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Medicare adviser supports expanding competitive bidding for medical equipment

A congressional Medicare adviser supports expanding the Centers for Medicare and Medicaid Services' authority to use competitive bidding strategies for all durable medical equipment.

Nearly every member of the Medicare Payment Advisory Commission, or MedPAC, agreed during a Sept. 5 meeting that CMS should be able to expand the competitive bidding program the agency uses for certain products to include all durable medical equipment, prosthetics, orthotics and supplies. Commissioners also supported expanding the competitive bidding program to other aspects of Medicare, including services and treatments.

MedPAC advises Congress about potential payment rate and policy changes for Medicare, the federally run health insurance program for people who are 65 and older, have certain disabilities or end-stage renal disease. The commission delivers a March and June report to Congress with its recommendations; it does not have legislative authority.

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The competitive bidding program, which was established in 2003 and phased in beginning in 2011, allows suppliers in a given geographic area to submit bids to CMS for certain products or categories of products. The agency then offers suppliers contracts according to best prices and financial and quality requirements, according to CMS.

CMS temporarily paused the program and allowed all contracts to expire Dec. 31, 2018, according to the agency's website. New contracts are scheduled to take effect Jan. 1, 2021.

Brian O'Donnell, a policy analyst for MedPAC, said during his presentation that the program was established to lower Medicare rates that were significantly higher than rates of private insurers. Rates for products not currently in the program are based on prices from 1986 and 1987 plus inflation and other information, according to O'Donnell.

O'Donnell added that the excessive costs still being offered for certain products under the traditional fee-for-service model encourage abuse and fraud.

The U.S. Department of Justice announced April 9 charges for 24 individuals in a durable medical equipment fraud scheme that totaled $1.7 billion. O'Donnell highlighted the case in his presentation.

O'Donnell said competitive bidding has substantially decreased Medicare spending for products in the program.

Medicare spending for all products in the competitive bidding program declined from $7.5 billion in 2010 to $2.8 billion in 2017, according to data presented by MedPAC. Spending for products that were not included in the program increased from $3.3 billion in 2010 to $4.7 billion in 2017, according to the data.

CMS currently has the authority to use this program only for a select number of products. However, the commission supported extending this authority to all products categorized as durable medical equipment, prosthetics, orthotics and supplies due to the success of the program.

Multiple commission members stressed that CMS will still need to follow certain safety and quality safeguards if its authority is extended.

MedPAC commissioners also agreed that CMS could use the competitive bidding strategy for certain services like hip replacements or diabetes care.

"This is a program that has worked, and I think it is worth examining to see if it can be replicated," said James Matthews, executive director of MedPAC.

Pat Wang, MedPAC commissioner and president and CEO for Healthfirst Inc., a not-for-profit health insurer in New York, said the competitive bidding program makes sense for commodities, but the program may not be easy to replicate for healthcare services and treatments.

Commissioner Kathy Buto said the competitive bidding program allows for more purchasing power, adding that it has a broader application "than just durable medical equipment."