The Restart of Medicare Orthotics & Prosthetics Competitive Bidding Program Adds Margin Pressure on O&P Players

After a pause, The Centers for Medicare & Medicaid Services (CMS) announced plans to reinstate the Competitive Bidding Program for Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies.  “Round 2021” competition will cover a total of 130 competitive bidding areas and add new product categories: off-the-shelf (OTS) back braces, OTS knee braces, and non-invasive ventilators.

The new rule will put margin pressure on the O&P, bracing and homecare sector. It will also squeeze small suppliers, as the rule requires that any bidder must bid on an entire category and that all bidders must agree to serve the entire competitive bidding area.

As more and more orthotic devices are included in the “jaws” of the competitive bidding program, consolidation will be inevitable.

Keywords: Healthcare Investment Banking, Healthcare M&A, Healthcare mergers