Medicare Slows Down Select DME Reimbursements

Medicare beneficiaries in nine areas of the country who use certain durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) could see average price reductions of about 32% off the current cost of those items come Jan. 1, 2011. The savings will be realized through the first round of a new competitive bidding program to determine the price Medicare pays for the equipment.

The program, which replaces Medicare's existing fee schedule amounts with market based prices, is expected to save more than $17 billion over 10 years. It will ensure "continued access for beneficiaries to high quality products" from accredited suppliers that "meet stringent quality and financial standards---which help to reduce fraud," according to Jonathan Blum, Centers for Medicare and Medicaid Services' deputy administrator and director of the Center for Medicare.

The first round of the program is scheduled to begin on Jan. 1, for beneficiaries in Charlotte, Cincinnati, Cleveland, Dallas, Kansas City, Miami, Orlando, Pittsburgh, and Riverside, CA. Suppliers that wished to participate in the program submitted bids last year. CMS plans to announce the contract suppliers in September once all contracts have been finalized.

As part of the first round of the competitive bidding program, price reductions are expected among frequently used items such as an oxygen concentrator, a semi electric hospital bed, and a typical monthly supply of 100 diabetic test strips and 100 lancets.

To take advantage of the savings, Medicare beneficiaries living in the nine communities who use certain medical equipment and supplies may have to choose a new Medicare contract supplier if they wish to have Medicare help with payment. Medicare said it will work with local partners and healthcare providers to inform beneficiaries about the changes.

Suppliers that are not contract suppliers may continue to provide certain rented medical equipment, oxygen, and oxygen equipment for those beneficiaries who are clients at the time the program begins -- if they elect to continue furnishing the items as "grandfathered" suppliers.

Two trade groups, though, have expressed opposition to the DMEPOS requirements. The American Association for Homecare, in Arlington, VA, said seniors and people with disabilities who rely on home medical equipment and services "will pay a steep price under Medicare's controversial and mislabeled competitive bidding program for durable medical equipment."

The bid prices on DMEPOS "will translate into unsustainable reimbursement rates for homecare providers," says Tyler Wilson, the association's president. "Over time, it will make it harder for seniors and people with disabilities to get the home medical equipment and services they require to live independently."

If CMS officials proceed with the DMEPOS bidding program, "we urge caution against any action that would undermine or reverse the benefits of coordinated care," says Joseph Harmison, PD, president of the National Community Pharmacists Association.

He added that the inclusion of small pharmacies in the bidding program or reimbursing them at the newly announced mail order rates "eventually would result in the virtual elimination of independents from the program."

This is because "independents don't operate with the purchasing power of large chains or mail order competitors and thus can't always match those prices," Harmison says.