Medicare's Expanded Competitive Bidding Program May Increase Prices
NEW YORK ( MainStreet) Medicare patients shopping for certain durable goods, such as motorized scooters, that are sold in specific areas of the country may find that prices have dropped substantially but at a major cost -- the ease of access and training.
The Centers for Medicare & Medicaid Services (CMS) recently expanded the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program to 91 metropolitan areas, bringing the total to 100 areas across the country and dropping prices on durable medical equipment and supplies an average of 45%. CMS expects to save $25.7 billion and says beneficiaries can expect to save $17.1 billion between 2013 and 2022.
"On all measures, the competitive bidding program is a triple win: better costs for beneficiaries, better prices for Medicare and a better deal for American taxpayers," Medicare Rights Center president Joe Baker said in a statement.
The competitive bidding program was established by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 and was created to replace a fee schedule that was outdated and high priced, according to CMS, which cites reports from the Office of Inspector General, Government Accountability Office, and others showing that Medicare was paying well over market prices and what private insurers were paying for the same equipment.
Suppliers were using the higher reimbursements to improve service, such as delivery and set up of equipment, says Dan Brown, managing partner at The Health Law Partners. Now they may sell only basic models, because that's all Medicare will reimburse, or provide less training to patients, he says.
"True competition would benefit Medicare beneficiaries and the American taxpayer," says Jay Witter IV, vice president of government affairs at the American Association for Homecare. "The current competitive bidding program does neither."
Witter says that reports indicate that homecare patients in the expansion, which began in July, "are experiencing significant barriers to the equipment they need."
Further, Witter says AAHomecare has received information that indicates competitive bidding has caused delays in having patient released from the hospital all across the country."
In addition to concerns about ease of access, Catherine Sreckovich, a managing director in the healthcare practice of Navigant Consulting, says "if manufacturers lowball their bids to increase their chances of being selected, then the final price will be so low that some manufacturers will ... withdraw their bid." The remaining manufacturers may be so overwhelmed with orders that "they fall behind and beneficiaries are left waiting for a long time to get their equipment," Sreckovich says.
CMS claims that during the initial round there have been few complaints from beneficiaries and no negative impact on health status based on measures such as hospitalizations compared with areas not subject to competitive bidding.