Diagnostics & Imaging Week Washington Editor

The competitive bidding final rule published this past Monday by the Centers for Medicare & Medicaid Services is designed to drive down Medicare costs for durable medical equipment (DME), off-the-shelf orthotic items and supplies, and as the agency announced, the program will roll out in 10 standard metropolitan statistical areas next year.

Despite employing the acronym of DMEPOS (for durable medical equipment, prosthetics, orthotics and supplies), the regulation does not call for competitive bidding for prosthetics, and it calls for no competitive bidding for orthotics other than off-the-shelf items.

Among the Metropolitan Statistical Areas (MSAs) that will host the first 101 sites are the Charlotte-Gastonia-Concord area running between North and South Carolina; Miami-Fort Lauderdale-Miami Beach on Florida’s Atlantic coast; and Dallas-Fort Worth-Arlington, Texas. The MSA composed of San Juan-Caguas-Guaynabo, Puerto Rico is the only site not located in the U.S. “lower 48.”

Ellen Griffith, a public affairs specialist at CMS, told Diagnostics & Imaging Week that “the reason [CMS] left Los Angeles, Chicago and New York out of the initial 10 MSAs is that they were significantly larger and would have created a problem with the start-up” in terms of logistics, but that CMS “hopes to get them in next year.”

The accompanying press release notes that the competitive bidding program is mandated by 2003’s Medicare Modernization Act and that CMS intends to ensure that contracts “will be awarded to a sufficient number of winning bidders in each” competitive bidding area.

The agency also sought to assure beneficiaries that “this program will reduce out-of-pocket expenses while ensuring that they receive high quality items and services.”

CMS co-administrator Leslie Norwalk said in am agency statement that the program will save the taxpayer $1 billion per year after 2010, when the program will be in full force.

Norwalk also described the program as “another way to use the competitive marketplace to bring the best possible and most efficient care to Medicare beneficiaries.”

The rule calls for small companies to make up 30% of the participating organizations, a move designed in part to help ensure that rural beneficiaries would not lose out.

The threshold for smaller companies is set at $3.5 million in annual revenues, but the agency will go out of its way to bring small firms into the fold only if they do not total 30% of the total winning bids. However, those suppliers will have to accept rates set by the companies that come in with winning bids, but the agency will allow small companies to team up in networks without fear of prosecution — that might suggest price-fixing or an anti-competitive ploy — and small suppliers will not have to submit bids for all product categories.

Also, healthcare professionals are exempt from the requirements so long as the items are “furnished as part of their professional services.” Among the grandfathering exemptions is one that allows beneficiaries to keep their rental equipment providers, even if that supplier does not post a winning bid with CMS.

CMS’s projected savings total is based in part on a pilot project conducted in Polk County, Florida, and San Antonio, Texas, between 1999 and 2003. According to the agency’s figures, the two rounds of bidding for oxygen equipment and supplies in the Florida site generated savings of 17% and 20%, bringing the total expenditure down to roughly $1.5 million. The original cost figure was not listed. The single round in San Antonio drove down costs for the same product category by 19%, to just less than $2.1 million.

On the other side of the ledger at CMS are operating costs that will run to “approximately $1 million in immediate fixed costs for contractor start-up and system changes” as well as routine staffing and maintenance costs, which were not listed in the announcement.

However, CMS said it expects to hire about 1,600 new employees to run the program.

The final rule has failed to elicit much comment, perhaps because it is considered an accomplished fact or that no one wants to go on record as bucking the CMS.

For instance, Bob Cohen, director of media relations at the National Association of Home Care & Hospice (Washington), declined to comment for the record.

At press time, Kathy Dodson, senior director of governmental affairs at the American Orthotic and Prosthetic Association (Alexandria, Virginia), did not returned calls for comment, as was the case for representatives of the Medical Device Manufacturers Association (Washington).

Stephen Ubl, president/CEO of the Advanced Medical Technology Association (AdvaMed; Washington), said in a prepared statement that any competitive bidding program “must ensure that all Medicare patients have access to the best available treatment for their conditions,” adding that he is “concerned that the final rule may not pass this fundamental test.”

The association raised questions about the effect of the rule on smaller companies, and Ubl indicated that AdvaMed had offered CMS “extensive comments representing the views of industry . . . and we are pleased that a number of our suggestions were adopted, but we remain concerned about some of the provisions and about the overall impact of the program.”

The AdvaMed statement said that the association is “still analyzing the details of the rule and will closely monitor these issues in the coming weeks and months.”

FDA posts post-approval e-page list

The tracking and verification of post-approval (PA) studies for medical devices has been a bone of contention between FDA and various stakeholders, with some of the agency’s critics charging that FDA is not doing enough to enforce compliance with PA study requirements.

Finally responding to that criticism, the Center for Devices and Radiological Health (CDRH) at FDA has gone live with a web page for PA studies, listing more than 40 such studies in a format that can be downloaded into a spreadsheet.

Criticism of the agency’s thoroughness in its PA strategy may not go away, however.

The page lists little more than general information about the studies and whether the reports are coming in on time. None of the listings include study data that tell anything about the impact of the study product. The listings include information on the schedule of reports and the dates of actual reports, including an asterisk if that report was filed late.

At present, FDA lists 44 studies, including descriptions of the PA studies and copies of the approval letter. The site also lists summaries of safety and effectiveness as well as product labeling.

In some cases, FDA lists some of the standards used in designing the device.

For instance, in the listing for the Duraloc Option ceramic hip system, manufactured by Depuy Orthopaedics (Warsaw, Indiana), the listing describes briefly the standards for material integrity that the sponsor used in developing the device. The American Society for Testing and Materials (ASTM; West Conshohocken, Pennsylvania) developed the standards in question, and Depuy has committed to a 10-year follow-up, which may reflect FDA concerns about the prospects for decay of ceramic material and its impact on health.

Depuy was more than two months late with its second report, but a brief review of some other PAS listings shows that this was not unusual.

According to FDA, some sponsors had assumed “that there was a 30-60 day grace period past their due date to submit their reports,” but the agency addressed this in a December 2006 PA studies guidance document. As a nod to the widespread erroneous impression, the agency “has added an asterisk next to the Overdue/Received status for reports prior to April 6, 2007, to indicate that the delay was due to a temporary extension.”

According to the press release FDA posted with the new web page over the weekend, companies are typically required to submit reports every six months for the first two years of a study, and then annually thereafter until the conclusion.

The listing is for all post-approval studies stipulated after Jan. 1, 2005, but the data do not include clinical data “because the studies may be ongoing and include personal and confidential information.”

At press time, FDA, the Advanced Medical Technology Association (AdvaMed; Washington) and the Medical Device Manufacturers Association (MDMA; Washington) had not responded to calls for comment on the new listing.