CMS on Monday issued a final rule for competitive bidding in Medicare for durable medical equipment, CQ HealthBeat reports. CMS said that the 2008 competitive bidding program will operate in 10 of the largest Metropolitan Statistical Areas and will apply to 10 of the top durable medical equipment, prosthetics, orthotics and supplies product categories, as outlined in the rule. In 2009, the program will expand to an additional 70 MSAs and will continue to expand in future years (Carey, CQ HealthBeat, 4/2). CMS currently pays for durable medical equipment based on a listed price. Under the rule, durable medical equipment companies will submit bids to CMS, which will select suppliers based on cost and volume or on the potential savings for Medicare beneficiaries. The 2003 Medicare law mandated the rule as part of a larger effort to implement competitive bidding for CMS payments (Kaiser Daily Health Policy Report, 4/26/06). The rule includes provisions to allow certain medical professionals -- such as physicians, physician assistants and occupational and physical therapists -- to provide durable medical equipment on the competitive bidding list to patients without participating in the bidding process. In addition, the rule includes provisions to limit effects on small businesses -- those with gross revenue of less than $3.5 million annually -- such as a 30% target for participation of small suppliers in the program and a measure to allow small suppliers to form bidding networks. The program, when fully implemented in 2010, will save Medicare $1 billion annually, according to CMS. Acting CMS Administrator Leslie Norwalk in a statement said, "The final rule we are announcing today is focused on improving both service delivery and the quality of care, while getting savings for beneficiaries and taxpayers" (CQ HealthBeat, 4/2).