CMS reports Medicare savings with DME program

Medicare patients can anticipate paying considerably less for their diabetes and other products starting in July when the Centers for Medicare & Medicaid Services (CMS) expands its competitive bidding for durable medical equipment (DME) and mail-order program. However, the DME industry continues to point out problems with the program.

CMS piloted the first round of the program in nine regions, where it reduced costs for certain supplies an average of 45 percent for Medicare patients. The agency said it would widen the program to 91 metropolitan areas across the nation for Round 2, which is scheduled to begin on July 1.

A national mail-order program, starting at the same time, is expected to save Medicare beneficiaries an average of 72 percent on diabetic testing supplies purchased through the competitive mail-order contracts program, CMS has said. Diabetes supplies include blood glucose test strips, meters and lancets.

The Medicare program will save $25.7 billion and beneficiaries $17.1 billion between 2013 and 2022, CMS said when it announced at the end of January the program’s expansion. In the first year of operation in the nine areas it was tested, CMS said Medicare saved about $202.1 million.

While CMS appears happy with the results it is seeing with the competitive bidding program, some in the DME industry continue to air concerns.

The CMS bidding system is far from competitive, according to Tyler Wilson, president of the American Association for Homecare (AAHomecare), which represents providers of home medical or durable medical equipment and has been a critic of the program.

“This is not a competition or an auction, this is arbitrary price setting that bears no relation to providers’ costs for doing business,” he said in a Feb. 5 statement.
Additionally, others in the industry believe the lower costs in the pilot round of the program affected access to some products for Medicare patients.

“We think the expansion will exacerbate problems we saw in Round 1,” said Andrea Bergman, senior director of legislation and health policy at McDermott, Will and Emery, a law firm representing Diabetes Access to Care Coalition, which includes product manufacturers, chain drug stores, community pharmacies and diabetes educators. For example, she said, diabetes testing products priced at $14 were so low that it drove suppliers to narrow their offering.

And some of the products that seniors were accustomed to using were no longer available in that market, such as products made with larger screens or with better lighting for those with poor eyesight.

“They were offering fewer and lowest-cost products, which makes sense from a business perspective,” she said. With prices in the program likely to continue to fall, she doesn’t expect participating suppliers to purchase brand-name products that might be more innovative.

“We would like CMS to establish a single payment amount that more accurately reflects value,” she said.

CMS has said that the pilot program maintained beneficiary access to quality products from accredited suppliers. The agency said it used real-time monitoring data that showed very few beneficiary complaints and no negative impact on beneficiary health status compared with non-competitive bidding areas.

“We will continue to monitor the program closely as it expands to ensure the same success we saw in the program last year, with beneficiaries continuing to have access to all the services they need, while paying a much lower price,” said Jonathan Blum, deputy CMS administrator and director of CMS’ Center for Medicare, in an agency statement.