GAO explores bid program for manufacturers

Thursday, June 30, 2011

WASHINGTON - Industry stakeholders are taking comfort that a Government Accountability Office (GAO) report on manufacturer-level competitive bidding for home medical equipment doesn't include strong language or even a recommendation.

The report, which Rep. Pete Stark, D-Calif., forwarded to the Center for Medicare and Medicaid Innovation last week, explores existing manufacturer-level competitive bidding programs, like those in place at the Department of Veterans Affairs (VA).

"The GAO uses pretty tepid language," said Cara Bachenheimer, senior vice president of government relations for Invacare. "They use the word 'could' instead of 'should.' I don't think, based on their research, that they concluded it was a good thing. I think that's why there's no recommendation."

Stark requested the GAO look into manufacturer-level competitive bidding in 2009, after the industry successfully delayed Round 1 of an existing program involving providers. That program was re-launched Jan. 1 of this year.

The GAO may not have had a recommendation on the subject, but Stark did.

"This report deserves review by the Innovation Center as it presents evidence that manufacturer-level competitive bidding for certain durable medical equipment items may be a cost-saving alternative for Medicare," he wrote in a letter to the center.

Stark is likely referring to a table in the GAO's report that shows Medicare pays $3,885 for a Jazzy power wheelchair and the VA pays $2,004. Other comparisons in the report: $187 vs. $103 for a dry pressure mattress, and $1,638 vs. $396 for an electric hospital bed.

Stakeholders say the price comparisons don't make much sense because Medicare and the VA are two different animals.

"The VA has the clinical component--they have the docs and clinicians on staff; they have the people that do all of the documentation and evaluation," said Seth Johnson, vice president of government affairs for Pride Mobility Products. "With Medicare, that all falls on the backs of physicians and, largely, providers."

The biggest take-away from the report, stakeholders say: That the industry still has work to do to get lawmakers and others to appreciate all of the services providers furnish.

"Once again, they don't understand that it's not just a product drop-off," said John Gallagher, vice president of government relations for The VGM Group. "There's a strong service component. I guess it's shame on us for not making sure everyone understands that."

Read the GAO report. Read Stark's short letter.