Medicare competitive bidding program realized price savings for durable medical equipment purchases

Abstract

From the inception of the Medicare program there have been questions regarding whether and how to pay for durable medical equipment, prosthetics, orthotics, and supplies. In 2011 the Centers for Medicare and Medicaid Services (CMS) implemented a competitive bidding program to reduce spending on durable medical equipment and similar items. Previously, CMS had used prices in an administrative fee schedule to reimburse for these items. We compared prices from Round 1 of the Medicare competitive bidding program, which were established for the periods 2011-13 and 2014-16, to prices paid by national commercial insurers for the same types of items in 2011-14. Our results suggest that the initial years of the program produced prices comparable to those obtained, on average, by large commercial insurers-sophisticated purchasers that presumably were able to negotiate prices with suppliers of durable medical equipment and similar items.