OIG Reports That CMS Generally Met Its Policy And Legal Requirements In Round Two Of The DMEPOS Competitive Bidding Program

The Department of Health and Human Services (HHS) Office of Inspector General (OIG) recently reported its findings on the Durable Medical Equipment Prosthetics, Orthotics, and Supplies (DMEPOS) competitive bidding program. Specifically, the OIG found that the Centers for Medicare and Medicaid Services (CMS) generally selected suppliers, calculated the sampled DMEPOS single-payment amounts (SPAs), and monitored suppliers in accordance with its established procedures and applicable federal requirements. The OIG determined that CMS followed both its own established program procedures and the applicable federal requirements for 192 of the 215 winning suppliers associated with the reviewed SPAs. The OIG also found, however, that CMS did not consistently follow its established procedures and applicable federal requirements in selecting the remaining 23 of the 215 winning suppliers during the bid process, which affected 99 of the 240 sampled SPAs. CMS awarded contracts to 10 suppliers that failed to meet financial statement requirements and 13 suppliers that did not procure a license in at least one competition. Furthermore, CMS failed to monitor suppliers in compliance with procedures and federal requirements for another 31 suppliers that also did not maintain their contractually-required license throughout the last six months of 2013. Based on its sample, the OIG 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 Two during the last six months of 2013.

OIG Recommendations to CMS

1. CMS should consistently evaluate the financial documents of all DMEPOS suppliers, consistent with its program procedures and federal requirements;
2. CMS should continue working with state licensing boards to ensure that suppliers have the applicable licenses for the specific competitions in which they are submitting a bid; and
3. CMS should implement a system to identify and address potential unlicensed suppliers in order to monitor licensing requirements.

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