Dive Brief:
- The conservative Pacific Research Institute is praising a CMS proposal to overhaul the competitive bidding system for Durable Medical Equipment (DME), Prosthetics, Orthotics and Supplies (POS). It called the current program flawed in a new report, blaming the method of setting reimbursement pricing at the median winning bid.
- Wayne Winegarden, a fellow at the industry-funded think tank, argues the system is driving suppliers out of the market and creating supply shortages. Patients are forgoing “the sub-standard devices that are being offered,” leading to higher healthcare costs, the report contends.
- CMS proposed significant changes to the bidding program in its recent proposed rule, suggesting a maximum bid system in tandem with lead item bidding for DME. The agency is seeking input on the proposal by Sept. 10.
Dive Insight:
Industry is largely behind the CMS changes. The Council for Quality Respiratory Care (CQRC) says that the proposed rule's move to a maximum bid price instead of a median price is a major change and praised the lead product bidding system being proposed by the CMS.
"I think it's reflective of the discussions that the industry in total has been having with the CMS and HHS over the last few years. We're really fixing and closing some of the problematic areas in the bid process that we believe will lead to more sustainable prices that are more reflective of actual costs," CQRC’s Chairman Dan Starck told MedTech Dive.
Starck acknowledged the PRI study was funded by industry, but said Winegarden was editorially independent. The report raises concern that the current bid system is distorting the market in a manner that negatively impacts patients.
“CMS implemented a bidding process that was not transparent, does not hold bidders accountable (their bids are not binding), discourages suppliers from submitting bids that accurately reflect their costs of providing the equipment, and discourages an adequate supply of medical devices and equipment. And, these are exactly the problems that are emerging in practice,” the report states.
Winegarden pointed to the median bid system as flawed in an interview with MedTech Dive, saying that it “creates all sorts of problems in terms of gamesmanship,” adding that the new proposal “is definitively a step in the right direction” despite the potential for increased costs. CMS Administrator Seema Verma has also raised concern with the median bid system.
“Half of the participating suppliers get paid more than what they bid, and half get paid less. The current structure does not produce the best prices for patients, and doesn't drive optimal performance by contractors and it is simply is not sustainable in the long term,” Verma previously told reporters.
Starck said that the proposed rule could result in increased costs for Medicare on a per unit basis, but characterized the current system as one that has artificially low prices and presents access challenges for beneficiaries.
"Companies are making drastic changes not necessarily in the beneficiaries' best interest at all times," Starck said. "The overall number of providers has shrunk significantly. What's happened is that most companies have closed a number of locations to consolidate and retrench into larger metropolitan areas that is creating a longer distance or a longer wait time for individuals who need oxygen."