A bid program for Durable Medical Equipment(DME)?

Recently the Medicare Payment Advisory Committee (MedPAC) made payment policy recommendations for non-competitively bid Durable Medical Equipment. And if internal reports are to be believed, MedPAC plans to recommend that CMS shift more products away from the excessive fee schedule to bid rates.

Also, it plans to call for immediate reduced payment rates for certain non-CBP products, while CMS works on incorporating them into the CBP.

Alternatively, there are plans to recommend a policy option that would have CMS consider capping balance billing (specialty billing) at a percentage of the fee schedule rate and reduce the allowed amount by 5% for non-participating providers.

Shifting the Bidding Program can DMEs a fortune

A new research paper published in Health Affairs found that Medicare’s competitive bidding program is expected to save CMS $25.7 billion on durable medical equipment. This amount is calculated on a 10-year basis.  The program is expected to save about as much as what large commercial insurers save by negotiating with suppliers.

  • The research found out that the early stages of the Medicare Durable Medical Equipment Billing; Competitive Bidding Program resulted in an average of 35% lower prices than the CMS’ 2010 fee schedule, which is how CMS determined payment for DME before the bidding program.
  • The authors found ‘competitive bidding for durable medical equipment and similar items may be an effective mechanism for achieving savings in Medicare.’
  • Medicare spent more than $11.3 billion on DME Billing in 2010, the year before the bidding program started. It went national this year after beginning in nine metropolitan areas.
  • The study authors compared prices from the first round of the Medicare competitive bidding program to prices paid by national commercial insurers. The study reviewed seven prices, including six rental prices of six products and a new purchase price for one of the six products.

In their summation, the authors said, “Our results suggest that the initial years of the program produced prices comparable to those obtained, on average, by large commercial insurers — sophisticated purchasers that presumably were able to negotiate prices with suppliers of DME and similar items.

The authors further added that savings were ‘impressive,’ but warned that they were compared to the Medicare fee schedule, which is known to be high.

Despite those savings, the CMS announced earlier this year that it is temporarily delaying the next steps of the DME program, which were expected for 2019, following complaints from program critics. If we go by their 2019 program, DME billing companies will also have to undergo certain changes, especially through the specialty billing route.

Opponents of the bidding program, such as the Council for Quality Respiratory Care, are of the view that suppliers submit unrealistically low bids. This is after knowing that if they are selected, and the ultimate bid price is too low to cover their expenses, they can simply refuse to enter into a binding contract.

The Moran Company issued a white paper on the same topic in September 2016. The report questioned the “sustainability of the prices, the ability of suppliers to remain in the market, and beneficiary access to needed DMEPOS products and services.”

DME billing service is now in a holding pattern with Price leading the HHS. However, the $25.7 billion in savings over 10 years will likely interest a future HHS secretary when it comes time to look for ways to cut Medicare spending.

In conclusion, we would like to say that yes CMS shift more DME products to bid programs!!!