Competitive bidding for DME finally took place in 2011 — eight years after being legislated. A 2014 report by the Government Accountability Office determined that competitive bidding saved Medicare $400 million in 2011 and 2012, reduced inappropriate use of some equipment by over one fifth and did not harm patients’ access to the equipment they needed.
Of course, the suppliers which would prefer not to compete under this system continue to lobby for protection. Competitive bidding can be a blunt tool. As the program evolves, the Centers for Medicare & Medicaid Services CMS must be careful not to lump differentiated products in the same bucket and force commodity pricing on them. Nevertheless, there was no significant uprising by Medicare beneficiaries against competitive bidding for DME like there has been against Obamacare’s cuts to Medicare.
And yet, it took years for the Administration to overcome the suppliers’ lobby. Why? I suggest that it is because Medicare beneficiaries themselves did not share in the savings. Suppose that instead of CMS running the competitive bidding and sending the savings to the Treasury Department, the law had been written so that the Secretary could have given a press conference the same day the President signed the bill and said something like this:
“Folks, Medicare has been paying over $4,000 for your power wheelchairs. We know that they can be purchased for around $3,000, or even less in some parts of the country. So, you go find yourself a power wheelchair for less than $4,000, send me the invoice, and I’ll share the savings with you. I’ll add half the savings to your Social Security deposit as soon as we’ve verified the transaction.”
Does anyone doubt that America’s seniors would have jumped all over that deal? Competitive bidding for DME would have been a done deal within eight months or maybe eight weeks, not eight years.