The federal government has deemed a pilot Medicare competitive bidding program for durable medical equipment like wheelchairs and diabetes supplies a success and plans to expand it.
The pilot, which was rolled out in nine cities that included Cleveland, Dallas and Pittsburgh, saved consumers in those cities $200 million on medical supplies through lower prices and fewer unnecessary services, according to a new report from the Centers for Medicare & Medicaid Services (CMS).
CMS considers the program such a success that it’ll expand it to 100 cities next year and eventually plans to have the entire U.S. participate.
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Fueling part of CMS’ claims about the program’s positive impact is that just 151 complaints were filed among the 2.3 million Medicare consumers who live in the nine geographic areas covered in the program, according to CMS.
However, the durable medical equipment industry — which has long opposed the competitive bidding program — didn’t react kindly to the report.
“With respect to the number of complaints, (the report’s) information is downright laughable,” a lobbyist for the American Association for Homecare told the Associated Press. “It defies logic.”
Calls to the American Association for Homecare didn’t go through.
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However, the group earlier this month released a statement that blasted the program’s effects in the Pittsburgh market. The home care group said the competitive bidding program has led some Pittsburgh-area medical suppliers to lay off workers or close up their businesses entirely, and has resulted in delays for Medicare patients who’ve ordered medical supplies.
“CMS has used the bidding process to cut prices to unsustainable levels while significantly reducing the number of providers allowed to care for Medicare patients,” the American Association for Homecare said.
Too bad, says CMS. The competitive bidding program will be rolled out to the entire country by 2016, and it could save up to $42.8 billion for taxpayers and beneficiaries over the next 10 years, according to the agency.
It’s worth noting that Invacare (NYSE:IVC), one of the leading home health products suppliers in the U.S., said last year that it anticipated the competitive bidding program would have no impact on its 2011 financial results. However, at that time the program was only live in nine markets, so that certainly doesn’t mean competitive bidding won’t have a far greater impact on the company once the program spreads.
An Invacare spokeswoman didn’t immediately return a call.
Under competitive bidding, medical equipment suppliers in each market bid what they will charge for equipment in specified categories. The bid winner becomes the Medicare supplier in that market.
It is replacing a system that relies on a fee schedule to determine what Medicare pays for equipment.
Following are the nine medical equipment categories that are included in the program: oxygen supplies, standard power wheelchairs, complex power wheelchairs, mail-order diabetic supplies, tube-feeding supplies and equipment, sleep apnea machines and equipment, hospital beds, walkers, and certain types of mattresses.
