Study: Bid program puts Medicare more in line with commercial insurers

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Thursday, August 10, 2017

BETHESDA, Md. – A comparison of the prices Medicare paid for certain DME under its competitive bidding program in 2010 and the average prices that commercial insurers paid that same year supports the conclusion that CMS overpaid for DME, according to a new study conducted by the Health Care Cost Institute and published this month in Health Affairs. On average, the Round 1 Rebid prices for the seven items included in the study were 34.7% lower than the prices in the Medicare fee schedule for 2010. On average, commercial payers paid 28.7% less than Medicare for the same items in 2010. “This suggests that in the nine program MSAs, the program resulted in prices that were generally comparable to but lower than the prices obtained by large commercial insurers,” the study’s authors say. Because the bid program has better lined up prices from Medicare with those of commercial insurers, the study’s authors argue it is an “effective mechanism for achieving savings,” with one caveat. “If the concerns about the program’s long-term sustainability can be resolved, competitive bidding for DME and similar items may be an effective mechanism for achieving savings in Medicare, relative to historic fee schedule prices,” they say. The Health Care Cost Institute is a non-partisan, non-profit organization that aims to provide complete, accurate, unbiased information about healthcare utilization and costs to better understand the U.S. healthcare system, according to its website.