Some contract supplies in Round 2 of the Durable Medical Equipment Competitive Bidding Program had not met all of the competitive bidding licensure requirements. Specifically, of the 146 suppliers covered in our audit, 69 suppliers met licensure requirements. However, 63 suppliers did not meet licensure requirements for some of the competitions for which they received a contract. Additionally, 14 suppliers need to be further researched by CMS and its contractors to determine if they met or had not met licensure requirements.

Suppliers received contracts without meeting all licensure requirements because the licensure database that CMS and its contractors used when awarding contracts to suppliers was incomplete and inaccurate. These licensure database deficiencies occurred as a result of variations in State licensure requirements and challenges in coordinating with States to ensure that the database was kept current.

To address the challenges associated with maintaining an accurate and complete licensure database, we recommended that CMS (1) complete the research required to determine whether 14 suppliers had a proper license and make a licensure determination regarding those suppliers; (2) identify all applicable State licensure requirements to prevent suppliers that do not have all currently required licenses from receiving contracts in future rounds of the competitive bidding program; and (3) work with State licensing boards to better coordinate, identify, and maintain an accurate and complete licensure database of currently required State licenses. CMS concurred and discussed steps it had and will take regarding our first two recommendations. CMS did not concur with our third recommendation.

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