Starting in July 2010, nine U.S. cities will see changes in the way seniors obtain coverage for durable medical equipment, prothestics, orthotics and supplies (DMEPOS) under Medicare. This is attributable to a new system devised by the federal government for setting the price of DMEPOS. Formerly, increases in the Medicare-established fee schedule were tied to a number of variables, including the influx of new Medicare beneficiaries and the projected increase in per capita gross domestic product. The new system of setting prices is based on a competitive bidding system whereby suppliers of DMEPOS submit bid proposals for each item they supply to seniors and beneficiaries. The contract price for that good or service is derived from the median eligible bid for that product, and suppliers must accept that price assignment in order to obtain a contract with Medicare.

The implementation of this system bodes well for consumers because it forces suppliers to submit competitive bids on DMEPOS items such as walkers, wheelchairs, scooters, and lift chairs covered by Medicare. Tying reimbursement to a fixed fee schedule meant that some providers would simply bill the maximum allowable amount, despite Medicare’s directions to the contrary. A competitive bid structure requires the market to set a rational price point rather than simply charging patients as much as they are allowed by law. Some projections estimate that this system will actually save taxpayers close to $1 billion annually.

The medical supply lobby is fighting the changes, ostensibly because they question the method by which bids are evaluated by Blue Cross Blue Shield subsidiary Palmetto GBA, which the government has hired to oversee the bidding process. The lobbyists claim that valid bids by suppliers, some of them well-established industry leaders, were thrown out by Palmetto; under the new regulations, any company who doesn’t receive a contract is excluded from the Medicare program for three years. Some industry insiders say that the projected savings for taxpayers and federal budgets are a result of companies throwing in “suicide bids” – prices that are too low to sustain industry growth – to gain contracts. If this is the case, though, the blame would seem to lie with companies who are lowballing themselves, and not with taxpayers or bureaucrats. This doesn’t absolve Palmetto of their duty to oversee the bid process with transparency in an effort to prevent cronyism, however.

Tyler J. Wilson, president of the American Association for Homecare lobbying group which represents DMEPOS suppliers across the United States, has repeatedly claimed that suppliers who are shut out of Medicare’s program will suffer layoffs and may potentially collapse without the influx of federal dollars; the average DMEPOS supplier gets 40% of its business from Medicare patients. What is less concrete, though, is Wilson’s claim that a reduction in the number of contracted suppliers will shift the financial burden of medical care from Part B to Part A coverage. The argument is that as suppliers dwindle and go out of business from losing government contracts, a gap in service to patients will occur that will cause increased hospitalizations. While a short term spike may occur as the system is implemented, a long-term shift seems unlikely when one considers the pragmatic relationship between manufacturers and suppliers. The number of Medicare beneficiaries isn’t likely to drop, so demand for those products will still remain in place. As some businesses disappear, the other suppliers who remain will still pick up the goods being manufactured. As their individual market share grows , these suppliers can provide employment opportunities for laid-off individuals who are seeking work in the DMEPOS sector.

Author Bio: Brad Brubaker is a technical writer for several online retailers of medical supplies and mobility equipment. For more information about durable medical equipment such as scooters, wheelchairs, and lift chairs covered by Medicare, please visit Lift-Chairs.com.

Category: Medical Business
Keywords: medicare,dmepos,bidding,lift chairs,lift chair,lift chair recliners,lift chair recliner