DME competitive bidding saves $202M, spreads nationwide

The Centers for Medicare & Medicaid Services will dramatically expand a program that encourages competitive bidding for durable medical equipment (DME), The New York Times reported.

The program, which had been in the pilot program stage in nine major metropolitan areas, had dramatically cut costs for items such as diabetes testing equipment, which presumably cut hospitalizations. However, some smaller durable medical equipment firms had complained that they could not compete with larger companies. Some hospitals that dispense DME also presumably had lower margins in that segment.

According to a report by U.S. Department of Health & Human Services Secretary Kathleen Sebelius, the competitive bidding program cut Medicare's costs of durable medical equipment in the nine markets by 42 percent, for a total of $202 million. CMS predicted rolling out the program nationwide would save up to $42.8 billion a year, the agency said last week in a statement.

As a result, competitive bidding will be expanded to 91 more metropolitan areas throughout the United States, for 100 in total.

However, DME's major trade group, the American Association for Homecare, is objecting to the expansion, the Times reported.

"The bidding program steeply and artificially reduces the number of home medical equipment providers allowed to serve Medicare patients," Michael Reinemer, an AAH vice president, told the newspaper. "Cutting spending yet again in this one sector will translate into greater spending in other areas--more emergency room visits, longer hospitalizations and more nursing home admissions."

To learn more:
- read the New York Times article
- here's the CMS announcement
- check out the report (.pdf)