Stakeholders warn state lawmakers on bidding supplies

WASHINGTON - A recent Office of Inspector General (OIG) report calls on CMS to urge states to cut costs on incontinence supplies, and the agency agreed. Industry stakeholders warn that could lead to an expansion of competitive bidding.

Released in January, the report found Medicaid fee-for-service programs spent $266 million on disposable incontinence supplies in 2012, but they could have saved $62 million, or 23%, by using median competitive bidding prices, a move that five states have already made.

Competitive bidding isn't the answer, contends Rose Schafhauser, executive director of the Midwest Association of Medical Equipment Services (MAMES).

“Our recommendation would be to work with the respective state associations and come up with a plan if they need to achieve certain savings,” she said.

Incontinence supplies are in the crosshairs because they involve less service and are more subject to commoditization than other DME, said Ryan Ball, director of state policy for VGM & Associates.

“A lot of payers see that business as a drop-ship business and that there's no need for a provider in some cases,” he said. “And, they're just wrong in that.”

Ball said state-level competitive bidding would result in less service, lower quality products, and significantly fewer suppliers, especially local ones. Even worse, the introduction of competitive bidding for incontinence supplies could open the door to bidding for other products, he cautioned.

“Right now, they're only looking at incontinence supplies,” Ball said. “Once they get their nose under that tent and see some savings that may be available there, you're going to see a rather quick transition to other products to do the same thing.”

To stop it, the industry must educate and lobby state government about the potential drawbacks, Ball said.

“CMS has been espousing the benefits of bidding without talking about any of the challenges or problems,” said Ball.