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New Research Supports Proposed Reform of Medicare’s Competitive Bidding Program for DMEPOS

The Pacific Research Institute study underscores the need to reform Medicare’s current bidding and payment processes

Washington, DC, July 27, 2018 --( A new report published by the Pacific Research Institute (PRI) that analyzes Medicare’s competitive bidding program for durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) and calls for reforms to improve the program’s payment methodology is further evidence why the Centers for Medicare & Medicaid Services (CMS) should proceed with newly proposed reforms to better align reimbursement rates with the actual costs of care, according to the Council for Quality Respiratory Care (CQRC).

The report author concludes, “The current competitive bidding program should be reformed. Returning to the previous set fee schedule is not the answer. These fee schedules rarely reflected the actual costs of acquiring the durable medical equipment and imposed excessive costs on Medicare. Instead, CMS should replace its unique bidding process with a competitive bidding program that has a history of improving overall quality while reducing total costs.”

PRI’s report, entitled “Reforming CMS’ Competitive Bidding Process to Improve Quality and Sustainability,” reinforces a recent CMS proposal that would be more likely to result in identifying the market rate, creating a level playing field for providers, and ultimately protecting patients’ access to home oxygen supplies and equipment.

CMS recently proposed significant change to the Medicare competitive bidding program, which would alter the method of using a median bid to a maximum bid method that sets the rate using a clearing price – the lowest bid amount at which demand in an area is met. CMS is also proposing the elimination of burdensome and difficult composite bidding with a single lead product.

Under the current program that CMS is proposing to reform, thousands of oxygen providers across the country had to accept insufficient and unsustainable reimbursement rates for delivering home respiratory therapies and equipment. As a result, many oxygen providers were forced to exit the markets they have served for years––limiting Medicare beneficiaries’ access to lifesaving oxygen and particularly threatening the millions of Americans with chronic obstructive pulmonary disorder (COPD), the third leading cause of death in the United States.

By finalize the proposed reforms, CMS would be addressing the problems created by the current methodology. According to the report, the competitive bidding process “has led to a new set of problems, including low-ball bids, bid skewing, lack of sufficient supply, and reduced quality.” For COPD patients who waited longer to start treatment, in many cases due to reduced access and longer delays in receiving home respiratory therapies, healthcare costs were 20 percent higher than those COPD patients who began treatment within two months of diagnosis.

“The PRI research reinforces what the CQRC has been reporting to the Congress and CMS for some time now,” said Dan Starck, Chairman of CQRC. “The CQRC strongly supports reforms proposed by CMS and looks forward to sharing the sector’s comments on how best to reform and strengthen the competitive bidding program to protect access to care for the vulnerable patient population we serve.”

To download a copy of PRI’s full report, click here.

About the Council for Quality Respiratory Care
The CQRC is a coalition of the nation's seven leading home oxygen therapy provider and manufacturing companies. To learn more, visit and follow CQRC on Twitter at @TheCQRC.
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The Council for Quality Respiratory Care
Sarah Rhoades

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