HCFA is set to begin its first competitive-bidding demonstration project covering five types of medical equipment and supplies later this year in Polk County, Fla. But the agency already is encountering resistance from equipment suppliers.
Last year's balanced-budget law called for several such pilot projects. The Florida demonstration is slated to cover oxygen supplies and equipment, hospital beds, surgical dressings, nutritional products and urological supplies. Those five items account for about half of Medicare spending on equipment and supplies.
Bids will be solicited this fall. At that point, HCFA will choose a reimbursement rate. All bidders below that rate will be allowed to participate in Medicare, and all those above it will be barred from Medicare.
That could mean a number of suppliers will go out of business, said William Coughlan, president of the National Association of Medical Equipment Suppliers.
"I don't see how this will improve access to services or the quality of care," Coughlan said.
Later this year, HCFA is scheduled to release outlines of the bids, including the quality standards. At that point, the association may consider legal action to halt the demonstration, Coughlan said.
In 1997 Polk County's 4,500 Medicare beneficiaries received about $6.6 million for the five categories of equipment and supplies covered in the pilot project. No estimate of HCFA's anticipated savings was available.