HME Business

During CMS's announcement regarding the pending announcement of suppliers for round one of competitive bidding , Acting CMS Administrator Kerry Weems  gave several examples of the ranges of savings Medicare expected for different product categories.

"For oxygen and oxygen equipment, we're going to see savings of 22 percent in Riverside, California, and 32 percent in Orlando, Florida," he said. "Medicare currently pays about $199.28 a month for an oxygen concentrator. Under this competitive bidding program, on average across the bidding areas, Medicare will now pay $140.82."

For "standard power mobility devices," Weems said competitive bidding would earn Medicare a "savings of 12 percent lower in Kansas City, and 30 percent in Miami. Medicare pays $4,063.96 on average across the bidding areas for the purchase of the most commonly used power wheelchair. Under the competitive bidding program, on average across the bidding areas, Medicare will now pay $3,072.65."

Weems also compared competitive bidding prices to Internet pricing in some of his examples. "The Office of the Inspector General issued a report in October 2007 showing the median Internet retail price of $2,959 for this power wheelchair based on a survey of 222 prices."

Weems said mail-order diabetic supplies savings under competitive bidding would be 36 percent in San Juan and 57 percent in Riverside.

Weems added that Medicare in 2006 paid about 889,000 monthly payments for oxygen concentrators; 15,000 claims to purchase standard power chairs; and 2 million claims for 50-count boxes of diabetes test strips for the 10 MSAs involved.

"We were overpaying for those items," Weems said.

In answer to a question from HME Business sister publication Mobility Management, Weems said anticipated savings on complex rehab was about 15 percent on average, nationally. "That varies by market," he explained. "In Charlotte, it's 10 percent. In Cincinnati, it's 19 percent."

CMS expected to save 29 percent on CPAP equipment, Weems said.

"Promising" First Round Results, Says Weems

“Results of the first round of bidding are promising,” Weems said.

He indicated that all product categories originally mentioned were indeed included in the bidding.

Said CMS' Joel Kaiser on how "winning bids" were determined: "We selected the lowest-bidding suppliers, that is, suppliers with composite bids on the lowest end of the array, up to the point where the reported capacity of those suppliers met our projected demand."

Weems added, "One way to think about this is taking the lowest bid and working up the chain to a market-clearing price."

For more information on competitive bidding, go to www.cms.hhs.gov/CompetitiveAcqfor DMEPOS/. Details were also posted at www.dmecompetitivebid.com/SPA.