For many years, the Government Accountability Office and the Department of Health and Human Services (HHS) Office of the Inspector General have issued report after report pointing out that Medicare pays too much for durable medical equipment (DME).  DME includes walkers, wheelchairs, and portable oxygen equipment.  Unfortunately for taxpayers, Medicare’s fee schedule is not based on competitive market prices.   

In an effort to reduce costs to taxpayers and seniors, Congress took an incremental step in 2003 to fix Medicare’s DME pricing schedule.  The Medicare Modernization Act authorized the Centers for Medicare and Medicaid (CMS), the agency within the Department of Health and Human Services (HHS) that runs Medicare, to establish a competitive bidding process for purchasing DME.  

CMS developed pilot programs that demonstrated significant savings and found that the median bid for DME was 26 percent lower than the current price.  As a result, CMS believes the competitive bidding process could save taxpayers $1 billion.  Seniors would see an estimated savings of $200 million annually.  The first phase of competitive bidding occurred this spring in 10 metropolitan areas and on July 1, the lower prices were due to take effect.

But lobbyists for the DME companies that chose not to participate in the pilot program, or lost the bids have been pushing Congress to stop or delay the competitive bidding process.  They finally succeeded.  

On June 24, 2008, the House passed H.R. 6331, ironically called the Medicare Improvements for Patients and Providers Act.  The Senate soon followed on July 9. 

While most of the public focus on H.R. 6331 was the effort to stop a scheduled pay cut to physicians, a correction that will be offset by cutting payments to the popular Medicare Advantage program, the bill will also stop the competitively bid contracts and require CMS to rebid the contracts next year.  Neither the House nor the Senate leadership allowed amendments to remove this wasteful provision.

HHS Secretary Mike Leavitt wrote in a July 9 Wall Street Journal op-ed, “Make no mistake: ‘Delay’ means ‘kill.’  Killing this competitive-bidding program would cost taxpayers about $1 billion annually, while unjustly overcharging senior citizens.”  No doubt Congressional leadership and DME suppliers are betting a new administration will do just that: kill the program.

President Bush vetoed the bill and Congress overrode his veto on July 15 by a vote of 383-41 in the House and 70-26 in the Senate.  Congress has once again shown its inability to limit spending and continues to support special interests over taxpayers.

- Brandon Clapp