Traditional Medicare Provider Payment—Assistive Technology and Durable Medical Equipment

Under Part B, Medicare covers many types of medically necessary assistive technologies that improve health and functioning, including durable medical equipment (DME), prosthetics, orthotics, and supplies. The most common types of DME are mobility devices such as wheelchairs and walkers. Newer or less familiar forms of assistive technology, such as speech generators, may not be covered even when medically necessary because of questions about their clinical efficacy or appropriate use.

Some DME suppliers have engaged in fraud and abuse. The Centers for Medicare & Medicaid Services has imposed supplier conditions to address this problem, including surety bonds, criminal background checks, and unannounced site visits. Since 2009, with some exceptions, DME suppliers must be accredited and post a surety bond. The Affordable Care Act requires that providers have face-to-face visits with beneficiaries to determine medical necessity before the need for power wheelchairs and other DME items can be certified. In addition, DME suppliers must undergo fingerprinting, criminal background checks, and unannounced site visits. The Centers for Medicare & Medicaid Services (CMS) may withhold DME payments for 90 days when investigating suspected fraud.

To slow the growth of Medicare spending, most suppliers of durable medical equipment, prosthetics, orthotics, and supplies, known commonly as DMEPOS, must submit competitive bids. CMS estimated that competitive bidding reduced Medicare spending on DMEPOS by 42 percent in 2012, its first year of operation. It is estimated that it will save almost $26 billion over ten years. Initially, observers were concerned that requiring competitive bidding could negatively affect beneficiaries. But early indications are that access to DMEPOS and health outcomes have not suffered. In 2017, total Medicare spending on competitively bid DME supplies was $4.7 billion less than in 2010 ($2.8 billion compared with $7.5 billion), and median payment rates for the 25 highest-spending DME supplies declined by nearly 50 percent.