Officials defend new Medicare purchasing program

By Allison Bell

June 14, 2013

Medical equipment makers and distributors are lashing back at Medicare managers' efforts to hold down Medicare skilled nursing facility supply costs.

Nursing facility suppliers are lobbying to keep the Centers for Medicare & Medicaid Services (CMS) from expanding the Medicare Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Competitive Bidding Program July 1.

CMS has been testing the program in nine markets, and it says the program helped it cut prices for the products purchased by an average of 45 percent. CMS wants to start using the same approach to purchasing in 91 markets.

Equipment suppliers are arguing that expansion of the new Medicare bidding program will be devastating for the suppliers and may lead to supply shortages for patient.

The competitive bidding program came up today at a hearing on Medicare post-acute care payments organized by the House Ways and Means health subcommittee.

Rep. Adrian Smith, R-Neb., questioned whether reports of average savings of 40 percent or more are realistic.

"You've got to make sure these are legitimate bids," Smith said. "I just don't know you cut someone 40 percent."

Jonathan Blum, the Medicare program director, said he and other CMS officials believe the bidding program is necessary because Medicare now pays more for medical equipment than commercial insurers typically pay.

The bidding process itself should help Medicare program managers screen the sellers and detect fraud, Blum said.

Despite predictions that the bidding program would lead to chaos in the nine DMEPOS test markets, "that hasn't happened," Blum said. "We have not seen the disruption that the industry predicted would happen."

Mark Miller, executive director of the Medicare Payment Advisory Commission, said Medicare should address any shortages or other problems that crop up by finding specific ways to handle those problems, not by letting all suppliers throughout the country keep their current high profit margins.

Medicare does not normally pay for what is technically defined as long-term care (LTC), but it does pay for similar types of services for Medicare enrollees who need complicated medical care, or who are still recovering from the effects of acute medical problems.

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