Department of Health and Human Services 
OFFICE OF 
 
 
INSPECTOR GENERAL 
 
 
 
 
 
 
 
 
R 2 C B
OUND    OMPETITIVE  IDDING FOR 
 
ENT ERAL NUTRITION: CONTINUED 
 
A V M
CCESS FOR  AST  AJORITY OF 
 
  B  
ENEFICIARIES
Suzanne Murrin  
Deputy Inspector General for 
Evaluation and Inspections 
 
May 2018 
OEI-01-15-00042  Report in Br ief  U.S. Department of Health & Human Services 
May 2018 
Office of Inspector General 
OEI-01-15-00042 
 
 
   
Round 2 Competitive Bidding for Enteral 
Why OIG Did This Review 
Nutrition: Continued Access for Vast      The Competitive Bidding Program 
changed the way Medicare pays for 
Majority of Beneficiaries 
DME and it is important to understand 
how this change may have affected 
What OIG Found 
Key Takeaway  beneficiary access to needed DME.  
The vast majority of beneficiaries who received 
enteral nutrition supplies in 2013 continued to  Round 2 of the Competitive  Medicare established the program to 
Bidding Program does not 
do so after Round 2 of the Competitive Bidding  combat fraud, waste, and abuse in the 
appear to have disrupted 
Program for durable medical equipment (DME)  provision of DME.  The program 
access to enteral nutrition 
began in July 2013.  (In this report, we use the  replaced a fee schedule with 
term enteral nutrition supplies to refer to daily  supplies for the vast majority  a competitive bidding process to set 
feeding supply kits, tubes, and nutrients.)   of beneficiaries.  Among 
Medicare reimbursement amounts for 
Medicare payments for enteral nutrition  beneficiaries who received 
certain types of DME. 
supplies continued for 91 percent of  enteral nutrition supplies in 
beneficiaries in Round 2 competitive bidding  2013 before bidding began,  In a letter to the Office of Inspector 
areas (CBAs) and for 94 percent of beneficiaries  91 percent continued to do  General (OIG), Members of Congress 
in areas that were not CBAs (which we refer to  so after Round 2 began.  This  expressed concerns about the 
as non-CBAs) after Round 2 began.  These rates  rate is only slightly lower than  programs effect on access to DME and 
are only slightly lower than the percentage of  the 94-percent continuation  requested that OIG study this issue. 
beneficiaries95 percentfor whom Medicare 
rate in nonbidding areas after 
payments for enteral nutrition supplies 
Round 2 began and the      How OIG Did This Review 
continued over the same timeframe in 2012, 
95-percent continuation rate  We used Medicare claims to identify 
1 year prior to Round 2 of competitive bidding.  
before Round 2 took effect.  a population of beneficiaries for whom 
Our surveys of physicians and beneficiaries 
Medicare paid claims for enteral 
provided some insights for a sample of 
nutrition supplies before Round 2 of 
beneficiaries for whom payments for enteral nutrition supplies stopped.  
the Competitive Bidding Program 
For example, physicians largely told us that beneficiaries without continued 
began in 2013.  Using discontinued 
payments still had a prescribed need for the nutrients or supplies, and three of the 
six responding beneficiaries reported continuing to receive them even though  payments after Round 2 began as 
Medicare payments stopped.  a proxy for disrupted access, we 
What OIG Concludes  compared the rates of discontinued 
The Competitive Bidding Program aims to combat fraud, waste, and abuse;  payments in Round 2 CBAs and 
improve the methods for setting payments for DME; and create cost savings for  non-CBAs.  We also analyzed Medicare 
Medicare and its beneficiaries, all while maintaining beneficiary access to needed DME.   claims data from 2012 to determine the 
Our analysis for this report supports the conclusion that the vast majority of  percentage of beneficiaries receiving 
beneficiaries had continued access to enteral nutrition supplies after Round 2 began.   enteral nutrition supplies for whom 
However, we did find that the percentage of beneficiaries for whom Medicare 
Medicare payments stopped in the last 
payments for enteral nutrition supplies did not continue was slightly higher in Round 2 
full year prior to Round 2 of the 
CBAs than in non-CBAs.  This difference may or may not indicate disruptions in 
program.  We then surveyed the 
receiving needed enteral nutrition supplies.  For example, this difference 
physicians who had ordered the enteral 
may indicate that the program reduced the provision of unnecessary enteral nutrition 
nutrition supplies for a sample of these 
supplies, as the Centers for Medicare & Medicaid Services determined to be the case 
with Round 1 of the program.   beneficiaries.  In cases in which 
  physicians reported a continued 
beneficiary need, we surveyed those 
beneficiaries to learn about their 
experiences after Round 2 began.   
 
Full report can  be foun d at oig.hhs.gov/oei/reports/oei-01-15-00042.asp 
   
TABLE OF CONTENTS 
 
Objective ......................................................................................................1 
Background ..................................................................................................1 
Methodology ................................................................................................6 
Finding .........................................................................................................9 
The start of Round 2 did not appear to disrupt access to enteral 
nutrition supplies for the vast majority of beneficiaries ..................9 
Conclusion .................................................................................................13 
Agency Comments and OIG Response ......................................................14 
Appendices .................................................................................................15 
A: Agency Comments ....................................................................15 
B: Detailed Methodology ...............................................................16 
Acknowledgments......................................................................................22 
 
     
OBJECTIVE 
To determine whether Round 2 of the Competitive Bidding Program 
(CBP) appeared to disrupt beneficiary access to enteral nutrition supplies. 
BACKGROUND  
The Medicare Prescription Drug, Improvement, and Modernization Act of 
2003 mandated the establishment of the CBP as one of several efforts 
aimed at combating fraud, waste, and abuse.1  For selected categories of 
durable medical equipment (DME), this program replaces a fee-schedule 
payment methodology with a competitive bidding process in certain areas 
of the country.  The goal of the program is to improve the methodology for 
setting DME payment amounts in a way that creates cost savings for 
Medicare and its beneficiaries while maintaining beneficiary access to 
quality items and services.  The Centers for Medicare & Medicaid 
Services (CMS) has reported that the CBP is a success; however, Congress 
and other stakeholders have raised concerns about the programs impact 
on beneficiary access to DME. 
In a July 2014 letter to the Office of Inspector General (OIG), 
138 Members of Congress expressed concerns about the CBPs effect on 
Medicare beneficiary access to DME.  The letter suggested that 
noncompliance of contracted suppliers in the CBP is affecting the quality 
and choice of DME available to beneficiaries and requested that OIG 
study the CBPs effect on access to DME. 
In a report issued in May 2016, CMS concluded that the CBP was saving 
money for Medicare and its beneficiaries without compromising access to 
DME.  In that report, CMS stated that the CBP had saved about 
$3.6 billion and had not had any negative impact on beneficiary health 
outcomes.2  CMS conducts real-time data analysis to monitor the health 
status of beneficiaries served by the CBP, and as of the end of June 2017, 
CMS reported that it had not observed any negative changes in beneficiary 
 
1 Medicare Prescription Drug, Improvement, and Modernization Act of 2003.  P.L. No. 
108-173  302(b). 
2 CMS, Providing Quality, Affordable Durable Medical Equipment for Beneficiaries.  
Accessed at https://wayback.archive-
it.org/2744/20161207130006/https:/blog.cms.gov/2016/05/17/providing-quality-
affordable-durable-medical-equipment-for-beneficiaries/ on April 26, 2017. 
Round 2 Competitive Bidding for Enteral Nutrition (OEI-01-15-00042)          1 
   
health outcomes.3  For its real-time data analysis, CMS monitors health 
outcomes such as deaths, hospitalizations, and emergency room visits, as 
well as average number of days spent hospitalized, among other data.  In 
addition, CMS estimated in 2012 that Round 1 of competitive bidding had 
reduced Medicare spending on enteral nutrients, equipment, and supplies 
by nearly $19 million.4 
Overview of the Competitive Bidding Program 
Under the CBP, DME suppliers compete to contract with Medicare to 
supply selected DME items within specific geographic areas known as 
Competitive Bidding Areas (CBAs).  CMS and its Competitive Bidding 
Implementation Contractor evaluate a suppliers bid on the basis of the bid 
amount and several other criteria, including the suppliers eligibility and 
financial stability.5  
Pursuant to the Medicare Modernization Act, CMS established bidding in 
rounds, which CMS must recompete at least once every 3 years.6  Each 
round involves certain DME product categories and CBAs.  Each product 
category includes a group of related products that are used to treat 
a similar medical condition.  In January 2016, CMS began using pricing 
data from the CBP to set reimbursement rates for DME in areas of the 
country not subject to the CBP. 7  (In this report, we refer to areas not 
subject to the CBP as non-CBAs.)  See Exhibit 1 below for details on 
the rounds of the CBP. 
   
 
3 CMS, Durable Medical Equipment, Prosthetics, Orthotics, and Supplies Competitive 
Bidding ProgramHealth Status Monitoring:  Summary of Findings thru the Second 
Quarter of 2017.  Accessed at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-
Payment/DMEPOSCompetitiveBid/Downloads/DME-Summary-of-Findings.pdf on 
November 16, 2017. 
4 CMS, Competitive Bidding UpdateOne Year Implementation Update, April 17, 2012.  
Accessed at https://www.cms.gov/medicare/medicare-fee-for-service-payment/ 
dmeposcompetitivebid/downloads/competitive-bidding-update-one-year-
implementation.pdf on October 26, 2016. 
5 CMS, DMEPOS Competitive Bidding  Home.  Accessed at 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-
Payment/DMEPOSCompetitiveBid/index.html?redirect=/dmeposcompetitivebid/ on 
May 5, 2015. 
6 Social Security Act,  1847(b)(3)(B), 42 U.S.C.  1395w-3(b)(3)(B); 42 CFR 
 414.422(b). 
7 42 CFR  414.210(g). 
Round 2 Competitive Bidding for Enteral Nutrition (OEI-01-15-00042)          2 
   
Exhibit 1: CBP Round Effective Dates, CBAs, and Product Categories 
CBP Round  Effective Dates  CBAs  Product Categories* 
Round 1 Rebid:8       9 to 13 CBAs  For the Round 1 Rebid  All Effective Dates:  Oxygen; 
Round 1 
Jan. 1, 2011  Dec. 31,  and Round 1 Recompete, 9 CBAs  CPAP/RAD devices and supplies; 
2013   covering the largest metropolitan  enteral nutrition; standard power 
statistical areas by population that did not  wheelchairs; scooters; walkers; 
Round 1 Recompete:9 
span multiple Medicare Administrative  hospital beds 
Jan. 1, 2014  Dec. 31,  Contractor jurisdictions,10 but not 
2016  Some Effective Dates:  Complex 
including New York City, Los Angeles, 
rehabilitative wheelchairs, standard 
Round 1 2017:           and Chicago.  For Round 1 2017, to 
manual wheelchairs, support surfaces, 
Jan. 1, 2017  Dec. 31,  prevent multi-State CBAs, CMS split 3 of 
mail-order diabetes supplies, 
2018  the original 9 CBAs into multiple CBAs, for 
commode chairs, patient lifts, seat lifts, 
a total of 13 CBAs. 
transcutaneous electrical nerve 
stimulation, external infusion pumps, 
nebulizers, negative pressure wound 
therapy pumps 
July 1, 2013  June 30,  100 to 117 CBAs  For Round 2,  Oxygen; CPAP/RAD devices and 
Round 2 
2016  100 CBAs, covering the next 91 largest  supplies; enteral nutrition; standard 
metropolitan statistical areas and  wheelchairs; walkers; hospital beds; 
Recompete:            
including New York City, Los Angeles,  support surfaces; negative pressure 
July 1, 2016  
and Chicago, with each subdivided into  wound therapy pumps 
December 31, 2018 
multiple CBAs.  For the Round 2 
Recompete, 117 CBAs to prevent   
multi-State CBAs. 
National  July 1, 2013  June 30,  1 CBA  All parts of the United States, 
Diabetes testing supplies 
Mail Order  2016  including the 50 States, the District of 
Program  Columbia, Puerto Rico, the U.S. Virgin 
Recompete:               
Islands, Guam, and American Samoa. 
July 1, 2016  
December 31, 2018 
 
*Some product categories were renamed and combined from one contract cycle to the next.
Medicare Coverage of Enteral Nutrition 
To be covered by Medicare, an item or service must be reasonable and 
necessary for the diagnosis or treatment of illness or injury or to improve 
the functioning of a malformed body part.11  Enteral nutrition provides 
 
8 Round 1 was implemented in 2008 and discontinued 2 weeks later by the passage of the 
Medicare Improvements for Patients and Providers Act of 2008 (MIPPA).  As required 
by MIPPA, the supplier competition was held again in 2009.  This 2009 competition is 
referred to as the Round 1 Rebid. 
9 The Round 1 Rebid included contracts for mail-order diabetes testing supplies, but those 
contracts ended in December 2012, and bidding for diabetes testing supplies moved to the 
National Mail Order Program.  CMS, Round 1 Rebid Mail-Order Diabetic Supply 
Contracts Ending on December 31, 2012.  Accessed at 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ 
DMEPOSCompetitiveBid/Downloads/2012-12-14-DMEPOS.pdf on January 12, 2017. 
10 CMS, General Overview of the Final Rule for Competitive Acquisition for Certain 
Durable Medical Equipment, Prosthetics, Orthotics, and Supplies, April 10, 2007.  
Accessed at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-
Payment/DMEPOSCompetitiveBid/Downloads/DMEPOSRegSumm.pdf on May 5, 
2015. 
11 Social Security Act  1862(a)(1)(A), 42 U.S.C.  1395y(a)(1)(A). 
Round 2 Competitive Bidding for Enteral Nutrition (OEI-01-15-00042)          3 
   
nutrients through a tube into the stomach or small intestine.12  Medicare 
considers enteral nutrition reasonable and necessary for beneficiaries who 
have a permanent nonfunction or disease of the structures that normally 
permit food to reach the small intestine (e.g., if a beneficiary cannot 
swallow because of a permanent medical problem) or who have a disease 
of the small intestine that impairs digestion and absorption of nutrients.13  
In addition, the beneficiary must require tube feedings to provide 
sufficient nutrients to maintain weight and strength commensurate with 
the beneficiarys overall health status.  Medicare pays for enteral nutrition 
as long as medically necessary.14 
Enteral nutrients may be administered to beneficiaries by syringe, gravity, 
or pump.15  For enteral nutrients and supplies such as dressings, tape, and 
syringes, Medicare pays for no more than 1 months supply at a time.  
Medicare pays to replace certain more durable supplies every 3 months.16  
In this report, we use the term enteral nutrition supplies to refer to daily 
feeding supply kits, tubes, and nutrients. 
Program Integrity Concerns with Enteral Nutrition 
Medicares Comprehensive Error Rate Testing (CERT) program has long 
found high error rates in DME, including enteral nutrition.  In 2012, the 
year before Round 2 of the CBP started, the CERT found a 66-percent 
error rate in DME overall and a 57-percent error rate in enteral 
 
12 CMS, The Durable Medical Equipment, Prosthetics, Orthotics, and Supplies 
(DMEPOS) Competitive Bidding Program: Enteral Nutrition.  Accessed at 
https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-
MLN/MLNProducts/downloads/DME_Enteral_Factsheet_ICN901005.pdf on April 26, 
2017. 
13 CMS, National Coverage Determinations Manual, Pub. No. 100-03, ch. 1, pt. 3, 
 180.2.  See also Local Coverage Determination (LCD): Enteral Nutrition (L33783) for 
DME MAC Jurisdictions A, B, C, and D.  Accessed at https://www.cms.gov/medicare-
coverage-database/details/lcd-
details.aspx?LCDId=33783&ver=9&DocID=L33783&bc=gAAAABAAAAAA& on 
January 18, 2018.  Prior to October 1, 2015, the DME MACs had separate but identical 
LCDs for enteral nutrition (i.e., LCDs L5041, L27214, L11553, and L11568 for DME 
MAC Jurisdictions A, B, C and D, respectively), available online at 
https://localcoverage.cms.gov/mcd_archive/.   
14 Ibid. 
15 Ibid. 
16 Ibid. 
Round 2 Competitive Bidding for Enteral Nutrition (OEI-01-15-00042)          4 
   
nutrition.17, 18  In 2016, the CERT found a 46-percent error rate in DME 
overall and a 50-percent error rate in enteral nutrition.19 
Related OIG Work 
OIG has a long history of identifying fraud, waste, and abuse in the 
provision of DME devices and supplies.  Since passage of the Medicare 
Prescription Drug, Improvement, and Modernization Act of 2003, which 
established the CBP, OIG has opened more than 2,000 investigative cases 
involving DME suppliers.  Over the last several years, OIG investigations 
have contributed to several fraud cases by the Department of Justice 
against suppliers of enteral nutrition supplies. 20, 21, 22, 23   
OIG audits and evaluations have examined implementation of the CBP 
and market trends for specific types of DME. 24  A November 2017 OIG 
audit found that CMS generally met requirements in Round 2 of the CBP.25  
However, because of inconsistency in how CMS followed its procedures, 
CMS awarded a small number of Round 2 contracts to suppliers that did 
not meet program requirements.  OIG has also released three 
 
17 CMS, Medicare Fee-For-Service 2012 Improper Payments Report, p. 31.  Accessed at 
https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-
Programs/Medicare-FFS-Compliance-Programs/CERT/Downloads/Medicare-Fee-for-
Service-2012-Improper-Payments-Report.pdf on November 2, 2016. 
18 CMS, Medicare Fee-For-Service 2012 Improper Payments Report, p. 8. Accessed at 
https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-
Programs/Medicare-FFS-Compliance-
Programs/CERT/Downloads/AppendicesNovember2012CERTReport.pdf?agree=yes&ne
xt=Accept on May 2, 2017. 
19 CMS, Medicare Fee-For-Service 2016 Improper Payments Report, pp. 9 and 21.  
Accessed at https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-
Programs/Medicare-FFS-Compliance-
Programs/CERT/Downloads/AppendicesMedicareFee-for-
Service2016ImproperPaymentsReport.pdf on November 16, 2017. 
20 U.S. Department of Justice, Healthcare Company Executives Sentenced to Prison for 
Fraud and Kickbacks, February 2015.  Accessed at https://www.justice.gov/usao-
mdla/pr/healthcare-company-executives-sentenced-prison-fraud-and-kickbacks on 
April 26, 2017. 
21 U.S. Department of Justice, Operators Of Healthcare Company Convicted Of Fraud 
And Kickbacks, July 2014.  Accessed at https://www.justice.gov/usao-mdla/pr/operators-
healthcare-company-convicted-fraud-and-kickbacks on April 26, 2017. 
22 U.S. Department of Jusitice, DME Owner Convicted On All Counts, April 2014.  
Accessed at https://www.justice.gov/usao-sdtx/pr/dme-owner-convicted-all-counts on 
April 26, 2017. 
23 U.S. Department of Jusitice, DME Owner Arrested In 21-Count Health Care Fraud 
Indictment, March 2013.  Accessed at https://www.justice.gov/usao-sdtx/pr/dme-owner-
arrested-21-count-health-care-fraud-indictment on April 26, 2017. 
24 OIG, CMS Generally Met Requirements in the DME Competitive Bidding Round 1 
Rebid Program, A-05-12-00067, April 2014. 
25 OIG, CMS Generally Met Requirements in Round 2 of the DMEPOS Competitive 
Bidding Program, A-05-14-00049, November 2017. 
Round 2 Competitive Bidding for Enteral Nutrition (OEI-01-15-00042)          5 
   
memorandum reports evaluating the market shares of different types of 
diabetes test strips.26, 27, 28 
This report is one of a series on how the launch of Round 2 of the CBP has 
affected continued access to DME.  It examines beneficiary access to 
enteral nutrition supplies, which in 2013 made up 5 percent of paid claims 
in Round 2 of the CBP.  The other reports in this series examine 
CPAP/RAD devices (i.e., continuous positive airway pressure devices and 
respiratory assist devices) and related supplies and oxygen equipment and 
contents.  The former found that the launch of Round 2 of the CBP did not 
likely disrupt beneficiary access to CPAP/RAD devices but it was 
inconclusive as to whether Round 2 had affected access to related 
supplies. 29  The latter, Round 2 Competitive Bidding for Oxygen: 
Continued Access for Vast Majority of Beneficiaries, OEI-01-15-00041, 
which is being issued simultaneously with this report, found that Round 2 
of the CBP did not likely disrupt beneficiary access to oxygen equipment 
and contents. 
METHODOLOGY 
This inspection analyzes a population of Medicare beneficiaries over two 
different time spans to determine whether Round 2 of the CBP appeared to 
disrupt access to enteral nutrition supplies.  This population includes 
beneficiaries using enteral nutrition supplies and covers the 3 months 
before and the 6 months after Round 2 contracts became effective on 
July 1, 2013.  For ease of presentation in this report, we refer to July 1, 
2013the date when Round 2 contracts went into effectas the date that 
Round 2 began.  
We used Medicare claims data to identify our population.  The population 
includes beneficiaries who resided in Round 2 CBAs and non-CBAs, 
which enabled us to make comparisons to look for evidence of potential 
disruptions in access.  This population includes beneficiaries for whom 
there was at least one claim for enteral nutrition supplies from April 
through June 2013. 
 
26 OIG, Memorandum Report:  Medicare Market Shares of Mail Order Diabetes Test 
Strips from July-September 2013, OEI-04-13-00680, June 2014. 
27 OIG, Memorandum Report:  Medicare Market Shares of Mail Order Diabetes Test 
Strips Immediately Prior to the National Mail Order Program, OEI-04-13-00681, 
June 2014. 
28 OIG, Memorandum Report:  Medicare Market Shares of Mail Order Diabetes Test 
Strips 3-6 Months After the Start of the National Mail Order Program, OEI-04-13-00682, 
November 2014. 
29 OIG, Round 2 Competitive Bidding for CPAP/RAD: Disrupted Access Unlikely for 
Devices, Inconclusive for Supplies, OEI-01-15-00040, June 2017. 
Round 2 Competitive Bidding for Enteral Nutrition (OEI-01-15-00042)          6 
   
Using Medicare claims data, we determined the extent to which 
beneficiaries in our population appeared to have their access to enteral 
nutrition supplies disrupted by Round 2 of the CBP.  Specifically, we used 
the absence of paid claims for beneficiaries in the population after 
Round 2 began as a marker of potential disruption in access.  We 
calculated the percentages of beneficiaries in the population for whom 
Medicare payments stopped and compared them between beneficiaries 
residing in Round 2 CBAs and non-CBAs.  As a comparison, we analyzed 
Medicare claims data from 2012 to determine the percentage of 
beneficiaries receiving enteral nutrition supplies for whom Medicare 
payments stopped in the last full year prior to Round 2 of the CBP. 
To learn more about the experience of beneficiaries with a potential 
disruption in access after Round 2 began, we selected a sample of 
beneficiaries in our population for whom Medicare payments stopped.  We 
stratified this sample by whether the beneficiaries resided in Round 2 
CBAs or non-CBAs.  To determine whether the sampled beneficiaries 
continued to need the items after Round 2 began, we separately surveyed 
the physicians who ordered their enteral nutrition supplies.  Each 
physician we surveyed ordered nutrients or supplies for one of our 
sampled beneficiaries.  When a physician told us that the beneficiary had 
a continued need for the items and Medicare records indicated that the 
beneficiary was still living in 2016, we considered that beneficiary to be 
eligible for our survey, which asked beneficiaries to describe their 
experiences after Round 2 began.  Exhibit 2 provides details on these 
samples and surveys. 
Exhibit 2: Surveys Regarding Enteral Nutrition Supplies 
Round 2 
  Non-CBAs  Total 
CBAs 
Total Physicians in Sample  150  150  300 
Physicians Surveyed1  114  94  208 
Physicians Responding With 
64  54  118 
Usable Data2 
Physician Response Rate   43%  36%  39% 
Beneficiaries Eligible for 
25  12  37 
Survey 
Beneficiaries Responding With 
5  1  6 
Usable Data 
Beneficiary Response Rate  20%  8%  16% 
Source:  OIG analysis of physician and beneficiary responses to survey, 2017. 
1 We did not survey a physician if the beneficiary was deceased when Round 2 began, if the physician 
was under investigation, or if the physician was no longer in business. 
2 In some cases, physicians cooperated by responding to our survey, but their responses included no 
usable information. 
 
Round 2 Competitive Bidding for Enteral Nutrition (OEI-01-15-00042)          7 
   
Limitations 
This review has two limitations.  First, we use continued Medicare 
payment as a proxy for continued access to enteral nutrition supplies.  
Continued Medicare payment is a measure of potential continued access 
but we understand that it is not a direct measure of continued access to 
enteral nutrition supplies.  Without a determination of continued need, the 
lack of continued Medicare payments does not necessarily indicate a 
disruption in access to enteral nutrition supplies. 
Secondly, the response rate for our survey was too low to project the 
results to all beneficiaries for whom claims did not continue.  Therefore, 
we present our survey responses as testimonial evidence to provide 
potential insights into these individual beneficiaries experiences in 
accessing enteral nutrition supplies.  We did not independently verify 
responses from physicians and beneficiaries, nor did we conduct a medical 
review of beneficiaries medical need for these supplies.  See Appendix A 
for a detailed description of our methodology. 
Standards 
We conducted this study in accordance with the Quality Standards for 
Inspection and Evaluation issued by the Council of the Inspectors General 
on Integrity and Efficiency. 
   
Round 2 Competitive Bidding for Enteral Nutrition (OEI-01-15-00042)          8 
   
FINDING 
The start of Round 2 did not appear to disrupt 
access to enteral nutrition supplies for the vast 
majority of beneficiaries 
During the 3 months before Round 2 began (i.e., April through June 2013), 
40,891 beneficiaries used enteral nutrition supplies in Round 2 CBAs and 
non-CBAs.  The proportions of beneficiaries for whom Medicare made 
continued payments for enteral nutrition supplies after Round 2 began 
were similar in Round 2 CBAs and non-CBAs.  Additionally, the rate at 
which Medicare payments continued for beneficiaries between the period 
of April through June 2013 and later in 2013 was similar to the 
continuation rate for the corresponding months in 2012. 
In 2013, Medicare payments continued for 91 percent of 
beneficiaries in Round 2 CBAs and 94 percent of beneficiaries 
in non-CBAs 
After Round 2 began, 91 percent of beneficiaries in Round 2 CBAs and 
94 percent in non-CBAs had one or more paid claims for enteral nutrition 
supplies.  After Round 2 began, Medicare paid (on average) 13 claims per 
beneficiary for beneficiaries in Round 2 CBAs and 12 claims for 
beneficiaries in non-CBAs.  This suggests that in the months after 
Round 2 began, beneficiaries continued to receive enteral nutrition 
supplies both in Round 2 CBAs and non-CBAs.  However, we note that 
the slightly higher proportion of beneficiaries without continued Medicare 
payments in Round 2 CBAs compared to beneficiaries in non-CBAs may 
suggest disruptions in receiving needed enteral nutrition supplies for 
a small proportion of beneficiaries.  Alternatively, it may indicate that 
Round 2 of the CBP reduced the provision of unnecessary enteral nutrition 
supplies, similar to what CMS analysis found after Round 1 of the CBP.  
See Exhibit 3 for additional detail on the numbers and percentages of 
beneficiaries with continued or stopped paid claims for enteral nutrition 
supplies. 
   
Round 2 Competitive Bidding for Enteral Nutrition (OEI-01-15-00042)          9 
   
Exhibit 3: Numbers and Percentages of Beneficiaries For Whom Paid 
Claims for Enteral Nutrition Supplies Continued or Stopped After Round 2 
Began   
 
Source:  OIG analysis of Medicare claims data, 2017. 
In addition, Medicare claims suggest that a majority of these beneficiaries 
likely continued to receive enteral nutrition supplies without interruption.  
In the first half of 2013, suppliers billed Medicare every 24 to 30 days, on 
average, for beneficiaries enteral nutrients and daily feeding supply kits 
and less frequently for more durable supplies such as tubing.  On average, 
beneficiaries with continuing payments for these items in Round 2 CBAs 
went 30 days and beneficiaries in non-CBAs went 29 days between their 
last claim before Round 2 began and their first claim after Round 2 began.  
This suggests that beneficiaries with continued Medicare payments largely 
received their enteral nutrition supplies without interruption after Round 2 
began.   
In 2012, Medicare payments continued for 95 percent of 
beneficiaries who received enteral nutrition supplies in April 
through June of that year 
We also examined Medicare payments in 2012, the last full year prior to 
Round 2, and found that 95 percent of beneficiaries with Medicare 
payments for enteral nutrition supplies in April through June 2012 
continued to have payments for enteral nutrition supplies in the second 
half of that year.  This continuation rate for 2012 is slightly higher than the 
continuation rate for the corresponding period in 2013, which was 
91 percent in Round 2 CBAs. 
   
Round 2 Competitive Bidding for Enteral Nutrition (OEI-01-15-00042)          10 
   
In their survey responses, over 80 percent of physicians told 
us that beneficiaries without continued payments still had 
a prescribed need for the nutrients or supplies, and three of 
the six responding beneficiaries reported continued use of the 
nutrients or supplies 
Our surveys provide some insights, albeit limited, to the experiences of 
these beneficiaries for whom payments stopped after Round 2 began
an indicator of a potential disruption in access.  Physicians who responded 
to our survey largely reported that beneficiaries for whom they ordered 
enteral nutrition supplies still had a prescribed need for them after 
Round 2 began.  This was the case both in Round 2 CBAs and non-CBAs.  
In Round 2 CBAs, 46 of 51 physicians who provided usable data reported 
that the beneficiaries for whom they ordered nutrients or supplies still had 
a prescribed need for those nutrients or supplies.  This compares to 37 of 
45 physicians in non-CBAs. 
Finally, responding beneficiaries provided some insights into their 
experiences with enteral nutrition supplies.  For example, three of the six 
beneficiaries reported continued use of enteral nutrition supplies, even 
though Medicare stopped paying for them.  Specifically, two of the 
five responding beneficiaries from Round 2 CBAs and the one responding 
beneficiary from a non-CBA reported continued use of enteral nutrition 
supplies.  One beneficiary from each population reported having started 
getting enteral nutrition supplies from a new supplier, while two 
beneficiaries from Round 2 CBAs reported that they received supplies 
from their usual respective suppliers.  One beneficiary from a Round 2 
CBA reported using nutrients or supplies that he or she already had on 
hand.  None reported having paid out of pocket for their needed nutrients 
or supplies.  Having to pay out of pocket could limit access to needed 
items. 
Also, of the three beneficiaries in Round 2 CBAs who reported that they 
stopped using enteral nutrition supplies, one reported doing so because of 
being able to eat again after removal of the feeding tube.  See Exhibit 4 for 
additional detail on survey responses from beneficiaries. 
   
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Exhibit 4: Survey Responses From a Subset of Beneficiaries For Whom 
Paid Claims for Enteral Nutrition Supplies Stopped 
 
Source:  OIG analysis of beneficiary responses to survey, 2017. 
   
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CONCLUSION 
This study is one in a series that determines whether Round 2 of the CBP 
appeared to disrupt access to certain types of DME when it began in 
2013.  In this study, we examined enteral nutrition supplies, which 
accounted for 5 percent of paid Medicare claims under Round 2 in 2013.   
According to our claims analysis, the start of Round 2 of the CBP did not 
appear to disrupt access to enteral nutrition supplies for the vast majority 
of beneficiaries.   
Another report in this series examines beneficiary access to CPAP/RAD 
and found that Round 2 did not likely disrupt beneficiary access to 
CPAP/RAD devices but was inconclusive as to whether Round 2 had 
affected access to related supplies.  Additionally, a report on oxygen 
equipment and contents found that Round 2 of the CBP did not appear to 
disrupt access to oxygen equipment and supplies for the vast majority of 
beneficiaries. 
Taken together, the three types of DME we examined in this series 
comprise just over 70 percent of DME subject to bidding under Round 2.  
The CBP aims to combat fraud, waste, and abuse; improve the methods 
for setting DME payments; and create cost savings for Medicare and its 
beneficiaries, all while maintaining access for beneficiaries who need 
DME.  With respect to the DME we examined in this report, our analysis 
supports the conclusion that the vast majority of beneficiaries had 
continued access to enteral nutrition supplies after Round 2 began.  
However, we did find a slightly higher proportion of beneficiaries in 
Round 2 CBAs in 2013 without continued Medicare payments compared 
to beneficiaries in non-CBAs and compared to beneficiaries in 2012.  This 
decline may suggest disruptions in receiving needed supplies for a small 
proportion of beneficiaries.  Alternatively, it may indicate that Round 2 of 
the CBP reduced the provision of unnecessary enteral nutrition supplies, 
similar to CMSs findings after Round 1 of the CBP. 
   
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AGENCY COMMENTS AND OIG RESPONSE 
CMS wrote that it appreciates our close review of the CBPs effect on 
beneficiary access to DME.  CMS stated that it continues to review the 
and will take our findings and methods into account.  
OIG appreciates CMSs review of and comments to this report. 
 
 
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APPENDIX A 
Agency Comments 
 
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APPENDIX B 
Detailed Methodology 
Scope 
This inspection analyzes a population of Medicare beneficiaries over two 
different time spans to determine the effect of Round 2 of the CBP on 
access to enteral nutrition supplies.  This population includes beneficiaries 
using enteral nutrition supplies and covers the 3 months before and the 
6 months after Round 2 contracts became effective on July 1, 2013.  For 
ease of presentation in this report, we refer to July 1, 2013, as the date 
when Round 2 began.  This inspection does not examine beneficiary 
access to enteral nutrition infusion pumps or intravenous poles. 
We used Medicare claims data to identify the population.  The population 
includes beneficiaries who resided in Round 2 CBAs and non-CBAs, 
which enabled us to make comparisons to look for evidence of potential 
disruptions in access.  This population includes beneficiaries for whom 
there was at least one claim for enteral nutrition supplies from April 
through June 2013. 
Data Sources 
Our data sources for this evaluation were Medicare claims and 
administrative data and survey responses we collected from a sample of 
beneficiaries and the physicians who ordered their enteral nutrition 
supplies.  We used the continuation of paid claims as a marker for 
continued access after Round 2 began.  We surveyed physicians and 
beneficiaries to learn about the experience of beneficiaries for whom 
Medicare stopped paying for supplies after Round 2 began.  Because we 
did not receive sufficiently high response rates to our surveys, we did not 
project the survey responses we received to our population of 
beneficiaries. 
Identification of Beneficiaries Using Supplies 
We identified beneficiaries who used enteral nutrition supplies in 2013 
using data from Medicares National Claims History File and CMSs 
Competitive Bidding Implementation Contractor.  As a comparison, we 
also identified beneficiaries who used enteral nutrition supplies in 2012 
using data from Medicares National Claims History File. 
We first created files of claims for enteral nutrition supplies.  To do so, we 
downloaded a list of Healthcare Common Procedure Coding System 
(HCPCS) codes for enteral nutrition supplies subject to bidding from the 
Competitive Bidding Implementation Contractors website.  We then used 
these HCPCS codes to extract paid claims for enteral nutrition supplies 
Round 2 Competitive Bidding for Enteral Nutrition (OEI-01-15-00042)          16 
   
from Medicares National Claims History File.  We created one claim file 
for 2012 and another for 2013.  Next, we matched ZIP Codes from 
Medicares Competitive Bidding Implementation Contractor to the 
beneficiary ZIP Code on the claim to identify each claim as being for 
a beneficiary in a Round 2 CBA, Round 1 CBA, or non-CBA. 
To identify beneficiaries using enteral nutrition supplies, we used our 
2013 claims file to select all beneficiaries for whom there was at least one 
paid claim for supplies from April through June 2013.  This identified 
40,891 beneficiaries.  We used this criterion because enteral nutrition 
supplies include a wide range of items, some of which may need to be 
replaced once a month and others every several months.  See Exhibit A-1 
for additional detail on beneficiary selection criteria. 
Exhibit A-1: Selection Criteria for Sample of Beneficiaries Using Enteral 
Nutrition Supplies 
Characteristics of   Beneficiaries 
Beneficiaries 
Supply-Using Beneficiaries in  in Round 2  Total 
in Non-CBAs 
Sample  CBAs 
HCPCS:   
B4034B4036:  Enteral 
Feeding Supply Kit 
B4081B4083:  Tubing  
B4087, B4088:  
Gastrostomy/Jejunostomy 
Tube 
24,575  16,316  40,891 
B4149, B4150, B4152B4155: 
Enteral Formula 
 
Payment History 
At least 1 paid claim 
April-June 2013 
 
Source:  OIG analysis of Medicare claims data, 2017 
 
Identification of Populations of Beneficiaries For Whom Medicare 
Payments Stopped 
Next, for each group of beneficiaries we identified, we identified the 
population of those for whom there were no paid Medicare claims after 
Round 2 began.  For enteral nutrition supplies, we identified 3,077 
beneficiaries for whom there were claims for supplies from April 1 
through June 30, 2013, only.  See Exhibit A-2 for additional detail on 
beneficiary claims data. 
 
 
 
 
 
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Exhibit A-2: Beneficiaries With Paid Claims for Enteral Nutrition Supplies 
Status of Beneficiaries Who 
Beneficiaries 
Used Enteral Nutrition  Beneficiaries 
in Round 2  Total 
Supplies Before Round 2  in Non-CBAs 
CBAs 
Began 
Medicare payments stopped 
2,169  908  3,077 
after Round 2 began  
Percentage of beneficiaries for 
whom Medicare payments  9%  6%  8% 
stopped after Round 2 began 
Medicare payments continued 
22,406  15,408  37,814 
after Round 2 began 
Percentage of beneficiaries for 
whom Medicare payments  91%  94%  92% 
continued after Round 2 began 
Source:  OIG analysis of Medicare claims data, 2017. 
 
We also analyzed Medicare claims data from 2012 to determine the 
percentage of beneficiaries receiving enteral nutrition supplies for whom 
Medicare payments stopped in the last full year prior to Round 2 of the 
CBP. 
Sample Selection 
From the population of beneficiaries for whom Medicare payments 
stopped after Round 2 began, we drew a statistical sample of 
300 beneficiaries.  We stratified this sample by whether the beneficiaries 
were in Round 2 CBAs or non-CBAs.  See Exhibit A-3 for a description of 
beneficiary sample sizes. 
Exhibit A-3: Samples of Beneficiaries Using Enteral Nutrition Supplies 
Beneficiaries 
Beneficiaries 
Type of Beneficiary  in Round 2  Total 
in Non-CBAs 
CBAs 
Beneficiaries using enteral 
150  150  300 
nutrition supplies 
     Total  150  150  300 
Source:  OIG analysis of Medicare claims data, 2017. 
Physician Survey  
To determine whether beneficiaries in our sample still had a prescribed 
need for supplies, we surveyed the physicians who were the ordering 
physician on the beneficiaries final enteral nutrition claims and who were 
still living.  The surveys asked physicians if the beneficiary for whom they 
ordered supplies had a prescribed need for them during the period from 
July 1 through December 31, 2013. 
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We made at least three attempts to reach physicians with our survey.  We 
sent the surveys using a trackable delivery service and accepted survey 
responses by mail and by fax to a secure fax server.  We received 
responses from 148 of the 208 physicians we surveyed.  In 96 of those 
responses, physicians were able to answer our key question as to whether 
or not the beneficiary still needed supplies after Round 2 began.  See 
Exhibit A-4 for information on physician survey sampling and responses. 
Exhibit A-4: Results From Survey of Physicians for Beneficiaries Using 
Enteral Nutrition Supplies 
Round 2 
Characteristics of Physicians  Non-CBAs  Total 
CBAs 
A)  Total Physicians in 
Sample  150  150  300 
B)  Physicians Surveyed1  114  94  208 
C)  Physicians Responding 
With Usable Data2  64  54  118 
D)  Physicians Answering Key 
Question  51  45  96 
Physician Response Rate 
(Row C/Row A)  43%  36%  39% 
Source:  OIG analysis of data from survey of physicians, 2017. 
1 We did not survey a physician if the beneficiary was deceased when Round 2 began, if the physician 
was under investigation, or if the physician was no longer in business. 
2 In some cases, physicians cooperated by responding to our survey, but their responses included no 
usable information.  
 
Beneficiary Survey 
To learn about beneficiaries experiences in the 6 months immediately 
after Medicare stopped paying for their enteral nutrition supplies, we sent 
a brief survey to beneficiaries.  Specifically, we surveyed the beneficiaries 
who were still living and whose physicians told us in the physician survey 
that they had a prescribed need for supplies after Round 2 began.  In the 
surveys, we asked beneficiaries if they continued to use enteral nutrition 
supplies after Round 2 began and, if so, how they managed given that 
Medicare did not pay for their supplies.  
We made at least three attempts to reach beneficiaries with our survey.  We 
used a trackable delivery service to send the surveys to beneficiaries and 
provided them with postage-paid business reply mail envelopes for 
returning the surveys directly to the Office of Inspector General.  We 
received responses from 6 of the 37 beneficiaries we surveyed.  We did 
not survey beneficiaries when Medicare records indicated that they were 
no longer living.  See Exhibit A-5 for information on beneficiary survey 
eligibility and responses. 
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Exhibit A-5: Response Rates for Survey of Beneficiaries Using Enteral 
Nutrition Supplies 
Beneficiaries 
Beneficiaries 
Status of Beneficiaries  in Round 2  Total 
in Non-CBAs 
CBAs 
Beneficiaries Eligible for 
25  12  37 
Survey 
Beneficiaries Responding With 
5  1  6 
Usable Data 
Beneficiary Response Rate  20%  8%  16% 
Source:  OIG analysis of survey data, 2017. 
Data Analysis 
All-Beneficiary Analysis Using Medicare Claims 
We analyzed claims data to determine the extent to which beneficiaries 
experienced a potential disruption in access to supplies.  To do so, we 
calculated the percentage of supply-using beneficiaries for whom there 
were no paid claims for supplies after Round 2 began.  We used these 
percentages as the basis of our lead findings for supplies. 
We analyzed claims data to determine two aspects of Medicare payments 
for supply-using beneficiaries for whom there were continued payments 
after Round 2 began.  First, we counted the number of paid claims for 
supplies for these beneficiaries after Round 2 began to determine whether 
payments had continued for a sustained period.  Second, we checked 
whether these beneficiaries experienced an interruption in payments 
immediately after Round 2 began.  To do so, we calculated the days 
between the last paid claim for supplies before Round 2 began and the first 
paid claim after Round 2 began.  We then determined the percentage of 
beneficiaries for whom this span was greater than 30 days, as Medicare 
covers 1 month of enteral nutrition supplies at a time.30 
Tabulation of Physician and Beneficiary Survey Responses 
We counted responses to our physician survey to determine the number of 
responding physicians who told us that beneficiaries in our sample still 
needed supplies after Round 2 began.  Our denominator of responses for 
this analysis considered the responses in which physicians were able to tell 
us whether or not the beneficiary still needed supplies after Round 2 
begani.e., we did not include responses of cannot determine. 
 
30 CMS, National Coverage Determinations Manual, Pub. No. 100-03, ch. 1, pt. 3, 
 180.2. 
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We counted responses to our survey of supply-using beneficiaries to 
determine the extent to which beneficiaries reported that they continued to 
use enteral nutrition supplies in the 6 months after Round 2 began, and, if 
so, whether they needed any supplies during that time.  For beneficiaries 
who reported that they did need supplies during that time, we counted how 
many reported that they got supplies from their existing supplier, found 
a new supplier, paid out of pocket, or used supplies that they already had 
on hand. 
Limitations 
This review has two limitations.  First, we use continued Medicare 
payment as a proxy for continued access to enteral nutrition supplies.  
Continued Medicare payment is a measure of potential continued access, 
but we understand that it is not a direct measure of continued access to 
enteral nutrition supplies.  Without a determination of continued need, the 
lack of continued Medicare payments does not necessarily indicate 
a disruption in access to enteral nutrition supplies. 
Secondly, the response rate for our survey was too low to project the 
results to all beneficiaries for whom claims did not continue.  Therefore, 
we present our survey responses as testimonial evidence to provide 
potential insights into these individual beneficiaries experiences in 
accessing enteral nutrition supplies.  We did not independently verify 
responses from physicians and beneficiaries, nor did we conduct a medical 
review of beneficiaries medical need for the supplies. 
   
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ACKNOWLEDGMENTS 
Jesse Valente served as the team leader for this study, and Lyncy Ha 
served as lead analyst.  Other Office of Evaluation and Inspections staff 
who conducted the study include Jessica Fargnoli.  Office of Evaluation 
and Inspections staff who provided support include Joe Chiarenzelli, 
Kevin Farber, Evan Godfrey, and Christine Moritz.  Other Office of 
Inspector General staff who provided support include Maria Maddaloni 
and Jessica Swanstrom. 
This report was prepared under the direction of Joyce Greenleaf, Regional 
Inspector General for Evaluation and Inspections in the Boston regional 
office, and Kenneth Price, Deputy Regional Inspector General. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
To obtain additional information concerning this report or to obtain copies, 
contact the Office of Public Affairs at Public.Affairs@oig.hhs.gov  
Round 2 Competitive Bidding for Enteral Nutrition (OEI-01-15-00042)          22 
   
Office of Inspector General 
https://oig.hhs.gov 
 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 
amended, is to protect the integrity of the Department of Health and Human Services 
(HHS) programs, as well as the health and welfare of beneficiaries served by those 
programs.  This statutory mission is carried out through a nationwide network of audits, 
investigations, and inspections conducted by the following operating components: 
Office of Audit Services 
The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting 
audits with its own audit resources or by overseeing audit work done by others.  Audits 
examine the performance of HHS programs and/or its grantees and contractors in carrying 
out their respective responsibilities and are intended to provide independent assessments of 
HHS programs and operations.  These assessments help reduce waste, abuse, and 
mismanagement and promote economy and efficiency throughout HHS. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 
HHS, Congress, and the public with timely, useful, and reliable information on significant 
issues.  These evaluations focus on preventing fraud, waste, or abuse and promoting 
economy, efficiency, and effectiveness of departmental programs.  To promote impact, OEI 
reports also present practical recommendations for improving program operations.  
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations 
of fraud and misconduct related to HHS programs, operations, and beneficiaries.  With 
investigators working in all 50 States and the District of Columbia, OI utilizes its resources 
by actively coordinating with the Department of Justice and other Federal, State, and local 
law enforcement authorities.  The investigative efforts of OI often lead to criminal 
convictions, administrative sanctions, and/or civil monetary penalties. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to 
OIG, rendering advice and opinions on HHS programs and operations and providing all 
legal support for OIGs internal operations.  OCIG represents OIG in all civil and 
administrative fraud and abuse cases involving HHS programs, including False Claims Act, 
program exclusion, and civil monetary penalty cases.  In connection with these cases, OCIG 
also negotiates and monitors corporate integrity agreements.  OCIG renders advisory 
opinions, issues compliance program guidance, publishes fraud alerts, and provides other 
guidance to the health care industry concerning the anti-kickback statute and other OIG 
enforcement authorities.