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DMEPOS Competitive Bidding Program

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. The intent is to improve the effectiveness of the Medicare methodology for setting DMEPOS payment amounts, which will reduce beneficiary out-of-pocket expenses and save the Medicare program money while ensuring beneficiary access to quality items and services.

Under the program, a competition among suppliers who operate in a particular competitive bidding area is conducted. Suppliers are required to submit a bid for selected products. Not all products or items are subject to competitive bidding. Bids are submitted electronically through a web-based application process and required documents are mailed. Bids are evaluated based on the supplier's eligibility, its financial stability and the bid price. Contracts are awarded to the Medicare suppliers who offer the best price and meet applicable quality and financial standards. Contract suppliers must agree to accept assignment on all claims for bid items and will be paid the bid price amount. The amount is derived from the median of all winning bids for an item.

Competitive Bid 2021 Modifier Chart - OTS Knee and Back Braces

Policy vs Competitive Bid Modifiers Contract Supplier Non-Contract Supplier Physicians/Practitioners who are DME Suppliers Physical and Occupational Therapists who are DME Suppliers
Modifiers per Policy Knee - KX, RT, LT
Back - CG
 Knee - KX, RT, LT
Back - CG
Knee - KX, RT, LT
Back - CG
 Knee - KX, RT, LT
Back - CG
Modifiers for Competitive Bid KT when applicable KT when applicable KV J5

 

Modifier Physician/Practitioner or Occupational Therapist (OT)/Physical Therapist (PT)
KV (physician/practitioner)/J5 (OT/PT) A physician or OT/PT in a CBA is supplying an OTS brace to a beneficiary in a CBA as part of their professional service
KV/J5 Beneficiary travels from a CBA to a physician or OT/PT in a CBA and the OTS brace is supplied as part of their professional service
KV/J5 Beneficiary travels from a non-CBA to a physician or OT/PT in a CBA and the OTS brace is supplied as part of their professional service
KV/J5 Beneficiary travels from a CBA to a physician or OT/PT in a non-CBA and the OTS brace is supplied as part of their professional service
No modifier required Beneficiary travels from a non-CBA to a physician or OT/PT in a non-CBA; competitive bid rules do not apply

 

Tips

Topic Details
Beneficiary in Competitive Bid Area
  • To verify if beneficiary resides in a competitive bid area, suppliers should:
    • Check eligibility in Noridian Medicare Portal to verify beneficiary’s permanent address on file with Social Security
    • Check the beneficiary’s zip code to verify if in competitive bid area
      • Not in competitive bid area - provide medical necessity brace
      • In competitive bid area
        • Contract Supplier must provide brace
        • Non-contract supplier exception
          • Brace can be provided at office visit only if medically necessary at that time. If not find contract supplier and send order to them to provide after medical need exists

Billing for Orthotics Requiring Prior Authorization in Acute Situations and Under Competitive Bidding

CMS has given special consideration for acute situations for orthotics. Prior authorization requirements will be suspended for HCPCS codes L0648, L0650, L1832, L1833, and L1851 for the following criteria:

  • When there is an acute situation where a two-day expedited review would delay care and risk the health or life of the beneficiary, a supplier may opt to bypass the prior authorization program. These claims should be billed using modifier ST and will be subject to 100% prepayment review.
  • For a Physician/Practitioner or Occupational Therapist (OT)/Physical Therapist (PT)  or hospital furnishing these items under a competitive bidding program exception (as described in 42 CFR 414.404(b)), claims billed with modifiers KV, J5 or J4  would convey that the DMEPOS item is needed immediately. When submitted with one of these modifiers, 10% of claims will be subject to prepayment review.

ST Modifier- This modifier is only to be used for DME suppliers providing the codes above requiring prior authorization in an acute/emergent situation where a two-business day expedited review would delay care and risk the health or life of the beneficiary. Claims will be subject to 100% prepay review.
J4, J5, and KV Modifier - The ST modifier is not to be used by a physician/practitioner or occupational therapist (OT)/physical therapist (PT) or hospital who is a non-contract supplier with the competitive bidding program, who have the option to furnish off-the-shelf (OTS) back and knee braces to their own patients. Claims that are billed to the DME MACs by these suppliers must have the same date of service as the professional office visit or physical/occupational therapy service that is billed to the Part B MAC. The billable office visit is an absolute requirement. Claims will be subject to 10% prepayment review. The modifiers below should be used for these suppliers.

  • J5 - Physical therapists and occupational therapists
  • KV - Physicians and other treating practitioners
  • J4 - Hospital
Contract Suppliers

For a comprehensive list of contract supplier locations in each CBA, see the Supplier Directory on the Medicare.gov website.

  • Enter zip code of beneficiary’s permanent address on file with Social Security
  • Enter “brace” in equipment field (Round 2021)
  • Mark appropriate brace on list with check mark (Off-the-Shelf Back and/or Knee Brace(s))
  • Click Update
  • Supplier List will display a warning if zip code is in competitive bid area
Non-contract Suppliers and Exceptions

Non-contracted suppliers submitting claims for beneficiaries that reside in a CBA and do not meet the definition of a traveling beneficiary, will need to obtain a properly executed ABN for off-the-shelf (OTS) back and knee braces. Suppliers that provide off-the-shelf (OTS) back and knees braces without a properly executed ABN cannot collect payment from the beneficiary.

Non-Contract Supplier Exceptions Fact Sheets
Physicians and Other Treating Practitioners. Refer to Physicians and Other Treating Practitioners, Physical Therapists, and Occupational Therapists fact sheet on the CMS website.

  • Medicare physicians, physician assistants, nurse practitioners, and clinical nurse specialists enrolled as Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) suppliers via Form CMS-855S have option to furnish OTS back braces and OTS knee braces to their own patients without being a contract supplier if both of the following requirements are met:
    • The OTS back brace or OTS knee brace must be furnished by the physician or other treating practitioner to his or her own patient as part of his or her professional service.
      • Must be office visit, surgery is not included
        • Claims must have the same date of service as the professional office visit or physical/occupational therapy service that is billed to the Part B MAC. The billable office visit is an absolute requirement.
      • Brace must be medically necessary to be worn at home prior to surgery
      • If medical need does not exist until after surgery, a competitive bid contractor must supply brace
    • The OTS back brace or OTS knee brace must be billed to a Durable Medical Equipment Medicare Administrative Contractor (DME MAC) using the DMEPOS billing number that is assigned to the physician, the treating practitioner (if possible), or the group practice to which the physician or other treating practitioner has reassigned the right to receive Medicare payment. 
  • Hospitals. Refer to Hospitals That Are Not Contract Suppliers fact sheet on the CMS website.
  • Medicare Secondary Payer. A non-contract supplier may receive a Medicare secondary payment for a competitively bid OTS back or knee brace furnished to a beneficiary residing in a CBA if the beneficiary is required to use that supplier under his or her primary insurance policy.
  • Repairs and Replacements. Medicare allows for the repair of beneficiary owned items by any Medicare-enrolled supplier. Beneficiary owned competitively bid OTS back or knee braces that are replaced, rather than repaired, must be furnished by contract suppliers when beneficiaries obtain these items in a CBA. Refer to Repairs and Replacements of Off-the-Shelf Back and Knee Braces fact sheet on the CMS website.

Modifiers: Physicians/Practitioners and Physical and Occupational Therapists Only

  • KV Utilized by Physicians/Practitioners; and J5 Utilized by Physical Therapists and Occupational Therapists
    • When providing brace as part of professional service in beneficiary’s CBA (must be same date of service)
  • KT not applicable
    • When  beneficiary travels to non-CBA for procedure (surgery) and then goes home
    • For beneficiary temporarily living in another CBA or non-CBA
Single Payment Amount

Suppliers will find the Single Payment Amounts (SPAs) for the Healthcare Common Procedure Coding System (HCPCS) codes included in Round 2021 of the DMEPOS Competitive Bidding Program on the Competitive Bidding Program Contractor (CBIC) website. Existing payment amounts have been replaced with these SPAs for the selected HCPCS codes in certain competitive bidding areas (CBAs) when Round 2021 was implemented on January 1, 2021. For more information on how SPAs are calculated, please see the Lead Item Pricing fact sheet.

Informational Flyer Regarding Round 2021

The Centers for Medicare & Medicaid Services (CMS) released a printable flyer for referral agents, State Health Insurance Assistance Programs (SHIPs), suppliers, and other stakeholders to share with Medicare beneficiaries and other interested individuals. The flyer provides information regarding Round 2021 of the DMEPOS CBP and how to determine if a beneficiary is impacted by it. This flyer can be downloaded from the CBIC website.

Round 2021

Round 2021 of the DMEPOS Competitive Bidding Program begins on January 1, 2021 and extends through December 31, 2023. Round 2021 consolidates the competitive bidding areas (CBAs) that were included in Round 1 2017 and Round 2 Recompete. Round 2021 includes 130 CBAs.

On April 9, 2020, the non-invasive ventilators product category was removed from Round 2021 due to the novel COVID-19 pandemic.

On October 27, 2020, the Centers for Medicare & Medicaid Services (CMS) announced the single payment amounts and began offering contracts for the off-the-shelf (OTS) back braces and OTS knee braces product categories. All other product categories were removed from Round 2021. Please see the CMS announcement for additional information.

CMS is required by law to recompete contracts under the DMEPOS Competitive Bidding Program at least once every three years. The contract periods for Round 1 2017, Round 2 Recompete, and the National Mail-Order Recompete expired on December 31, 2018.

Traveling Beneficiary - KT modifier

The Traveling Beneficiary Fact Sheet is available on the Medicare Learning Network and provides guidance on the rules for traveling beneficiaries and the use of the KT modifier from January 1, 2021, thru December 31, 2023.

The permanent residence is the address on file with the Social Security Administration (SSA). It is the address to which the SSA mails checks and/or correspondence to the beneficiary.

Four important CBP rules to know when a beneficiary needs an OTS back or knee brace while traveling: 

  • Medicare payment is always based on the beneficiary’s permanent residence.
  • Which supplier may furnish the OTS back or knee brace is determined based on where the beneficiary purchases the item.
  • The supplier that provides the OTS back or knee brace to the Medicare beneficiary must accept assignment (i.e., accept Medicare payment as payment in full) unless the beneficiary’s permanent residence is not in a CBA and the beneficiary travels to an area that is not a CBA.
  • Suppliers must affix the HCPCS modifier "KT" to claims for OTS back or knee braces that are furnished to beneficiaries who permanently reside in a CBA and need a competitively bid item when they travel outside of the CBA where they reside.

The HCPCS codes used to bill for OTS back braces: L0450, L0455, L0457, L0467, L0469, L0621, L0623, L0625, L0628, L0641, L0642, L0643, L0648, L0649, L0650, and L0651.

The HCPCS codes used to bill for OTS knee braces: L1812, L1830, L1833, L1836, L1850, L1851, and L1852.

KU Modifier
MM12345

Effective for dates of service on or after July 1, 2021, we continue the KU modifier fee schedule amounts for wheelchair accessories (including seating systems) and seat and back cushions you provide for wheelchair codes E1161, E1231, E1232, E1233, E1234, E1235, E1236, E1237, E1238, K0005 and K0008. We continue to pay for these items when you provide them for a complex rehabilitative or certain manual wheelchairs and bill them with the KU modifier. Continue to add the KU modifier when billing the manual wheelchair accessories and seat and back cushion codes listed in Attachment A of CR 12345.

Modifiers
  • J5 - Physical therapists and occupational therapists furnishing DMEPOS item subject to DMEPOS Competitive Bidding Program as a non-contract supplier. Professional service and DME must be billed same date of service.
  • KE - Used to identify an accessory code that can be dually billed with either a competitive bid or non-competitive bid base item not subject to fee schedule reduction. Only for rural and non-contiguous states. Not appropriate for former competitive bid areas or non-rural locations.
  • KY - Used to identify a formerly competitively bid wheelchair accessory code used with a base unit that was not bid for a beneficiary who resides in a former competitive bid area.
  • KG - Used to identify supplies/accessories utilized across multiple former competitive bidding product categories or when same code can be used for both formerly competitively bid and non-competitively bid items.
  • KU - Only for wheelchair accessories and seat back cushions used with Group 3 Complex Rehab Wheelchair bases.
  • KL - Any DMEPOS item delivered by mail. This includes shipping services and supplier delivery services.
  • KT - Beneficiary resides in a competitive bidding area and travels to a non-competitive bidding area and receives item from a non-contract supplier. The permanent residence is the address on file with the Social Security Administration (SSA). It is the address to which the SSA mails checks and/or correspondence to the beneficiary.
  • KV - DMEPOS item subject to DMEPOS Competitive Bidding Program that is furnished as part of a professional service (non-contract supplier, physicians and other treating practitioners) In limited situations, physicians are allowed to both prescribe and furnish OTS back and knee braces under the in-office ancillary services exception to the physician self-referral law described at 42 CFR 411.355(b), provided they meet all requirements of that exception. Professional service and DME must be billed same date of service.

 

Resources

 

Last Updated Wed, 18 May 2022 14:42:14 +0000

The below are topic specific articles which have been published to "Latest Updates" and sent out in Noridian emails within the past two years. Exclusions to this include time sensitive related announcements such as: Noridian and CMS educational events, Ask-the-Contractor Teleconferences and claims processing downtime.

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