Competitive DME bidding could save CMS $1B

A new CMS analysis suggests that its new competitive bidding program for Medicare DME suppliers might save $1 billion in 2009 alone. Right now, CMS pays for DME under a listed price, but under the program, DME companies will be required to submit bids, allowing CMS to choose based on cost and volume, or on potential savings. The program was mandated by the 2003 Medicare law. So far this year, the program is operating in 10 of the largest metro areas, and applies to 10 of the top DME, prosthetics, orthotics and supplies product categories. However, next year, CMS expects to expand to an additional 70 metro areas, and will add additional product categories to the competitive bidding list.

Critics say the program potentially could put too much of a squeeze on suppliers, possibly limiting patient access to equipment. They're also arguing that such bidding could eliminate smaller suppliers from the game. However, CMS Acting Administrator Kerry Weems says that small suppliers with gross annual revenue of $3.5 million or less accounted for 64 percent of companies winning contracts. Weems didn't address whether such a program would cut down on Medicare fraud, but that might be on his mind too.

To learn more about this debate:
- read this Kaiser Daily Health Policy Report item

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