Subcommittee on Health Hears Testimony on DMEPOS Competitive Bidding

On May 6, 2008, the House Ways and Means Subcommittee on Health held a hearing on the Medicare Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) competitive bidding program.

During the hearing, the Subcommittee on Health entertained testimony from a number of witnesses, including Kerry Weems, the Centers for Medicare & Medicaid Services (CMS) Acting Administrator and Tom Ryan on behalf of the American Association for Homecare.

In testimony before the Subcommittee, the Acting CMS Administrator states that the "success story of DMEPOS competitive bidding is the amount of money that beneficiaries will save as a result of lower coinsurance..." and reports that, when fully implemented in 2010, the DMEPOS competitive bidding program is projected to save the Medicare program and taxpayers $1 billion annually. In fact, CMS claims that, across the first 10 metropolitan statistical areas and in each product category of the DMEPOS competitive bidding program, beneficiaries will see an average savings of 26 percent when the new payment rates take effect on July 1, 2008. 

However, in testimony before the Subcommittee, the American Association for Homecare (AAHomecare) depicts the DMEPOS competitive bidding program as "poorly conceived and fundamentally flawed."  In fact, AAHomecare points out that nearly 63 percent of the accredited, qualified homecare providers that submitted bids were disqualified in the first round of bidding because they were unable to navigate the bidding process. AAHomecare also raises a number of concerns about the DMEPOS competitive bidding program adversely impacting Medicare beneficiaries access to quality care. 

AAHomecare also believes that the savings projected by CMS for the first round of competitive bidding is misleading. According to AAHomecare, small suppliers (concerned about larger suppliers having a competitive advantage) may have bid extraordinarily low to remain viable. AAHomecare reports that the small suppliers may have assumed that the larger suppliers' bids would reflect accurate (higher) pricing and increase the final Medicare single payment amounts. However, AAHomecare believes that the number of small suppliers with extraordinarily low bids may have prevented many larger firms' bids from being considered. Therefore, AAHomecare questions whether the extraordinary low bid rates in the first round of the DMEPOS competitive bidding program will be sustainable over the 3 year contracting period.

Consequently, AAHomecare urges Congress to immediately halt the implementation of the DMEPOS competitive bidding program and reports that it supports the implementation of a rational, alternative process to determine Medicare pricing for DMEPOS items and services.