Lawmakers Discuss Delaying Medicare Durable Medical Equipment Bidding Program

Sens. Debbie Stabenow (D-Mich.) and George Voinovich (R-Ohio) on Friday circulated a letter in the Senate seeking support for legislation that would delay a competitive bidding program in Medicare for durable medical equipment, CongressDaily reports. The program is scheduled to begin on July 1 (Edney, CongressDaily, 6/9). CMS will select DME suppliers to participate in Medicare based on bids they submit. The 2003 Medicare law mandated the program as part of a larger effort to implement competitive bidding.

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. The program likely will result in an average 26% decrease in the prices of medical equipment in the 10 MSAs, according to CMS (Kaiser Daily Health Policy Report, 5/7).

The bidding program is facing criticism in part because more than half of suppliers who placed bids were disqualified because they were missing paperwork, according to CongressDaily. The draft letter by Stabenow and Voinovich states, "The vast majority of rejected bidders were informed that they had not submitted sufficient financial information, when in many cases, bidders argue they had" (CongressDaily, 6/9). In addition, suppliers say that some of the businesses that won bids have little experience, which will reduce quality and services, the Washington Post reports (Lee, Washington Post, 6/10).

The senators asked their colleagues to sign the letter by Monday and are expected to present it to Senate and Senate Finance Committee leadership on Tuesday (CongressDaily, 6/9). A similar letter was sent to House Ways and Means Committee leaders. That letter, which was signed by 132 lawmakers, calls for legislation that would delay the program for at least a year.

Costs, Savings
CMS officials said that when the program is fully implemented, it would save about $1 billion of the $8.5 billion spent annually by Medicare on DME. The program would save about $125 million over the next year, according to CMS (Washington Post, 6/10). The Congressional Budget Office estimated that delaying the program for one year would cost about $3 billion over five years (CongressDaily, 6/9).

Ways and Means Health Subcommittee Chair Pete Stark (D-Calif.) said he plans to introduce legislation that would delay the program for 18 months. However, he said such a delay would come only if DME suppliers took a cut equal to the savings of the bidding program (Washington Post, 6/10). The American Association for Homecare, the trade group for DME suppliers, has agreed to take an across-the-board cut in order to delay the program, according to Walter Gorski, vice president of government affairs for the group. AA Homecare is still waiting for CBO to estimate the size of such a cut (CongressDaily, 6/9).

Informing Beneficiaries
CMS on Monday said it is sending letters to about four million beneficiaries in the 10 MSAs to inform them of the DME supplier changes, CQ HealthBeat reports. For some beneficiaries, this means they will have to find a new supplier. The letters include brochures that detail which products are included in the program and which companies were selected to supply them. According to CMS, beneficiaries can continue to use suppliers that are "grandfathered" in until the rental period for the product they supply expires. The letter says, "If your current supplier isn't listed, contact them for more information" (Reichard, CQ HealthBeat, 6/9).