Utilization drops in Round 2 bid areas, GAO finds

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Wednesday, October 19, 2016

WASHINGTON – The number of Medicare beneficiaries receiving DMEPOS in Round 2 areas decreased more than twice as much from 2012 to 2014 than in non-bid areas, according to a new report from the Government Accountability Office.

The number of beneficiaries receiving DMEPOS in Round 2 areas decreased 17% from 2012, the year before bid pricing went into effect, to 2014, the year after. The number of beneficiaries in non-bid areas decreased 6% during the same time period.

“CMS officials stated that competitive bidding pricing has helped limit fraud and abuse and may have curbed unnecessary utilization of some covered items in competitive bidding areas,” the report stated.

For a corresponding national mail-order program for diabetes supplies, the number of Medicare beneficiaries receiving covered items decreased 39% from 2012 to 2014. There was also a 13% increase in the number of beneficiaries receiving these items through retail outlets.

Despite the decreases in utilization, the GAO cited reports from CMS that indicate Round 2 of competitive bidding and the national mail-order program have had no widespread effects on beneficiary access.

“CMS officials told GAO that CMS took measures to ensure that contract suppliers met their contract obligations, such as investigating complaints using secret shopping calls, and terminating contractors of suppliers that remained noncompliant after receiving targeted education,” the report states.

The GAO did acknowledge that some beneficiary advocacy groups and state hospital associations have reported specific access issues, such as difficulty locating contract suppliers that will furnish certain items, and delays in delivery of certain items.

The GAO also found that 11% of bid areas had three or fewer active contract suppliers and 1% had just one active contract supplier. Additionally, it found that while multiple suppliers had substantial shares of the market for most areas, a single supplier had the majority in some areas.

For example, the GAO found in 6% of bid areas, one contract supplier had a at least 90% of the market, and 11% of contract suppliers did not furnish any bid items for any areas in their contract.

“CMS officials told GAO that CMS monitors these suppliers to help ensure that they are meeting their contractual obligations, such as being willing to service all beneficiaries in their areas and to furnish the same items to Medicare beneficiaries that they make available to other customers,” the report stated.