Durable Medical Equipment Competitive Bidding Program Keeps Scooting Along

HHS Secretary Kathleen Sebelius boasted in a recent HHS News Release that the durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program, which began in 2011, saved the Medicare Part B program $202 million in the first year.  CMS’ Office of the Actuary estimates that the Part B program will save $25.7 billion between 2013 through 2022, during which time beneficiaries will save around $17.1 billion, according to the report. 

To put these amounts into context, back in 2010, Medicare and beneficiaries paid around $14.3 billion for DMEPOS.  Fifteen and a half million beneficiaries used DMEPOS.  The competitive bidding program was created under the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 (P.L. 108-173) to help curtail excessive prices and program abuse with regard to Part B DME, enteral nutrition, and off-the-shelf orthotics.  The Medicare Improvements for Patients and Providers Act (MIPPA) of 2008 (P.L. 110-275), the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148), and the Health Care and Education Reconciliation Act (HCERA) (P.L. 111-152), both enacted in 2010, further amended the program.  The previous implementation of the program in 2008 was called off after only 2 weeks in operation. 

The current program, which began on January 1, 2011, covers 2.3 million beneficiaries in 9 metropolitan statistical areas (MSAs): (1) Charlotte-Gastonia-Concord, in North and South Carolina; (2) Cincinnati-Middletown, spanning Ohio, Kentucky, and Indiana; (3) Cleveland-Elyria-Mentor, Ohio; (4) Dallas-Fort Worth-Arlington, Texas; (5) the Kansas City area, Missouri and Kansas; (6) Miami-Fort Lauderdale-Pompano Beach, Florida; (7) Orlando, Florida; (8) Pittsburgh, Pennsylvania; and (9) Riverside-San Bernardino-Ontario, California.  Nine DMEPOS product categories are included in the program: oxygen supplies, standard power wheelchairs and scooters, complex rehabilitative power wheelchairs, mail-order diabetic supplies, enteral nutrients and equipment, Continuous Positive Airway Pressure (CPAP) and Respiratory Assist Devices (RADs), hospital beds, and walkers.  In Miami, support surfaces are also covered.

The bulk of the savings came from oxygen and oxygen supplies, mail-order diabetic supplies, and standard power wheelchairs.  The program resulted in lower prices and a reduction in unnecessary services.  The program is helping to eliminate stockpiles of supplies beneficiaries may have wound up with previously.  A phone survey of beneficiaries who had used diabetes test strips and CPAP supplies prior to the program’s initiation and had ordered no supplies all during 2011 found that, in most cases, they had more than enough supplies on hand to last for months and did not need replacements.

The out-of-pocket costs for beneficiaries in the form of co-insurance has also been reduced.  For instance, beneficiaries saved between $72 and $105 on hospital bed rental, between $10 and $14 per month on oxygen concentrator rental, and from $128 to $140 for diabetic test strips order through the mail.

Probably the most surprising result from the report was the lack of problems with its implementation.  According to the news release, “there have been no negative effects on the health of people on medicare or their access to needed supplies and services.”  The real-time claims monitoring system which was set up to make sure that access to supplies was not compromised watches for changes in key secondary indicators since implementation, such as hospital admissions, emergency room visits, physician visits, and admissions to skilled nursing facilities.  The monitoring system has found that the program has not hindered access to necessary and appropriate items and services and, in fact, has curbed inappropriate use of mail-order diabetes and CPAP supplies.  A comparatively low number of complaints have been made by beneficiaries since the beginning of 2011 regarding the program.  Out of the 2.3 million beneficiaries residing in the MSAs included in the program in 2011, 127,466 inquiries were received by the 1-800-Medicare call center regarding the competitive bidding program.  Only 151 of those calls were complaints. 

The program continues this year, with the addition of another 91 MSAs to the program, as well as a national mail order program for diabetic testing supplies.  By 2016, the program will include all areas of the country.