Lawmakers call for delay of DMEPOS program

Lawmakers on both sides of the aisle have asked CMS Administrator Marilyn Tavenner to delay the second-round implementation of Medicare's Durable Medical Equipment Prosthetics, Orthotics and Supplies (DMEPOS) competitive-bidding program, scheduled to take effect July 1.

Reps. Glenn Thompson (R-Pa.) and Bruce Braley (D-Iowa) have circulated a letter urging their congressional colleagues to press Tavenner to halt Round Two of the program through the end of the year.

DMEPOS, established by the Medicare Modernization Act a decade ago, was created to set more accurate payment rates for medical equipment and supplies by having suppliers submit bids to the CMS for equipment like wheelchairs, hospital beds and oxygen supplies for which it had historically overpaid, with the first round rolling out in January 2011. Round Two would add an additional 91 markets to the nine already included under Round One, as well as reimburse a single payment amount for diabetic testing supplies.

Nearly 150 other lawmakers have signed a May 17 letter, citing alleged problems with lack of transparency, lack of binding bids during the contract process, improper vetting of firms, and violations of state licensure and accreditation requirements. A number of industry groups that would be affected by the expanded competitive bidding program, including members of the Advanced Medical Technology Association (AdvaMed), support the delay.

But others want the program to move forward. “We're very encouraged by Round One results,” Stacy Sanders, federal policy director at the Medicare Rights Center, a beneficiary advocacy group, said.

The CMS credits the program with saving about $202 million on durable medical equipment in its first year, with an expected $25.7 billion in savings to the Medicare Part B Trust Fund between 2013 and 2022. Earlier this year, the CMS estimated that for Round Two, Medicare will pay, on average, about 45% less than its current fee schedule amounts for eight product categories including hospital beds, oxygen equipment, wheelchairs and scooters. Payment amounts for the national mail-order program for diabetic testing supplies are on average 72% less than fee-schedule rates.

Many health policy experts have recommended an expansion of competitive bidding as an essential part of reforming Medicare to control costs and reduce the program's long-term funding shortfall.

But many healthcare industry groups, as well as lawmakers argue that the program should not continue in its current form. Lobbying by industry groups long has blocked Medicare from using competitive bidding.

In a speech to the U.S. House of Representatives on Tuesday, Thompson said the competitive bidding process was anything but. “There was nothing competitive about it,” he said. “(It) was intended to reduce Medicare costs, ensure that beneficiaries have access to quality services. In practice, the system denies competition while worsening access to goods and services and harming seniors.”

Richard Price, senior vice president of payment and healthcare delivery policy for AdvaMed—a trade association that represents healthcare technology and device companies—agrees.

“We learned in the eleventh hour that CMS has awarded winning bids to suppliers who did not meet the requirements set out by CMS itself for bidders to actually participate in the bidding process, let alone the program,” Price said in an interview. “They've awarded contracts to bidders who are not licensed to provide services in the states for which they've been awarded contracts.”

Meanwhile, certain other suppliers who were licensed prior to submitting bids to the CMS did not win contracts. Price says this raises issues of access to care and access to products that physicians want their patients to have. “Suppliers who weren't licensed shut out other suppliers who were licensed,” Price said.

But other observers disagree that the program jeopardizes Medicare patients' access to critical medical equipment. Sanders said the Medicare Advocacy Center's national helpline for beneficiaries has not seen any increase in calls related to access concerns. If concerns arise, Sanders said there are appropriate safeguards in place to deal with them, including the competitive acquisition ombudsman office that was created to respond to and resolve related program inquiries and complaints.

“There's not enough evidence to suggest these access issues, these concerns—related to supplier bids, size of the bidding area—are going to come to fruition or the size and scope,” Sanders said.

Still, the American Association for Homecare, which represents healthcare providers, equipment manufacturers, and other organizations in the homecare field, would like to see the current program halted. “We've had longstanding concerns about the way it's being implemented,” said Tyler Wilson, president of the organization. “We've had many of these issues during Round 1. They've persisted and only grown on the run-up to Round 2.”

Follow Rachel Landen on Twitter: @MHrlanden