CMS Says Medicare Competitive Bidding Program for Durable Medical Equipment Might Save $1B in 2009

Acting CMS Administrator Kerry Weems on Thursday said that a new Medicare competitive bidding program for durable medical equipment might save the program and beneficiaries $1 billion in 2009, the Cox/Miami Herald reports (Lipman, Cox/Miami Herald, 3/21).

In 2008, the program will operate in 10 of the largest Metropolitan Statistical Areas and will apply to 10 of the top durable medical equipment, prosthetics, orthotics and supplies product categories. In 2009, the program will expand to an additional 70 MSAs and will continue to expand in future years. The program also will apply to additional product categories in future years. CMS currently pays for durable medical equipment based on a listed price. Under the program, durable medical equipment companies will submit bids to CMS, which will select suppliers based on cost and volume or on the potential savings for Medicare beneficiaries. The 2003 Medicare law mandated the program as part of a larger effort to implement competitive bidding for CMS reimbursements (Kaiser Daily Health Policy Report, 4/3/07).

The program, scheduled to take effect on July 1, likely will result in an average 26% decrease in the prices of medical equipment in the 10 MSAs, CMS said (Cox/Miami Herald, 3/21). Medicare beneficiaries, who pay for 20% of the cost of medical equipment, will pay "substantially lower prices than they are paying now," Weems said. In addition, he said, "It's clear that we've been paying too much for medical equipment and supplies," adding, "We expect that when the program is (fully) implemented ... Medicare will save about a billion dollars a year in the cost of equipment and supplies."

CMS has received bids from more than 6,300 medical equipment suppliers and will announce the winners of contracts by May.

Some Concerns
A number of lawmakers -- such as Sens. Blanche Lincoln (D-Ark.) and Pat Roberts (R-Kansas) and Reps. John Tanner (D-Tenn.) and Phil English (R-Pa.) -- have sent letters to CMS that raise concerns about the effect of the program on access to medical equipment, the quality of services and the competitiveness of smaller suppliers (Young, The Hill, 3/20). Health care lobbyist Fred Graefe said, "If you're not one of the winners" of a contract, "you're going out of business." In addition, he said that Medicare beneficiaries would "end up with 10 suppliers with 10 different monthly copays and 10 different people to call" for medical equipment (Carey, CQ HealthBeat, 3/20).

Weems said that Medicare will provide beneficiaries with "nationally known, brand-name, quality products." In addition, he said that small medical equipment suppliers, which CMS defines as suppliers with gross annual revenue of $3.5 million or less, accounted for 64% of those that won contracts (The Hill, 3/20).

Obligations for Private Plans
In other Medicare news, CMS has released a final "call letter" with a list of obligations for sponsors of private health and prescription drug plans that seek to enroll beneficiaries in 2009, CQ HealthBeat reports.

The letter states that CMS plans to increase oversight of the marketing of the plans. According to the letter, CMS will begin to require the use of standardized language in marketing materials for such plans, reject materials that contain "substantive grammatical errors," retrain staff members who review the materials and establish a "secret shopping" program to detect marketing violations.

In addition, CMS will require plan sponsors to test brokers and sales agents on their knowledge of Medicare requirements and the plans that they market. Plan sponsors also must send materials that detail the current coverage of Medicare beneficiaries and expected changes for the next year in a single mailing before the open enrollment period in which beneficiaries can switch plans, according to the letter. In addition, cost-sharing amounts charged by the plans cannot exceed the amounts charged by traditional Medicare for renal dialysis, Part B medications and skilled nursing facility care, the letter states (CQ HealthBeat, 3/20).