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Brady, McDermott Release GAO Report on Durable Medical Equipment Competitive Bidding

March 31, 2015

Washington, DC – Today, Ways and Means Subcommittee on Health Chairman Kevin Brady (R-TX) and Ranking Member Jim McDermott (D-WA) released a Government Accountability Office (GAO) report on the experience of the Durable Medical Equipment (DME) competitive bidding program.  GAO assessed the program’s 2012 impact in the nine geographic areas involved in the initial phase (Round 1 rebid) on beneficiaries, suppliers, and the Medicare program.

The GAO report compares the number of items supplied to beneficiaries in each of the nine competitive bidding areas to a similar geographic area outside of the program.  It also describes Centers for Medicare and Medicaid Services (CMS) efforts to monitor the program’s impact.  GAO states that the program has resulted in a drop in utilization of DME supplies in the nine areas without impeding beneficiary access to these supplies.

In issuing the report, Health Subcommittee Chairman Brady said, “The GAO report provides critical information for the Committee’s on-going oversight of Medicare’s competitive bidding program.  We need to make sure that Medicare pays appropriately for DME so as to protect seniors and taxpayers from overpaying, while ensuring that seniors have access to the equipment they need to lead long and healthy lives.  I am glad GAO agrees that continued monitoring of the competitive bidding experience is needed to understand its impact for seniors and the Medicare program over the long-term.  I look forward to working with GAO and others as the Committee continues to work to ensure seniors have affordable health care options under the Medicare program.”

Health Subcommittee Ranking Member McDermott said, “The latest GAO report is a new source of information as both Democrats and Republicans work together to ensure that American seniors have access to the medical equipment they need.  I look forward to continued oversight of the competitive bidding program and even more information about the program’s effectiveness with regards to Congress’ crucial mission to control costs and ensure access in all facets of the bedrock program of Medicare.”

Under competitive bidding, DME suppliers submit bids to the CMS that include the price at which they are willing to sell a specific item and the percentage of the geographic area’s market they would serve at that price.  CMS collects these bids and offers contracts to the lowest bidders with sufficient capacity to service the market.  The contracts cover a three-year period for each item in each market.  The competitive bidding Round 1 rebid started in 2011 in nine geographic areas.  Congress halted the initial Round 1 implementation in 2008 because of concern that the process for awarding contracts to suppliers was flawed.  The program’s Round 2 began in July 2013 in an additional 91 geographic areas.  The statute requires that CMS adjust the amount paid for items in all other geographic areas using the competitively bid prices starting in 2016.