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Medicare Competitive Bidding Pilot Reduced Costs by 42%, CMS Says

A year-long Medicare competitive bidding pilot program conducted in nine metropolitan areas reduced costs by 42%, or $202 million, without reducing care quality, according to a CMS report released on Wednesday, the New York Times reports (Pear, New York Times, 4/18).


Congress in 2003 ordered CMS to establish the Durable Medical Equipment, Prosthetics, Orthotics and Supplies competitive bidding program.

The federal health reform law expanded the program, under which DME suppliers offer bids to provide certain equipment for Medicare in competitive bidding areas. CMS uses the bids to set reimbursement rates.

Study Details

For the study, CMS monitored the health of beneficiaries likely to use home equipment in the nine pilot areas and compared them with beneficiaries living in similar areas that were not part in the competitive bidding pilot (Alonso-Zaldivar, AP/Washington Times, 4/18).

The report found "no negative effects on the health of people on Medicare or their access to needed supplies and services" (Pecquet, "Healthwatch," The Hill, 4/18). In addition, the report found that CMS received just 151 calls from beneficiaries who were dissatisfied with the program in 2011, and just six in the last quarter of the year (Kennedy, USA Today, 4/17).

Jonathan Blum, director of the Center for Medicare at CMS, noted that beneficiaries in the pilot had similar mortality rates and use of hospitals, physicians and nursing homes as the rest of the country (New York Times, 4/18).

According to HHS Secretary Kathleen Sebelius, the pilot program secured lower prices and reduced "inappropriate utilization" of personal medical equipment (New York Times, 4/18).

Association Expresses Dissatisfaction With Program

The American Association for Homecare disputed CMS' findings, "Healthwatch" reports.

AAHC officials said they have received "reports from hundreds of Medicare patients about difficulty finding local equipment and service providers, delays in obtaining medical required [durable medical equipment], and fewer choices when selecting equipment and providers" ("Healthwatch," The Hill, 4/18).

AAHC spokesperson Michael Reinemer said the bidding program pushes prices too low and forces many providers out. He added, "We believe it will translate to greater costs in other areas, such as emergency room visits and nursing home stays. People won't be able to get access" (USA Today, 4/17).

Expansion Ahead

Citing the success over the last year, CMS officials announced plans to expand the competitive bidding program to 91 additional markets over the next year, the Times reports (New York Times, 4/18). The agency said that expanding the program nationwide would save beneficiaries $17.1 billion and the Medicare trust fund $25.7 billion over a decade (USA Today, 4/17).

However, not everyone is satisfied with the program, the Times reports.

Rep. Glenn Thompson (R-Pa.), who has introduced a bipartisan bill (HR 1041) to repeal the competitive bidding program, said he does not question that CMS achieved savings in the last year. "However, the perceived savings will come at a much greater cost when this flawed program goes nationwide," Thompson said (New York Times, 4/18).

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