* Competitive bidding brings 45 pct savings over set fees
* $42 billion savings for Medicare, beneficiaries over 10
* HHS sees few problems with beneficiary access due to lower
By David Morgan
WASHINGTON, Jan 30 Medicare and its
beneficiaries in 100 metropolitan areas will pay less for
durable equipment beginning July 1.
The new prices, set by competitive bidding, are expected to
save 45 percent on average, on products including walkers,
wheelchairs, oxygen equipment, hospital beds and prosthetics.
Diabetic testing supplies will be available at savings of 72
percent through a separate national mail-order program.
Medicare is forecast to spend $598 billion this year on
benefits for 50 million elderly and disabled beneficiaries. Its
finances will come under mounting pressure, as the beneficiary
population hits 80 million and spending tops 7 percent of the
U.S. economy by 2030.
Wednesday's announcement illustrates the savings that
traditional fee-for-service Medicare could achieve at a time
when analysts, policymakers and lawmakers are considering ways
to reduce spending as part of deficit reduction. Some have
recommended broad use of the competitive bidding process for a
host of private operators that do business with Medicare,
including private insurers.
Until now, Medicare prices for durable equipment and related
supplies have been set according to a fee schedule that was
established in the 1980s and has been updated for inflation. But
officials at the U.S. Department of Health and Human Services
say the older system has proved vulnerable to fraud and price
About 20 million people who receive Medicare fee-for-service
benefits live in the 100 metropolitan areas where the program is
scheduled to operate, according to officials with the U.S.
Department of Health and Human Services. Only a fraction of
those beneficiaries need durable equipment supplies.
But the initiative is expected to save $27 billion for
Medicare Part B, which covers physician and out-patient
services, and $17 billion for beneficiaries, between 2013 and
"The program for far too long has been overpaying for these
supplies and has led to numerous fraud concerns,
over-utilization concerns," Jonathan Blum, director of HHS's
Center for Medicare, told reporters in a conference call.
To demonstrate the scale of savings, officials said
competitive bidding cut the price Medicare pays for a home
hospital bed from $1,376 under the old schedule to $737. The
co-insurance cost for beneficiaries fell from $275 to $147.
For diabetic lancets and test strips, the monthly cost will
fall from $77.90 to $22.47 for Medicare and from $15.58 to $4.49
Medicare moved to a competitive bidding process in nine
metropolitan areas in 2011 and has expanded the practice to an
additional 91 areas for the coming fiscal year. In its first
year of operation, competitive bidding saved Medicare about $202
HHS officials said lower prices would require some
beneficiaries to change suppliers who are unwilling to meet
prices set through competitive bidding. But they said Medicare
has found few problems in the initial program.