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Medicare saves over $4 billion in durable medical equipment costs

A rebid for durable medical equipment saved $580 million; Round 2 and mail order saved $3.6 billion.

Susan Morse, Executive Editor

Medicare's changes to the way it pays for durable medical equipment, prosthetics, orthotics and other supplies has saved the federal government over $4 billion over five years, according to the Centers for Medicare and Medicaid Services.

A rebid for durable medical equipment has saved the Medicare program more than $580 million in nine markets, between Jan. 1, 2011 and Dec. 31, 2013, said Sean Cavanaugh, CMS Deputy Administrator and Director, Center for Medicare, in a blog released Tuesday.

A round two rebid and a national mail order program has saved another $3.6 billion between July 1, 2013 and June 30, 2015, he said.

CMS has been implementing changes to the bidding process since 2011 when legislation mandated it. Numerous studies from the Department of Health and Human Services Office of Inspector General and the Government Accountability Office showed the payments to be excessive, Cavanaugh said.

Earlier this year, CMS phased in the adjusted durable medical equipment fee schedule rates in non-competitive bidding areas.

Data shows suppliers continue to accept the new, adjusted payments, and that the amount of supplies and services has remained steady.

In addition, CMS has seen no adverse health outcomes due to the new fee schedule.

"We have been monitoring health outcomes data closely and have not detected any changes in the number of deaths, hospital and nursing home admission rates, monthly hospital and nursing home days, physician visit rates, and emergency room visits in 2016 compared to 2015," Cavanaugh said.

In March, CMS announced new, single payment amounts for durable medical equipment, prosthetics, orthotics and other supplies, and sent out contract offers.

[Also: CMS sets single payment amounts for durable medical equipment, supply contracts]

CMS said it would continue to monitor all data leading up to and following implementation of the phase-in of the fully adjusted fee schedule adjustments on July 1.

A gradual implementation has been a blend of 50 percent of the unadjusted payment rates and 50 percent of the adjusted payment rates beginning on January 1, 2016.