WASHINGTON -- The Department of Health and Human Services has agreed to investigate whether government contracts for durable medical goods -- such as wheelchairs, beds and blood-sugar monitors -- are being awarded properly.
The probe stems from concerns that the Center for Medicare Services may have awarded hundreds of contracts to suppliers who aren't in compliance with program requirements.
U.S. Reps. Glenn "G.T." Thompson, R-Centre, and Bruce Braley, D-Iowa, requested the investigation in June after learning that contracts were awarded to 30 unlicensed suppliers in Tennessee and that more may have been improperly awarded in other states.
The new bidding program was created as part of the Medicare Modernization Act in order to help set new, more appropriate payment rates. Its aim is to let market costs replace a pricing system that has been based on charges from the 1980s, which were then increased by an automatic factor that sometimes overestimated inflationary costs of medical supplies.
Medicare says the new system, which forces suppliers large and small to bid on the chance to supply equipment to Medicare patients, could cut the cost of these goods by up to 20 percent. But losing bidders will be left off the new list of certified suppliers and wouldn't be eligible for Medicare reimbursement.
That's different from the current set-up, where any supplier is free to work with Medicare, as long as it meets the Centers for Medicare and Medicaid Services' price restrictions. And that's why smaller suppliers have been lobbying against the changes for years.
What's particularly troubling to Mr. Thompson and Mr. Braley is that the bids aren't binding, even though the quotes in them will be used to develop pricing benchmarks for licensed suppliers, including those small companies that might be priced out of the market.
"When the government picks winners in a flawed bidding system for the medical equipment business, seniors on Medicare and the small businesses that serve them lose," Mr. Braley said Tuesday.
That's what prompted him and Mr. Thompson to ask for an investigation into whether bureaucrats intentionally awarded contracts to unlicensed companies in an attempt to artificially low price points.
This week, Health and Human Services Inspector General Daniel R. Levinson agreed to "conduct a limited scope review."
Mr. Thompson has said that the problems stifle competition and restrict patients' access to necessary medical equipment, prosthetics, orthotics and supplies.
"You hear the phrase 'competitive bidding' and you think, 'What can be wrong with that?' " Mr. Thompson said. "But it's a very complex issue."
Later, in a written statement, Mr. Thompson said he's glad the Office of Inspector General will look into his concerns.
"With any hope, the OIG's efforts will shed light on how these failures occurred and impose a new level of transparency at [the Center for Medicare Services], and among those tasked with upholding the public trust and ensuring that the promise of Medicare is upheld for our nation's seniors and those facing life-altering disease and disability," he said.
The new bidding program initially operated in nine metropolitan areas, including Pittsburgh. This summer it expanded to include 100 regions.
Washington Bureau Chief Tracie Mauriello: firstname.lastname@example.org, 703-996-9292 or on Twitter @pgPoliTweets.