Bloomberg News: Competitive Bidding for Home Medical Equipment Cuts Business by 85%

The new competitive bidding system mandated under the Centers for Medicare and Medicaid Services (CMS) for home medical care equipment saved roughly 42% on Medicare spending in its first year. Launched as a pilot program in nine states, the new process is being touted as a success by some, says a Bloomberg Government analysis.

The program’s critics, including about 100 academic auction experts express two main concerns: first, that the bids are non-binding, and second that the set price is not a clearing price. The business impact, too, is stark: the Government Accountability Office reported a reduction of suppliers able to do business in those nine markets fell from 2,300 in 2010 to just 365 in 2011—a reduction of 85%.

While the bidding process is currently being used for home medical equipment, or about 1.5% of Medicare spending, the system does have widespread implications, Bloomberg reports, in that CMS could potentially implement this program in other sectors.

Written by Elizabeth Ecker