare contractors may make payment for replacement oxygen equipment in the event that a supplier files for Chapter 7 or 11 bankruptcies in a United States Bankruptcy Court and a new reasonable useful lifetime period and a new 36 month rental payment period may begin on the date that the replacement equipment is furnished.


Q33: Is the new Face-to-Face requirement necessary for breast prosthesis?
A33: No. Only items listed in MM8304 are subject to the new face to face requirements.


Q34: What type of liability does a subcontractor have for documentation if the DME MAC or Recovery Auditor performs an audit?
A34: The contract supplier is purchasing the item from the subcontractor; therefore, the contract supplier is responsible for any documentation regarding the item.


Q35: If the beneficiary is on a Medicare Advantage plan, can a non-contract supplier grandfather the beneficiary under the Medicare FFS plan?
A35: Yes, if the beneficiary is in a Medicare Advantage plan at the time the program is implemented, and they decide to switch to Medicare FFS plan, the non-contract supplier would have the option of grandfathering that beneficiary.


Q36: Can the home assessment for power mobility devices be performed by the subcontractor, or must it be the contract supplier?
A36: The home assessment piece cannot be subcontracted out. That is the responsibility of the contract supplier. It is up to the contract supplier to determine how they will handle this process. It is a supplier standard that the home assessment be performed by the contract supplier.


Q37: If a beneficiary comes from a non-contract supplier to a contract supplier and they do not qualify for the item, does the contract supplier have to accept that beneficiary?
A37: No. If the beneficiary does not meet the medical necessity requirements, the contract supplier does not have to accept that beneficiary.


Q38: What type of documentation is the non-contract supplier required to provide to the contract supplier?
A38: The non-contract supplier is encouraged to provide all the medical documentation on file for that beneficiary.


Q39: What type of documentation is required to show proof the equipment was broken beyond repair?
A39: The documentation can be a written record by the supplier or a beneficiary attestation indicating what specifically happened to the equipment and why it cannot be repaired.


Q40: As a non-contract supplier, the beneficiary requests to have the modality of their oxygen changed, is this allowed?
A40: As per the LCD criteria and change in modality, a new order for the change in equipment would be required. A new capped rental period does not begin for a change in modality.


Q41: If we have to repair a part to the base equipment and replace a part, a non-contract supplier can perform this service. However, if we only needed to replace something, i.e., leg rest, would that need to be done by a contract supplier?
A41: Yes. If there is a repair along with a replacement of a competitively bid item, that can be done by any enrolled Medicare supplier. However, if it is a replacement of a competitive bid item with no repair, that must be done by a contract supplier.


Q42: How do we handle a repair if a supplier needs to go to the beneficiary’s home to asses if it is a repair or replacement?
A42: If it cannot be determined if the item needs to be replaced and a supplier must go to the beneficiary’s home, a non-contract supplier is allowed to furnish the repair. Ensure there is documentation showing a visit to the beneficiary’s home to determine what was actually needed for the item.


Q43: How would a non-contract supplier not receive a denial for not being a contract supplier in this situation?
A43: The supplier would keep the documentation on file, and if it was a replacement to a repair, remember to append the RBmodifier. If the claim denies, an appeal should be filed with all supporting documentation.


Q44: Oxygen patients in the 36-60 month category and patients post 60 months. Contents need to be provided by the contract supplier. In cases of grandfathering, can the non-contract supplier provide the contents in these categories?
A44: Yes. The non-contract supplier can furnish contents within the 36-60 month. Also, if after 60 months the beneficiary does not choose new equipment, the non-contract supplier can continue providing contents.


Q45: For oxygen beneficiary’s traveling outside the CBA receiving contents from another contractor that the original provider does not have a subcontract agreement, is it ok to pay that other contractor for the contents they are supplying?
A45: Competitive bidding does not have any effect on the current rules which must be followed in this circumstance. Refer to the following LCD guidelines:

Per LCD: (Months 1 – 36): If the beneficiary relocates outside the supplier’s service area (either short-term travel, extended temporary relocation, or permanent relocation), then for the remainder of the rental month for which it billed, the home supplier is required to provide the equipment and related items/service itself or make arrangements with a different supplier to provide the equipment, items, and services. For subsequent rental months that the beneficiary is outside the service area, the home supplier is encouraged to either provide the equipment and related items/services itself or assist the beneficiary in finding another supplier in the new location. The home supplier may not bill for or be reimbursed by Medicare if it is not providing oxygen equipment or has not made arrangements with a different supplier to provide the equipment on the anniversary billing date.

(Months 37 – 60): If the beneficiary relocates outside the supplier’s service area (either short-term travel, extended temporary relocation, or permanent relocation), the home supplier is required to either provide the equipment and related items/services itself or make arrangements with a different supplier to provide the equipment and related items/services.


Q46: A supplier has multiple locations (chains), some are contract suppliers and some are grandfathered. If a snowbird goes from a grandfathered supplier to a contract supplier, is a new cap allowed for a common ownership chain supplier?
A46: If beneficiary transitions to a new contract supplier within the 36 month rental, the contract supplier would receive the remaining rental months or 10 months, whichever is greater. If the beneficiary returns to the previous area, that supplier will receive any remaining months. If the beneficiary is a snowbird, the supplier in the area the beneficiary travels to will affix theKT modifier.


Q47: As a non-competitive bid supplier, are we automatically considered a grandfather supplier if the beneficiary continues with the rental of an item? If not, how do we register?
A47: Suppliers must make every attempt to establish contact with a beneficiary to obtain his or her election decision whether it is through a telephone call, written notification, or in-person visit. As long as you’ve made a good faith effort to contact the beneficiary and it’s documented in the beneficiary’s file, you may continue to provide the rented DME/oxygen and oxygen equipment and be reimbursed by Medicare as a grandfathered supplier.


Q48: We are a contract supplier for enteral nutrition and we use a distributor for our inventory that assists with our delivery, would that be something that has to be disclosed to CBIC or is it just other suppliers that are subcontracting with us?
A48: Any subcontractor used for inventory, set-up and instruction, or care must be disclosed to CBIC. For the purposes of the Competitive Bidding Program, subcontracting is between two Medicare-enrolled suppliers. Delivery services such as Fed-Ex and the USPS, distributors, clearinghouses and/or billing services are not considered subcontractors under the Medicare Program.


Q49: Is the documentation of proof of delivery from the distributor considered compliant?
A49: Yes, the documentation, i.e. proof of delivery, would be acceptable from the distributor.


Q50: We are a contract supplier for oxygen. If a beneficiary has just met their 36 month cap with a non-contract supplier and does not elect to grandfather their equipment, do we as a contract supplier need to accept this beneficiary?
A50: If the beneficiary is under the 36 months and wants service from a contract supplier; yes, you are required to accept them. If they are beyond the 36 months, you are not obligated to accept them. The CBIC would work with the beneficiary and the previous supplier to help them find a supplier that is willing to accept them.


Q51: Is there any special modifier used to indicate the claim is for a grandfathered supplier?
A51: No.


Q52: Are there modifiers used for contract suppliers for competitive bid?
A52: There are general modifiers related to the competitive bid program in CR7181. Also, the CBIC is waiting for additional information from CMS in regards to Round II.


Q53: If the beneficiary resides in a CBA, but they have a power of attorney that lives in a different CBA. Can a contract supplier service this beneficiary since they reside in the contract suppliers CBA?
A53: Yes. Since the address on file is not in the suppliers competitive bid area, the KT modifier would need to be appended to indicate traveling beneficiary.


Q54: Clarification on repairs: What is my responsibility as a contract supplier for wheelchair repairs in a CBA?
A54: Repairs needed on a competitive bid item, can be done by any Medicare enrolled supplier as long as a repair is needed. Repair and labor are not subject to competitive bid. If during a repair, a competitive bid item needs to be replaced, that also can be done by any Medicare enrolled supplier. However, if a competitive bid item needs to be replaced, and there is no repair associated with this task, then the replacement needs to be performed by a contract supplier. Rule of thumb: Repairs and replacements that are performed together can be completed by any Medicare enrolled supplier.


Q55: If an armrest needs repair, however, the leg rest needs to be replaced, who can perform this?
A55: If the repair of competitively bid, beneficiary-owned equipment requires the replacement of a part to make it serviceable, that replacement part may be obtained from any Medicare enrolled supplier. However, if an item needs to be replaced and the replacement is not associated with the repair, the replacement part must be furnished by a contract supplier.


Q56: If a non-contract supplier takes on a new beneficiary within a week of Round II implementation, is a letter signed by the beneficiary stating they want to stay with the grandfathered supplier considered valid notification?
A56: Yes.


Q57: If a beneficiary does not respond to our grandfathering notification, what are our obligations?
A57: If the beneficiary does not respond to the 30 day notification, try to follow up by a phone call. As long as you can show you made a good faith effort to reach the beneficiary, you can assume they wish to stay with you as their supplier.


Q58: Is an order required to pick up the oxygen?
A58: Suppliers should check their state regulations. Medicare does not require an order to pick up oxygen but suppliers must be in compliance with all state regulations.


Q59: If a non-contract supplier is providing oxygen, as of July 1st the beneficiary is not able to find a contract supplier due to limited contractors in a CBA, and the supplier does not get an order from the physician to pick up the equipment, how are they going to be reimbursed?
A59: All contract suppliers should be able to meet the needs of a beneficiary in a CBA. Also, the beneficiary can contact 1-800-Medicare and they will ensure the beneficiary is set up with a contract supplier.


Q60: What is the role of the subcontractor in the intake and assessment process, if any?
A60: Medicare guidelines only allow the subcontractor to sell equipment to the contracted supplier, deliver and setup, provide instructions, or repair the rented equipment. Any other function, i.e., home assessment, must be done by a contract supplier.