CMS announces contract winners in first phase of Medicare durable medical equipment bidding program

CMS on Monday announced that 325 suppliers have won contracts in the first phase of a durable medical equipment competitive bidding program for Medicare scheduled to begin on July 1, CQ HealthBeat reports (Carey, CQ HealthBeat, 5/19).

In 2008, the 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. In 2009, the program will expand to an additional 70 MSAs and will continue to expand in future years. The program also will apply to additional product categories in future years. The program likely will result in an average 26% decrease in the prices of medical equipment in the 10 MSAs, according to CMS (Kaiser Daily Health Policy Report, 5/7).

Acting CMS Administrator Kerry Weems during a telephone news conference said that nearly 90% of the contract winners already were doing business in the regions where they were selected to provide services. In addition, Weems said that about half of the companies are small businesses, which he defined as having $3.5 million or less in gross revenue. Weems said that CMS is initiating an aggressive outreach program to providers and beneficiaries and that the agency will conduct a "robust monitoring program" to ensure smooth implementation.

According to CQ HealthBeat, "Some suppliers targeted by the program have predicted it will drive many companies out of business and hurt product innovation because prices will be set too low to justify research and development." Walter Gorski, vice president of government affairs for the American Association for Homecare, said, "Nothing that CMS or Kerry Weems have said about the program have allayed concerns about the harmful impact of this bidding program on patients and the homecare provider community."

Weems on Monday also announced that the agency is extending the deadline to July 21 for suppliers to apply for accreditation for the second round of the program because a significant number of suppliers in the MSAs have not yet applied for accreditation (CQ HealthBeat, 5/19).

Editorial

"[C]ritics have raised legitimate concerns" that the bidding program might reduce quality for Medicare beneficiaries who use durable medical equipment, the Cleveland Plain Dealer writes in an editorial, adding that a "delay, at least, in awarding contracts is warranted." The editorial continues that CMS should conduct a review to determine "whether the specifications for suppliers are reasonable, whether the bidding selection and appeals processes are fair, and whether streamlining to suit the government also serves patients well enough."

The program has caused patients and advocates to worry that "they will be denied the types and brands of equipment they prefer," that they will have "limited choices and a decline in quality of products" and that they will be "unable to patronize a medical supply store in their own city because the rules force them to use a distant supplier," the Plain Dealer writes, concluding, "All such concerns must be addressed" (Cleveland Plain Dealer, 5/18).