Health reform • New Medicare bidding program lowers equipment costs by steering patients to approved-sellers.
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Utahns on Medicare will soon be encouraged to shop for diabetes testing supplies from 18 government-approved mail order companies.
And those in the greater Salt Lake area will be steered to a list of 56 retailers for wheelchairs, walkers, oxygen, hospital beds and other devices.
The providers have been chosen under the Obama administration's competitive bidding program, which debuts in Utah on July 1.
The program reaped $202 million in savings in nine regions of the country in its first year, reducing device costs by an average of 40 percent. By 2022, it's predicted to save taxpayers $25.7 billion and patients $17.1 billion through lower co-payments and premium costs, according to the U.S. Centers for Medicare and Medicaid (CMS)
"You can understand why we're anxious for this program to expand," said CMS regional spokesman Mike Fierberg.
Retailers approved for the Salt Lake service region which includes parts of Davis, Tooele and Summit counties won the rights to sell to Medicare enrollees through a bidding process, a break from the usual fee-for-service arrangement where enrollees could buy from any supplier.
Among them are some small shops, industry giants such as Orbit Medical of Portland and the big box store Walmart.
Typically, the payments for a piece of equipment will be 40 percent less than the current price. For example, a $100 purchase now will cost $60, cutting a beneficiaries' co-payment from $20 to $12.
Enrollees residing in the Salt Lake region must shop at approved retailers, or foot the entire bill themselves, Fierberg said.
The cost of diabetic testing supplies will be more than 50 percent lower for all beneficiaries who use the mail order companies that won contracts. The new prices will also be offered at pharmacies that participate in Medicare.
"The expansion means more beneficiaries will benefit from fair pricing," without suffering in quality, said CMS acting administrator Marilyn Tavenner in a prepared statement. She noted, "Each of these contract suppliers has met our stringent standards."
The program isn't popular, however, among retailers who argue it's confusing for patients and cuts smaller shops out of a critical segment of the market.
"It's not going to put us out of business, but it's going to hurt," said Ron Lundeen, marketing manager of the 31-year-old South Salt Lake supplier, Action Medical.
Action didn't bid to become an approved seller.
"Medicare does not comprise the bulk of our business. For that reason, and other costs associated, it just didn't work out," said Lundeen.
But he said Medicare's focus on the bottom line will hurt consumers. Companies will no longer be able to afford to keep an adequate stock of supplies, forcing delays in getting goods out, he said.
And cash-poor companies will scale back on customer service, he added. "We have an excellent reputation and fantastic customer support. But that doesn't weigh into Medicare's equation. If somebody needs a hospital bed, there will be no one there to help them understand how to use it."
Non-approved suppliers can still subcontract with approved sellers.
But the trade group American Association for Homecare has fielded complaints from consumers and providers who can't find equipment for the price CMS expects.
Part of the problem is the bids aren't binding, said the association's spokeswoman, Julie Driver. "The only way to get a contract is to bid low enough, but if you bid too low, below your actual cost, you can later decide that won't fly and walk away," Driver said.
Find an approved supplier near you
Patients and doctors can find a list of Medicare-approved medical device suppliers at www.medicare.gov/supplier, or by calling 1-800-MEDICARE. The website is searchable by ZIP code.