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Tuesday, January 8, 2008

New areas being covered by medical equipment competitive bid program

By Larry Lipman | Tuesday, January 8, 2008, 05:04 PM

Atlanta, Austin, Dayton, Greensboro and High Point, N.C., are among the 70 metropolitan areas that will be covered by a new Medicare program requiring competitive bidding for durable medical equipment and supplies.

weems-100.jpg Kerry Weems, administrator of the federal Centers for Medicare and Medicaid Services, announced the expansion of the competitive bidding program Tuesday at a news conference in Los Angeles. The southern California area has been plagued by widespread fraud in durable medical equipment sales charged to Medicare.

Ten other metropolitan areas — including Palm Beach, Broward and Miami-Dade counties — have been scheduled to come under the competitive bidding program in July. The areas announced Tuesday will come under the program in 2009.

Under the program, companies that sell durable medical equipment will have to be industry accredited and certified by Medicare to ensure that they are a legitimate business and must submit bids for the equipment items. Companies whose bids come in under a threshold set by the industry will be authorized to bill Medicare for the supplies.

Currently, Medicare sets prices for durable medical equipment based on prior sales data, which Weems said results in overpayments.

The kinds of supplies and equipment that will be covered include: oxygen; power wheelchairs; enteral (feeding tube) nutrients; respiratory devices; hospital beds; pressure wound therapy; and walkers.

Weems predicted the program would provide Medicare beneficiaries with better access to quality equipment at lower prices.

Recent investigations by the Health and Human Services’ Office of Inspector General have exposed about $1 billion in medical equipment-related fraud. Federal and state task forces also have charged more than three dozen people in Miami for defrauding Medicare in the sale of durable medical equipment.

The durable medical equipment industry hailed the expansion but criticized Medicare for allowing fraud to flourish for so long.

“Medicare has failed to effectively exercise its already ample authority to combat fraud and abuse. It is time for CMS to shine a spotlight on its own processes with respect to its ability to ensure the integrity of Medicare,” the American Association for Homecare said in a statement.

“The association questions why it has taken Medicare so long to impose effective measures to prevent fraud.”

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Report: Medicare prescription plan’s effect widespread

By Larry Lipman | Tuesday, January 8, 2008, 02:29 PM

The full implementation of the Medicare Part D prescription drug plan in 2006 has dramatically reshaped the landscape of who pays what for health care, according to a report released by the federal government Monday.

As a result of Medicare Part D, the number of prescriptions filled, the amount of retail drug spending and the public share of spending for drugs increased from 2005 to 2006, according to the annual report on national health spending prepared by analysts in the Centers for Medicare and Medicaid Services.

Meanwhile, the rate of growth in the amount that consumers spent on health care goods and services not covered by insurance slowed, primarily because of Medicare Part D. The growth of so-called “out-of-pocket” health care spending increased 3.8 percent in 2006. If the amount spent on prescriptions was not included in the calculation, out-of-pocket spending would have grown 5.3 percent. That means consumers spent significantly more out of their own pockets for other health services than for prescription drugs.

Overall, Americans spent 12 percent out-of-pocket for their health care in 2006. That percentage has steadily decreased since 1998, when it was 15 percent. In 1960, before the creation of Medicare, Medicaid and widespread employer health insurance, 47 percent of all health care spending was out-of-pocket.

Partially as a result of Medicare Part D, the growth in spending for prescription drugs increased in 2006 for the first time in six years, the report said. The growth in retail drug spending was 8.5 percent in 2006 compared to 5.8 percent in 2005.

In 2006, Medicare suddenly accounted for a much greater portion of prescription drug spending. Medicare covered only 2 percent of retail drug spending in 2005; in 2006 it covered 18 percent.

The advent of the Medicare Part D program shifted some prescription drug coverage for elderly and disabled Americans from employers to the federal government.

“The public share of drug spending increased from 28 percent in 2005 to 34 percent in 2006,” the report said.

Overall, the United States spent roughly $21 trillion - $7,026 per person - on health care in 2006. That was 6.7 percent more than was spent in 2005.

Despite the increase in the rate of spending for prescription drugs, the rate of growth for other health care services generally decreased:

  • Hospital spending grew by 7 percent to $648.2 billion, a 0.3 percentage point slowdown from 2005.
  • Physician and clinical services grew 5.9 percent to $447.6 billion, the slowest rate of increase since 1999 and 1.5 percentage points slower than in 2005.
  • Nursing home and home health care services spending grew 3.5 percent to $124.9 billion, again the slowest rate of increase since 1999, and a 1.4 percentage point drop from 2005.

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