Ignoring months of protests, the Centers for Medicare & Medicaid Services (CMS) announced Friday the next steps for a major expansion of a competitive bidding program designed to help lower costs for quality durable medical equipment, prosthetics, orthotics and supplies. Advocacy groups, economists and members of Congress have objected to the program, claiming it results in reduced access to care and higher costs.
The competitive bidding program uses competitions between suppliers to set new, lower payment rates for certain medical equipment and supplies such as oxygen equipment, walkers and some types of power wheelchairs.
"We're taking steps that will save Medicare, seniors and taxpayers $28 billion over 10 years," said CMS Administrator Donald M. Berwick, MD in a statement. "Medicare is paying much more than the private sector for equipment like wheelchairs and walkers. By expanding our successful competitive bidding program, we can ensure that Medicare pays a fair rate for these goods."
The first phase of the program was implemented for nine product categories in nine areas of the country on January 1, 2011.
CMS says that to date, round one of competitive bidding has yielded savings of 35 percent compared to the fee schedule. Inquiries in the first quarter of 2011 totaled less than 0.9 percent of calls to the Medicare call center, and Medicare received 45 complaints during that time.
As required by law, CMS will conduct the second phase of the program for a similar set of products in 91 major metropolitan areas. Competition begins this fall, and the new prices will be in effect on July 1, 2013.
From a beneficiary standpoint, there will be no immediate effect in areas where the program is expanding. Beneficiaries may continue to use their current suppliers at this time. Similar to the implementation of round one of the program, CMS will conduct outreach to beneficiaries in the round two areas prior to the new program taking effect.
"The success we've had in the first phase tells us that we can achieve these savings with no disruption for patients' access and no negative effect on patients' health," said Jonathan Blum, deputy CMS administrator and director of the Center for Medicare in a statement. "We remain confident in our bidding methodologies that will produce tangible savings while ensuring adequate choice of qualified suppliers."
Not everyone agrees that the CMS bidding program is a success. For months, several economists, consumer groups and members of Congress have gone on record to oppose the program, citing reduced patient access to care, flaws in the program design and impact on local jobs.
[See also: Proposed bill would eliminate Medicare competitive bidding program; Medicare's competitive bidding program disappoints.]
"There's a reason why more than 30 patient advocacy groups, 244 economists and auction experts and 145 members of Congress oppose this program: it undermines quality of care and it increases costs," said Tyler J. Wilson, president of the American Association for Homecare in a press release. "Because of this bidding program, beneficiaries will spend more time in expensive institutions, rather than in the far more cost-effective setting for care - their own homes."