Medical Supply Program Facing Delays, Scrutiny

By Jennifer Johnson Backer

Less than a week before an effort to rein in billions of dollars in Medicare spending on home medical equipment is set to kick in, members of Congress and medical supply programs are pushing to delay the plan, saying some of the process has been mishandled and that the process lacks transparency.

A plan to rein in Medicare spending on home medical equipment could be delayed a week before its set to be enacted.


In a June 12 letter sent to Marilyn Tanner, who leads the Centers for Medicare and Medicaid Service, a bipartisan group of 227 representatives pointed to problems in Tennessee, where a probe found that 30 of 98 Medicare suppliers awarded contracts were not licensed by the state.

Medicare has agreed to void the contracts, and Tanner said the agency “may consider making new awards to qualified and licensed suppliers in the future.”

Letter signees also focused on the lack of transparency, the lack of binding bids during the contract process, and the improper vetting of the financial wherewithal of many of the firms awarded contracts.

The Medicare competitive bidding program, the Competitive Bidding Program for Durable Medical Equipment, Prosthetics, Orthotics and Supplies, was created by a law designed to modernize Medicare in 2003 and signed into law by President George W. Bush. Originally set to launch more than four years ago, pressure from makers of medical supplies and Congress has successfully delayed the program until now.

The Medicare competitive bidding program is scheduled to go into effect July 1 for 91 metropolitan areas, including Memphis.

The CMS Office of the Actuary projects that the program will save $25.8 billion for Medicare over 10 years, and save another $17.2 billion for beneficiaries through lower coinsurance and premiums. The agency has said the program will save Medicare consumers an average of 45 percent on home health care supplies like wheelchairs, crutches, blood pressure monitors and diabetic testing supplies.

Critics of the bidding process, including drug companies and makers of medical supplies, have said the new bidding program could drive down prices to levels that push some medical suppliers out of business. Medical suppliers have spent millions of dollars on lobbying and advertising and stand to gain financially if the competitive bidding process isn’t implemented.

Advocates of the new pricing program have said consumers can privately purchase home medical equipment much more cheaply than what the government reimburses medical suppliers.


In a letter sent by a delegation of Tennessee members of Congress led by Sens. Lamar Alexander, R-Tenn., and Bob Corker, R-Tenn., Reps. Steve Cohen, D-Memphis, Marsha Blackburn, R-Brentwood, Phil Roe, R-Johnson City, John J. Duncan Jr., R-Knoxville, Jim Cooper, D-Nashville, Chuck Fleishmann, R-Ooltewah, Scott DesJarlais, R-Jasper, and Diane Black, R-Gallatin, the delegation expressed concerns that CMS awarded contracts to out-of-state suppliers not licensed by the state.

“The finding by the administration that nearly a third of its Medicare equipment suppliers in Tennessee were awarded contracts in violation of state law is troubling,” Alexander said. “While it’s appropriate now that the administration will void the contracts it mistakenly awarded, we will continue to monitor the situation to ensure every Medicare beneficiary is able to get the medical equipment they need when they need it.”

Tennessee congressional members said the state’s licensing standards help ensure Medicare beneficiaries are able to get equipment from businesses that have been vetted by the state. Some members expressed concern about whether out-of-state suppliers could adequately serve Medicare beneficiaries by the program deadline.

CMS administrator Tanner said the agency carefully examined Tennessee licensing requirements and determined that the 30 suppliers awarded contracts were licensed in their home states, but not Tennessee. While CMS agreed to revoke the contracts, the agency is not backing down on its efforts to roll out the program July 1.

“We implemented an active surveillance and monitoring program to identify any issues and have found no disruption in access or negative health consequences for beneficiaries,” Tanner wrote in a letter addressed to the Tennessee members of Congress. “In addition, CMS has received only a handful of complaints from beneficiaries of the program.”

The Medicare competitive bidding effort was implemented in nine metropolitan areas in January 2011.

CMS also is investigating additional claims of impropriety in Maryland.