The Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program (CBP) was established by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. The DMEPOS CBP is designed to improve the accuracy of Medicare DMEPOS payments and ensure that beneficiaries get quality items and services at fair prices. The competitive process only works, however, when bidders set their bid prices independently. When competitors collude, prices are inflated and honest bidders, Medicare beneficiaries, and the American public are cheated.
Why Antitrust Laws Matter
- Antitrust laws exist to protect fair competition and make collusion (secret cooperation between competitors) illegal.
- It doesn't matter if the agreed-upon prices seemed reasonable, if the agreement wasn't written down, or if competitors just wanted to make sure everyone got a "fair share" – it's still illegal.
- Even sharing sensitive pricing information with a competitor can be considered a violation.
- Violations can be prosecuted criminally by the U.S. Department of Justice
- Penalties include:
- Up to $100 million in fines for corporations.
- Up to $1 million in fines and/or 10 years in prison for individuals (and in some cases, even higher fines).
Note: This guidance doesn’t apply to participation in networks — as defined by the Centers for Medicare & Medicaid Services (CMS) for the DMEPOS CBP — and other legitimate joint ventures.
What Suppliers Must Avoid
Suppliers that bid or intend to bid in the DMEPOS CBP should determine whether to bid and submit their bid amounts independently of any competitors. They should never make any agreement or understanding with competitors to:
- Fix bid amounts or any part of them (like costs, discounts, or profit margins).
- Not bid on a product or area, or pull back a bid so a competitor wins.
- Take turns being the lowest bidder.
- Lose a bid or not bid at all in exchange for subcontracts or payments from the winner.
- Split up markets, customers, or territories among themselves.
- Share sensitive pricing or bidding information — even through a third party like a consultant.
CMS’s Position
- CMS has a zero-tolerance policy regarding antitrust law violations.
- CMS will monitor all bidders.
- Use of a consultant does not protect bidders from antitrust rules.
- CMS will work with the Office of Inspector General and other appropriate law enforcement partners on any suspected violations, including referring such matters to the Department of Justice.