For years, it didn’t make sense: Medicare paid sky-high prices for basic medical equipment like wheelchairs and walkers. Consider the case from Fort Lauderdale, Florida. As the South Florida Sun Sentinel reported, a man discovered that Medicare would pay $800 to rent a wheelchair he could have purchased for $350.
For years, stories like this were common. The policy didn’t make sense. Now, we’re fixing it.
Under the old rules, Medicare paid a fixed price for durable medical doctor supplies like oxygen equipment, hospital beds, and diabetic testing strips. Today, under a new competitive bidding program that is already in effect in Kansas City, suppliers must submit bids to the government, competing for business as they do with everyone else. And any supplier who wants to compete must meet strict quality and financial standards to ensure that beneficiaries receive quality equipment that is readily accessible.
The program is already working. A new report shows that in its very first year, our competitive bidding program reduced Medicare spending by $202 million in the nine areas of the country, including Kansas City, where the program launched in 2011. That represents a 42 percent reduction from the previous year, and a great example of how the Obama Administration is working to put the brakes on runaway health care costs. In the coming years, this program pioneered in Kansas City and only nine other areas in the United States, will be expanded across the country.
Over the next 10 years, as the program is expanded to many other areas of the country under the Affordable Care Act and prior legislation, Medicare will save up to $25.7 billion. And people with Medicare will save $17.1 billion because they will pay less in premiums and less for the medical equipment and supplies they need. We’ve already seen examples of how this program is working for our seniors. In the nine regions of the country where this program has been implemented, people with Medicare saw prices slashed. Last year, people with Medicare saved up to $105 on hospital beds, $168 on oxygen concentrators, and $140 on diabetic test strips.
But the competitive bidding program is more than just a prescription for curbing costs. Our goal is also to ensure better health and better health care. That’s why we monitored whether this program affected beneficiaries’ access to nursing medical supplies. Our data found no negative effects on the health of beneficiaries, with the Medicare beneficiaries in the nine areas continuing to have access to all necessary and appropriate items. Our report also shows that the competitive bidding program has reduced unnecessary services. Today, 2.3 million Medicare beneficiaries live in these 9 cities, and Medicare’s call center received only 151 complaints in 2011. And we continue to monitor the program to ensure there are no negative consequences for Medicare beneficiaries and that Medicare savings are achieved.
Fraudulent suppliers have also been attracted to the durable medical equipment benefit because of high Medicare payment rates. The competitive bidding program makes sure suppliers are in good standing with Medicare, meet quality and financial standards, and are licensed and accredited.
In its very first year of operations, the competitive bidding program has reduced overall Medicare spending and the out-of-pocket costs for many beneficiaries. It is a win for patients and their families; it is a win for taxpayers; and it is a win for the continued viability of the Medicare Trust Fund. The competitive bidding program is an excellent example of trying to do things better, smarter and safer.
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