Labeled as a “better way for Medicare to pay for medical equipment,” competitive bidding is proven to save money for taxpayers and Medicare beneficiaries while maintaining access to quality devices and services, according to the U.S. Department of Health and Human Services. A government program known as “DMEPOS,” is Medicare’s Durable Medical Equipment, Prosthetics, Orthotics, and Supplies Competitive bidding protocol that changes the amount Medicare pays for these items.
DMEPOS is designed to reduce out-of-pocket expenses for Medicare beneficiaries and works to save the Medicare program money while ensuring that beneficiaries continue to receive their products and devices from accredited suppliers.
What’s unknown is the lasting effect it will have on the future of medical equipment sales, including sales outside of DMEPOS geographically-designated areas. Is a government-controlled sales practice like this a good thing for the medical equipment industry?
Saving Money
So far, the program has been hailed a success, as independent experts have concluded that it will indeed save money in the short term. As an example of the program’s early success, in 2011, the first year of its operation, DMEPOS saved Medicare approximately $202.1 million, while maintaining beneficiary access to products from accredited suppliers (Healthcare Dive).
More recently, in a report released in August of this year, Health Affairs found that Medicare’s competitive bidding program is expected to save the Centers for Medicare and Medicaid Services $25.7 billion on durable medical equipment over the next ten years. This means that DMEPOS is projected to save about as much as what large commercial insurers save by negotiating with medical equipment suppliers. Additionally, the program has yielded an overall drop in expenditures of over 42% in the nine different markets that are currently participating in the program.
How it Works and What It Includes
Under DMEPOS, suppliers submit bids to provide medical equipment and supplies to people with Medicare living in or visiting designated competitive bidding areas as drawn up by the program. Medicare uses these bids to set the amount it pays for each item – essentially an open marketplace. Equipment suppliers are thoroughly screened to make sure they meet Medicare’s requirements including meeting financial, quality, and accreditation standards before they can receive contracts.
The major regions that DMEPOS covers include specific zip codes in the Northeast, the Midwest, the South, and the West. Devices and products that currently make up the list of eligible supplies are:
- Oxygen, oxygen equipment, and supplies
- Standard power wheelchairs, scooters, and related accessories
- Mail-order diabetic supplies
- Enteral nutrients, equipment, and supplies
- Continuous positive airway pressure (CPAP) machines and respiratory assist devices (RADs)
- Hospital beds
- Walkers and related accessories
Soon, the program is expected to expand to 91 additional areas within the previously-mentioned regions for some of the most expensive and frequently used DMEPOS items.
Potential Problems
Many medical equipment sales reps who work for smaller or independent companies are wondering about their future. Do they stand a chance against big government-friendly companies? Also, even if they receive contracts, can they continue to work for undoubtedly lower commissions due to the competitive nature of the program?
Outside of sales reps, there are opponents of the bidding program who said early on that it will cost jobs and cripple the home medical equipment industry as a whole, not to mention hurt the people who it should be protecting. Representative Bruce Braley, D-Iowa, said in 2013: “When the government picks winners in a flawed bidding system for the medical equipment business, seniors on Medicare and the small businesses that serve them lose.”
Opponents also say that a program like DMEPOS allows suppliers to submit unrealistically low bids, knowing that if they are selected, and the ultimate bidding price is too low to cover their expenses, they can just refuse to enter into a bidding contract (Healthcare Dive).
Similar issues that have been brought up include long-term sustainability of the prices, the ability of suppliers to remain in the market, and beneficiary access to much-needed DMEPOS products.
Competitive Bidding Update
Despite the encouraging news of overall cost savings, the Centers for Medicare & Medicaid Services (CMS) recently decided to temporarily delay moving forward with the next steps of the Competitive Bidding Program to allow the new administration time to review it. For now, these discussions, which would outline changes and additions for 2019, are on hold.
In theory, saving money is a good thing. But at what cost? The current state of competitive bidding, as well as the uncertainty surrounding its future, has many in the medical equipment sales force worried about their livelihood including keeping their jobs. Regardless of what happens with the Competitive Bidding Program, sales reps must find ways to adapt to this new form of government-issued competition and continue to deliver excellent products and service to their clients.
