Competition in medical equipment is not what the doctor ordered

Competition cuts down Medicare fraud

Medicare has struggled to manage medical equipment costs. Officials say the program often paid more than private insurers for comparable equipment and was vulnerable to fraud by unscrupulous suppliers ordering expensive but unneeded products for unwitting beneficiaries.

A yearlong experiment with competitive bidding for power wheelchairs, diabetic supplies, and other personal medical equipment produced $200 million in savings for Medicare, and government officials said Wednesday they are expanding the pilot program in search of even greater dividends.

The nine-city crackdown targeting waste and fraud has drawn a strong protest from the medical supply industry, which is warning of shortages for people receiving Medicare benefits and economic hardship for small suppliers. But the shift to competitive bidding has led to few complaints from those in Medicare, according to a new government report.

The report found only 151 complaints from a total population of 2.3 million Medicare recipients in the nine metropolitan areas, including Miami, Cincinnati, and Riverside, Calif.

As a result, the program is expanding to include 100 cities next year, along with a national mail order program for diabetes supplies such as blood sugar testing kits. Eventually the whole country will participate.

By shifting to competitive bidding with a limited number of approved suppliers in each area, Medicare will save nearly $26 billion from 2013-2022, the government estimates, and reduce costs for seniors without cutting benefits.

“What we see is that costs are lower and there is no impact on the health status of our beneficiaries,’’ said Jonathan Blum, deputy administrator for Medicare. ’

The home-care supply industry questioned that conclusion.

“With respect to the number of complaints [the report’s] information is downright laughable,’’ said Walt Gorski, a senior lobbyist for the American Association for Homecare. “It defies logic.’’

The industry says hundreds of economists at academic institutions around the country have concluded that Medicare’s competitive bidding model is flawed and could lead to shortages or force beneficiaries to use less desirable cut-rate equipment.

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