A Medical Device Daily

Taxpayers and Medicare beneficiaries stand to save more than $1 billion a year if the Bush administration succeeds in implementing a program designed to reduce spending on oxygen supplies, power wheelchairs and other medical equipment, known as durable medical equipment (DME), according to the Centers for Medicare and Medicaid Services.

But that's not good news for manufacturers.

CMS reported last week that prices for these supplies will be 26% lower on average under the first phase of a competitive bidding program for DME, prosthetics, orthotics and supplies.

"It's clear that we've been paying too much for medical equipment and supplies,” CMS acting Administrator Kerry Weems said during a conference call with reporters. In some cases, the prices based on the bids will be substantially lower than Medicare pays through its current pricing formula, the agency said.

At present, for example, Medicare pays $199.28 per beneficiary each month on average in rental and service fees to suppliers of stationary oxygen concentrators placed in patients' homes. The competitive bid prices are 22% to 32% lower, with the average being $140.82.

Because Medicare beneficiaries pay for 20% of the cost of these supplies, patients will get their equipment "at substantially lower prices than they are paying now,” Weems said. The new prices take effect July 1.

Under the first phase of the program, suppliers seeking to provide 10 different kinds of equipment to patients in 10 metropolitan areas were asked to submit bids. CMS will begin expanding the program to 70 additional metropolitan areas in July.

"We expect that when the program is [fully] implemented ... Medicare will save about a billion dollars a year in the cost of equipment and supplies,” Weems said.

Medical suppliers, most prominently the oxygen industry, and some allied lawmakers have expressed strong misgivings about CMS's handling of the competitive bidding program, mandated by Congress in 2005.

Sens. Blanche Lincoln (D-Arkansas) and Pat Roberts (R-Kansas), as well as Reps. John Tanner (D-Tennessee) and Phil English (R-Pennsylvania), attracted the support of many colleagues who signed on to letters the lawmakers sent to the administration criticizing the program. The letters, signed by 17 senators and 120 members of the House of Representatives, ask CMS to release data on how the bidding program will impact thousands of small providers.

"Although CMS and the Small Business Administration raised special considerations for small suppliers during the rulemaking process, we continue to believe that these steps will not guarantee adequate participations for small businesses,” the House letter said. "This will result in a number of small medical device providers going out of business, severely impacting patient access to necessary equipment and quality care.”

In addition to asking for economic data on the bidding program's impact, the House letter expressed concern about CMS's plan to initiate the second round of contract awards before the first round has been fully implemented and before first-round results can be evaluated.

The Senate letter suggested that reducing the number of small DME providers could actually increase rather than decrease Medicare costs.

"Small suppliers pay close attention to local, specialized service as a commonsense means of reducing medical errors, equipment-related injuries, and returned equipment. This in turn reduces Medicare costs,” the Senate letter said.

The letters also expressed concerns about a potential decline in the quality of service provided under this new arrangement.

Stephen Ubl, president/CEO of the Advanced Medical Technology Association (AdvaMed; Washington), said in a statement that his organization is concerned "that patient access to life-saving, life-enhancing durable medical equipment may be compromised through the DMEPOS competitive acquisition program.” He said that many of Medicare's elderly and disabled patients will lose their current supplier, which can often mean the difference between a patient being able to remain in their own home or being forced into a nursing home or hospital.
"We urge CMS to postpone expansion of the program ... until it fully evaluates the impact on patient access to the most appropriate treatment. Moreover, this system may discourage investment in new, superior products.”

Weems sought to allay these concerns, saying that more than 6,300 companies submitted bids, that the supplies being offered are "nationally known, brand name, quality products,” and that 64% of the winning bids came from small suppliers (those with gross annual revenues of $3.5 million or less).

CMS did not disclose what companies submitted winning bids because the agency said it is still in the process of notifying the firms that competed for contracts. Once notified, the companies have 10 days to decide whether to accept the new prices. The winners will be announced by May, Weems said.

The first phase of the program will occur in Charlotte, North Carolina; Cincinnati; Cleveland; Dallas; Kansas City, Missouri; Miami; Orlando, Florida; Pittsburgh; Riverside, California; and San Juan, Puerto Rico.

Medicare to cover warfarin self-monitoring

Medicare Part B will now cover and pay for meter training, equipment and supplies for all long-term warfarin users who monitor their own PT/INR results at home with portable meters.

Medicare previously reimbursed these expenses only for patient self- testers who had mechanical heart valves. The new coverage expands to include those on anticoagulant medication with chronic atrial fibrillation and venous thromboembolism.

"The decision to expand coverage to additional disease states allows physicians to manage more of their patients on warfarin therapy through home testing,” said Alan Jacobson, MD, a cardiologist at the Loma Linda University School of Medicine (Loma Linda, California). "Studies show that more frequent PT/INR testing leads to improved clinical outcomes. The benefits of providing patients with improved access to testing are reductions in strokes, bleeds and deaths.”