DALLAS, March 21 - When was the last time your health care costs went down?
Probably not recently, but that’s exactly what’s about to happen for McAllen area residents with Medicare who depend on walkers, wheelchairs and other kinds of medical equipment and supplies.
For years, Medicare and its beneficiaries relied on an outdated government fee schedule to buy or rent such items. The prices had nothing to do with the current market and often were much higher than other people paid for the same diabetic test strips, oxygen devices and power scooters.
No more, though. Not in Hidalgo County.
Medicare now requires medical equipment suppliers in the McAllen area to compete and bid for the government’s business. As a result, older and disabled residents enrolled in the traditional Medicare program will see an average savings of 44 percent on the equipment purchased here starting in July.
The first round of Medicare’s competitive bidding program began in nine areas of the country in 2011 and already has saved both taxpayers and beneficiaries hundreds of millions of dollars. On average, prices on items ranging from oxygen devices to home hospital beds fell 42 percent in the first year.
The second round of the program extends competitive bidding to McAllen and 90 other metropolitan areas. Again, the big winners will be the taxpayers as well as people with Medicare.
For example, Medicare and its beneficiaries have had to pay $177.36 per month to rent oxygen concentrators under the old fee schedule – or $2,128.32 for the year. Starting on July 1, the average cost of renting that equipment will drop 48 percent to $93.07 per month – or $1,116.84 a year.
The government will save $809.18 of the taxpayers’ money, while the older or disabled person who depends on the equipment will have $202.30 more to apply to life’s other necessities.
Medicare is also launching a separate nationwide mail-order program for diabetic testing supplies on July 1. The average monthly cost for 100 lancets and test strips will drop 72 percent to $22.47. Over the course of a year, Medicare will spend $532.13 less, while the beneficiary will save $133.03.
By 2016, competitive bidding will cover all areas of the country. All told, it will save Medicare an estimated $25.7 billion, and older or disabled Americans $17.1 billion, during the next decade. As policymakers work to make the health care system more efficient, those savings aren’t insignificant.
Besides reducing costs, the competitive bidding program is also helping to prevent health care fraud.
Medicare’s old fee schedule attracted some unscrupulous suppliers trying to cash in on the excessive payments. Some sold people with Medicare more supplies than needed. The new program checks suppliers to make sure they’re accredited and meet stringent quality standards.
Critics of the new program had argued that competitive bidding would bring shortages of equipment or force suppliers to offer inferior products. But neither has happened. A review of the program’s first year found that beneficiaries continued to have access to all the medical items they needed.
The 1-800-MEDICARE call center received only 151 complaints about the program. That’s out of 2.3 million beneficiaries who live in the first nine metropolitan areas with competitive bidding.
By having medical equipment suppliers vie for the government’s business, Medicare is showing one way to put the brakes on health care inflation. The competition promises to cut the government’s spending on these products and reduce McAllen area residents’ out-of-pocket costs, without compromising quality or safety.
Lower costs. High quality. That’s not a bad prescription.
Dr. Renard L. Murray is the Southwest regional administrator for the Centers for Medicare & Medicaid Services.