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Medical Suppliers Afraid of New Bid Squeeze

  • Published: 2009-04-08 (Rev. 2010-06-24) - Contact: Jason Monroe
  • Synopsis: New Medicare regulation will require companies in the home medical equipment sector to bid competitively for Medicare business.

Main Document

On January 16, 2009, CMS issued an interim final rule which would establish a durable medical equipment competitive bidding program on April 18, 2009.

The Medicare Modernization Act of 2003 established the competitive bidding program for durable medical equipment. However, initial implementation of the program was poorly executed by CMS. The process shut out many DME providers, thus limiting access to durable medical equipment for beneficiaries. This is why Congress mandated an 18-24 month delay to the competitive bidding program in the Medicare Improvement for Patients and Providers Act that was enacted on July 15, 2008.

On January 16, 2009, CMS issued an interim final rule which would establish a durable medical equipment competitive bidding program on April 18, 2009. The agency's rush to implementation provides no opportunity for public comment and subverts the will of Congress. The interim rule will have a detrimental effect on the quality and access to care for beneficiaries of durable medical equipment.

This new Medicare regulation will require companies in the home medical equipment sector to bid competitively for Medicare business. And many small companies can't offer prices as low as some larger ones that deal in much higher volumes of goods. The competitive bidding program is part of the Medicare Modernization Act of 2003, which was supposed to save Medicare and taxpayers $1 billion annually by 2010 (it didn't). The program was slated to start in 2007, but Congress put the brakes on the program last year because of problems in 10 initial test markets. Those problems were addressed, and the program will be restarted in phases this year.

The problem is half of most medical equipment providers' revenue comes from Medicare. One local medical supplier said, "It's designed to get rid of small, local businesses. If you do win a bid, you have to increase your staff to cover the wide service area, and we don't have that kind of budget." An online supplier, JRS Medical stated, "bring on the bidding process, online retailers are designed to be more cost effective and it should bring in new business."

Only time will tell if this new rule actually saves the American taxpayers money.







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