Despite up to $26B in projected savings, bidding program still questioned
Medicare’s competitive bidding program for durable medical equipment showed promise in saving money, but critics still worry about its long-term sustainability and impact on the overall industry.
Prices secured through the early stages of the bidding program were, on average, 35% lower than the prices in the CMS’ 2010 fee schedule that were based on historic supplier charges, a new study published in Health Affairs found. The CMS anticipates that will translate to $25.7 billion in federal savings from 2013 through 2022, while Medicare beneficiaries will collectively save an additional $17.1 billion.
The CMS’ negotiated prices were an average of 8.1% lower than commercial insurers generated.
Supporters say the Durable Medical Equipment, Prosthetics, Orthotics and Supplies Competitive Bidding Program, which began in 2011, could continue to save the government billions. Advocacy groups, including AARP, as well as the Government Accountability Office, said they haven’t seen the bidding program harm access, which has been a point of contention.
In March, the CMS halted plans to expand the program in 2019 after critics contended that it encourages bidders to offer only the lowest-cost products rather than what’s most needed. They also argued that the process lacks transparency and does not adequately assess the financial strength of companies that receive contracts.
“The American Association for Homecare will work to make sure that the industry’s concerns about the bidding program—an initiative that is putting long-time (home medical equipment) companies out of business, reducing beneficiary access, and resulting in reimbursement rates below provider costs—are effectively presented to the CMS,” the group said in a statement.
HHS Secretary Dr. Tom Price has voiced his long-held concerns with the CMS’ competitive bidding process. As a congressman, Price introduced a bill in 2015 that aimed to amend the bidding process, address concerns about rural access and establish an auction process based on “market prices” rather than the median price.