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Don't expand Medicare DME bidding program, CMS told

Don't expand Medicare bidding program, CMS told

By Virgil Dickson
Posted: April 4, 2014 - 3:30 pm ET

Devicemakers and lawmakers are asking the CMS to not move forward with plans to expand Medicare's competitive bidding program for durable medical equipment, an initiative that both the government and advocates say can reduce costs by billions without cutting access to equipment for beneficiaries.

The CMS estimates the program has saved Medicare $400 million the first two years of operation and projects it will save another $17.2 billion for beneficiaries and $25.8 billion for the Medicare program over the next 10 years. The Patient Protection and Affordable Care Act mandated an adjustment to the fees being paid for durable medical equipment beginning Jan. 1, 2016.

In late February the CMS issued a request for comment outlining an idea to use pricing information from durable medical equipment now purchased through competitive bidding to inform what it will pay for products not currently purchased through the program.

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Although DME suppliers have fought aggressively to pull the plug on the approach before and since its launch, the CMS and some observers say there have been few complaints from beneficiaries.

“Although there was some concern about the impact that implementation of these provisions could have on beneficiaries, preliminary indications are that beneficiary access to (durable medical equipment) and health outcomes have not been adversely affected by the competitive bidding program,” the AARP said in a policy document. “Competitive bidding should be used for pricing all (durable medical equipment), as long as quality and access are not compromised by the competitive bidding process.”

Decreased costs for the government also translates to savings for the beneficiaries that have cost sharing obligations as part of the Medicare coverage, according to Roger Feldman, professor of health policy and management at the University of Minnesota.

“This in my book is a win-win situation for both the government and taxpayers,” Feldman said.

The Center for Medicare Advocacy, an organization that helps ensure seniors have access to coverage and treatment, and the Commonwealth Fund, a liberal think tank, also said they've seen minimal impact on access and support the expansion of the competitive pricing program.

However, lawmakers on both sides of the political aisle have asked the CMS to put plans to expand the program on ice, arguing it lacks transparency and fails to vet the financial strength of companies getting the contracts. HHS' inspector general's office launched a review of the program after receiving a request last year from Reps. Glenn Thompson (R-Pa.) and Bruce Braley (D-Iowa).

“It would be unwarranted to move in a direction that expands the program to non-competitive bid areas, prior to the findings of the investigation,” the lawmakers said in a March 27 letter to CMS Administrator Marilyn Tavenner.

DME suppliers say the program is fostering a “race to the bottom” mentality, encouraging bidders to offer only the lowest-cost products, not the ones that are best suited for beneficiaries' needs, according to the Medical Device Manufacturers Association, a national trade group.

The trade group also says that the program has in fact meant beneficiaries are losing access to equipment and supplies they need, as well as experiencing difficulty finding new suppliers and poor service from winning bidders.

More than 2,800 Medicare beneficiary complaints were received between June 2013 and January 2014 according to VGM group, a national buying group for independent home medical equipment providers.

“We are concerned that these problems will continue as long as (competitive bidding) encourages bidders to offer unrealistically low bid prices in order to be eligible for a contract, even if they cannot furnish quality devices and services at that price,” the manufacturers association said.

Use of competitive bidding data to inform payment methodologies in non-competitive bidding may further reduce margins for suppliers and manufacturers of these technologies, according to the consulting firm Avalere Health.

Follow Virgil Dickson on Twitter: @MHvdickson

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