Medicare Bid Process for Medical Supplies to Expand, U.S. Says

U.S. regulators plan to proceed with a program requiring durable medical equipment suppliers led by Lincare Holdings Inc. (LNCR) and Apria Healthcare Group Inc. to bid to sell to Medicare beneficiaries.

A nine-city trial saved about $130 million in the first half of the year, led to almost 100 retail stores opening and hasn’t harmed patient care, the Centers for Medicare and Medicaid Services said today in a briefing with reporters.

Expanding to 91 more metropolitan areas by July 2013 and nationwide in 2016 will cut prices for wheelchairs, oxygen tanks and diabetes-testing supplies, saving the U.S. $17 billion in a decade, said Jonathan Blum, the deputy administrator overseeing Medicare, the health program for the elderly and disabled. Suppliers grew to 714 from 622, he said.

“This is a program that has led to direct savings for taxpayers and our beneficiaries without compromising quality of care,” he said. The Baltimore-based agency will begin accepting bids in coming months for the added areas, including New York, Los Angeles and Chicago, he said.

The effort will lead to business closings and access issues for Medicare beneficiaries, according to Apria of Lakewood Forest, California, owned by New York-based Blackstone Group LP (BX), and Clearwater, Florida-based Lincare, as well as manufacturers led by Elyria, Ohio-based Invacare Corp. (IVC) The companies are trying to have competitive bidding scrapped.

Reduced Prices

The program reduced prices for nine types of equipment by an average of 35 percent, Blum said. A review of claims data didn’t uncover evidence that patients required additional care at physician offices, hospitals or nursing homes, indicating the bidding program hasn’t harmed their health, he said.

The agency received 45 complaints, contrasting with reports from suppliers and the American Association for Homecare of more than 500 from beneficiaries who couldn’t find a supplier, said Tyler Wilson, the Arlington, Virginia-based group’s chief executive officer.

Medicare officials are “dead wrong,” Wilson said by telephone. “They’re mischaracterizing or turning a deaf ear to problems in this system,” he said. Association members also are reporting stores going out of business, he said.

To contact the reporter on this story: Jeffrey Young in Washington at jyoung89@bloomberg.net.

To contact the editor responsible for this story: Adriel Bettelheim at abettelheim@bloomberg.net.

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