Lawmakers, industry reps, officials discuss Medicare competitive bidding program for durable medical equipment

During a House Ways and Means Health Subcommittee hearing Tuesday, lawmakers, officials and representatives of the durable medical equipment industry discussed a Medicare competitive bidding program, including the application process and possible alternatives to the program, CQ HealthBeat reports (Carey, CQ HealthBeat, 5/6).

Under the program, CMS will select durable medical equipment suppliers to participate in Medicare based on bids they submit. The 2003 Medicare law mandated the program as part of a larger effort to implement competitive bidding.

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, scheduled to take effect on July 1, 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, 5/6). Medicare spent $8.5 billion on DME in 2007, according to the Dallas Morning News (Moos, Dallas Morning News, 5/6). The program, when fully implemented by 2010, would save about $1 billion, according to CongressDaily (CongressDaily, 5/7).

During the hearing, lawmakers expressed several concerns about the program, including complaints from providers about being unfairly rejected, from suppliers who won bids not being able to provide equipment to beneficiaries in areas where they have no existing operations and from providers going out of business after they lost bids (CQ HealthBeat, 5/6). According to Laurence Wilson, director of CMS' chronic care policy group, in the first application round, 6,209 bids were submitted and 3,043 were rejected because of missing documentation or lack of accreditation. From the remaining bids, 1,831 offered prices that were not low enough, and the remaining 1,335 suppliers won bids, he said (Dallas Morning News, 5/6).

Acting CMS Administrator Kerry Weems said that the agency examined business plans and capacity of each winning bidder to ensure they could provide equipment to beneficiaries. He also said that the competition would drive savings for beneficiaries, who pay 20% of the cost of their equipment.

At the hearing, Tom Ryan, a former chair of the American Association of Homecare, said that DME suppliers would be willing to take a reimbursement cut from Medicare if it meant that the program could end (CQ HealthBeat, 5/6). The association has been pushing Congress to delay the program, saying it will limit beneficiaries' access to equipment, reduce quality of services and punish providers offering high-quality service (Dallas Morning News, 5/6).

Weems, however, maintained that it is unnecessary to change the bidding rules (Edney, CongressDaily, 5/7).

Health Subcommittee Chair Pete Stark (D-Calif.) said it might be "simpler and much fairer" for CMS to reduce reimbursement rates and certify suppliers. He added that delaying the program for one year would cost $3.5 billion over five years and $6 billion over a decade (CQ HealthBeat, 5/6). Completely ending the program would cost $6 billion over five years and $20 billion over 10 years.

Stark said he does not plan to "wipe the slate clean." He added that while it is not clear whether Congress will take action on the program this year, it "will definitely do it next year" (CongressDaily, 5/7).