Monday, March 12, 2012

Medicare Competitive Bidding: Little Saving for Taxpayers, Big Headaches for Consumers

by Allan Friedman, CFILC's Technologies Manager

Not much has changed in the year since Medicare's Competitive Bidding program for Durable Medical Equipment, Prosthetics, Orthotics and supplies (DMEPOS) was launched in nine municipal areas, including Riverside-San Bernardino-Ontario in California, except for the fact that in the Riverside-San Bernardino-Ontario metropolitan area, now just 37 service providers for power wheelchairs are serving the same geographic area that previously had 375 companies for consumers to choose from.  Some consumers now have quite a few miles to travel for services.

The program, which is supposed to reduce the cost of DMEPOS that Medicare pays for, has been effective.  It the nine communities where the program pilot launched in 2011, DMEPOS costs have dropped 5.6%.  But unintended consequences which the home healthcare industry and consumer advocates warned about have also come to pass. 

Small businesses, which provided a variety of AT devices and home healthcare products, have been driven out of business by larger companies, often providing service in communities where they have no physical presence. Many "mom and pop" companies that did not win contracts for big ticket items have been forced out of business as their customers have been forced to get their equipment from the one or two vendors who won contracts for their area.

Consumers have had extended hospital stays while waiting to get their AT, have had to wait for deliveries by mail, make arrangements with multiple vendors for various products, and have lost services once provided by vendors they had an established relationship with, all due to the bidding process.

In short, the competitive bidding process has reduced cost for Medicare at the expense of consumer choice, access and quality.
The American Association for Homecare and others have proposed an alternative, urging Congress to enact the Market Pricing Program (MPP), a reform of the pricing system that is an alternative to the competitive bidding process now in place and scheduled for expansion next year.

The Market Pricing Program would establish fair market pricing for several categories of equipment through a proper auction process.  Using smaller geographic areas, the prices would be more in line with actual costs in each region and allow many more vendors to participate in the program.

One of the most important actions consumers can take to support this alternative is to add their testimony to stories already collected which demonstrate the difficulties caused by the competitive bidding process. is collecting stories to share with legislators and others.  If you or someone you know has had problems getting DME or home healthcare supplies as a result of the changes instituted in January 2011, then go to and share your story.  This is the best way to demonstrate to legislators that the bidding program is harming, rather than helping consumers and the saving realized by competitive bidding are more than offset by the delays and difficulties the program has caused.

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