CMS' competitive bidding program may cut back on device fraud, says GAO

The number of Medicare beneficiaries receiving durable medical equipment items decreased after the implementation of a competitive bidding program, possibly from a reduction in device fraud, according to a recent report from the U.S. Government Accountability Office.

The competitive bidding program adjusts the amount Medicare pays for various durable medical equipment, prosthetics, orthotics and supplies. Through the program, suppliers submit bids to provide supplies or devices to Medicare beneficiaries living in competitive bidding areas, according to Medicare's website. Medicare uses these bids to set the amount it pays for each product. Original Medicare recipients living in these competitive bidding areas must purchase their supplies and devices from these contracted suppliers if they want Medicare to cover the cost.

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 required CMS to implement the competitive bidding program to reduce Medicare spending on certain devices and supplies. CMS gradually implemented the program through two different phases in 2008 and 2013.

To analyze the program's effect on device utilization, researchers studied Medicare durable medical equipment data from 2012 and 2014 — a year before and after the program was fully implemented — to examine the amount of beneficiaries who received equipment covered under Medicare's competitive bidding program.

Here are four things to know about the report.

  1. From 2012 to 2014, the number of beneficiaries receiving covered items through the program decreased by 17 percent, compared to 6 percent of beneficiaries who received devices covered by Medicare, but outside of the competitive bidding program, the report states.

  2. In the same time period, the amount of beneficiaries receiving diabetes testing supplies through the program's national mail-order service decreased by 39 percent, while the amount of beneficiaries getting these supplies from a retail outlet increased by 13 percent, according to the report.

  3. In response to these decreases, CMS officials suggest the competitive bidding program has helped reduce fraud and abuse, possibly curbing unnecessary utilization of some items covered under the program.

  4. CMS' health status monitoring tool has not detected any changes in health measures attributable to the competitive bidding program and the results of a 2014 program beneficiary satisfaction post-survey were positive, according to the report.

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