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Medicare is the federal health care system that covers about 36 million people age 65 and older, plus 7 million disabled. It has four parts:
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Financed by Medicare and beneficiary premiums, which vary among plans.
The plans are private and financed by Medicare and beneficiary premiums, which vary among plans.
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All the entries posted on March 20, 2008.
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Home > Medicare Monitor > Archives > 2008 > March > 20
Thursday, March 20, 2008
Medicare says competitive bids will save a billion
Medicare officials announced Thursday they expect to save about $1 billion next year by using competitive bids to purchase medical equipment and supplies in 10 geographic regions around the country.
“It’s clear that we have been paying too much for medical equipment and supplies and that competition can serve as one tool to help improve Medicare’s long-term funding situation,” said Kerry Weems, acting administrator of the federal Centers for Medicare and Medicaid Services.
“At the same time, it will help lower prices for beneficiaries who have to pay for these items,” Weems said.
Medicare released the first estimates of how the competitive bidding process will affect prices for 10 categories of durable medical equipment and supplies such as oxygen concentrators, power wheel chair and diabetes testing strips.
Overall, the agency said it expects to see average savings of 26 percent in the 10 regions. The new prices only will apply to beneficiaries with a permanent residence — as listed by Social Security — in one of the regions. They are scheduled to take effect July 1.
In May, the agency is scheduled to announce which companies submitted winning bids to sell the supplies through Medicare.
The federal government has been pushing for a competitive bidding system for medical equipment and supplies for several years, claiming that Medicare is paying far more than retail prices.
Durable medical equipment suppliers have argued that the competitive bidding process will drive small companies out of the market and will result in a reduction in the quality of equipment and services.
Weems said 6,300 bid packets were sent out to suppliers in the 10 regions, of which almost two-thirds went to small businesses — those with gross revenues of $3.5 million a year or less.
Here are some examples of the average savings Medicare expects for some of the more common equipment and supplies:
- Oxygen concentrators — Medicare now pays roughly $200 a month to rent the concentrators, which convert room air to 90 percent-pure oxygen and which retail for about $600 to $800. Under the competitive bidding program, payments will be reduced to about $141 per month, a savings of about 29 percent. The average beneficiary would save about $12 a month.
- Hospital beds — Medicare now pays about $140 per month for three months to rent in-home hospital-style electric beds. Under the competitive bidding program, payment amounts will be reduced to about $99 per month, a savings of about 29 percent. The average beneficiary would save about $8 a month.
- Diabetic testing supplies — Medicare now pays about $83 a month for diabetic testing supplies. Under the competitive bidding program, payments would be reduced about 43 percent to about $48 per month. The average beneficiary would save about $7 a month.