States could potentially save millions if they adopted the Medicare competitive bidding payment amounts to purchase medical equipment instead of the higher Medicaid fee schedule amounts, according to a recent report from the Department of Health and Human Services Office of Inspector General (OIG).
But applying the Medicare competitive bidding process to state Medicaid programs might cause concern for the companies that currently provide the equipment and services.
[See also: CMS competitive bidding set to expand but DME industry still concerned]
The Obama administration’s fiscal 2014 proposed budget seeks to limit federal reimbursement for state Medicaid spending on medical equipment, such as oxygen and wheel chairs, to what Medicare would have paid.
In July, the Medicare durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) Competitive Bidding Program expanded to cover 100 metropolitan areas across the nation. The program is meant to reduce the costs for certain supplies for Medicare patients.
The HHS auditor compared the fee-for-service fiscal 2011 payment amounts for 32 medical equipment items covered under both the Texas Medicaid program and Medicare DMEPOS competitive bidding in the Dallas/Fort Worth area. Texas Medicaid spent about $12 million.
“If it had used the payment amounts from the Medicare competitive bidding program, Medicaid could have saved approximately $2 million,” said Stuart Wright, deputy inspector general for evaluations and inspections, writing in the report, adding that its “…findings provide a tangible example of potential state and federal savings.”
About 75 percent of the potential savings, or $1.5 million, came from the cost of just five items—oxygen, blood glucose, power wheelchairs, lancets and hospital beds, the report said.
In the first round of the Medicare purchasing program in nine regions, it reduced costs for Medicare patients for certain supplies an average of 45 percent, the Centers for Medicare and Medicaid Services has said. In the first year of operation in the nine areas it was tested, Medicare saved about $202.1 million. CMS expects to save $25.7 billion and beneficiaries $17.1 billion between 2013 and 2022.
However, some industry groups, like the National Association for Support of Long-Term Care, believe the lower costs in the Medicare competitive bidding program have affected patient access to equipment, provider quality of care and the companies supplying the products.
For example, supplying enteral nutrition or tube feeding for nursing facility residents requires that the supplier be able to track various formulas and to interact with a facility’s clinical staff to make sure that patients receive the proper formulas ordered by their physicians, said David Lefkowitz, NASL medical products committee chair and director of customer relations for Stonebridge Medical, in a June news release about cutting DMEPOS rates.
“Providing enteral nutrition involves more than just selecting a product listed on the Medicare fee schedule and delivering it to a provider,” he said in the release. “It appears that the government’s zeal for cost savings may have obscured its view of what is actually required to provide quality care.”
The American Association for Homecare (AAHomecare) has worked on a number of steps to slow the momentum of rate cuts. It also tried unsuccessfully this summer to block Medicare's July expansion of the competitive bidding program because of licensing irregularities by filing a lawsuit alongside a Maryland home medical equipment provider.
However, the HHS OIG said last month that it would conduct a “limited scope” investigation at the request of lawmakers into the Medicare competitive bidding program in four states where questions were raised about the possibility that improperly licensed suppliers had won contracts. The states are Maryland, Michigan, Ohio and Tennessee.
In an Aug. 22 letter to Reps. Glenn Thompson (R-PA) and Bruce Braley (D-IA), who have been critical of the Medicare competitive bidding program and requested the investigation, HHS Inspector General Daniel Levinson said that his office “…will determine how CMS applied state licensing requirements under Round 2 of the competitive bidding program in these states to suppliers that were awarded contracts.”