Medicare Will Use Bidding Program to Buy Medical Equipment

By JANE ZHANG

The Obama administration said Medicare will use competitive bidding to buy wheelchairs, walkers and other medical products, but seniors won't be affected until 2011.

Currently, the government pays set fees for such equipment used at beneficiaries' homes. The Centers for Medicare and Medicaid Services, the agency that manages the federal insurance program for the elderly and disabled, has said the prices it pays are too high. It sometimes pays several thousand dollars more than prices charged by Web vendors.

Under the new plan, companies will bid to provide the equipment and Medicare will select several low bidders in a particular geographic area. The government will only pay for equipment from approved suppliers.

Officials said the program, when implemented on Jan. 1, 2011, could save the government $1 billion a year. They said it will also reduce the incidence of fraud.

The announcement came despite a last-minute lobbying blitz by the home-care industry to scrap the bidding program. Earlier this week, 84 lawmakers in Congress wrote to the White House and CMS, asking the government to drop the program. Separately, 28 home-care groups wrote a similar letter to CMS.

The bidding program, the groups said in a news release, "will lower quality and reduce access to care for seniors and people with disabilities." It will drive out as many as 90% of the operators, many of them small businesses, they said.

Last year, the industry successfully persuaded Congress to block the bidding program, which was mandated by a 2003 law. That created confusion among patients in 10 metropolitan areas, where CMS had already solicited bids and told patients they could only use approved suppliers.

President Barack Obama has said he wants to eliminate waste in the health-care system, especially Medicare, to help finance a health-care overhaul. Administration officials also said they want to improve the quality of care for seniors, and the bidding program has been shown to reduce costs and improve quality.

CMS said it will collect and select bids for the program before the program starts in January 2011.

Tyler Wilson, president of the American Association for Homecare, said he was "surprised and disappointed" by CMS's decision. As companies make low bids to get contracts, he said, some businesses will have to close and beneficiaries will suffer from limited choices. "Medicare beneficiaries will be the ultimate losers here," he said.

Mr. Wilson said his group will work with Congress to step in and stop CMS from carrying out the program.

Write to Jane Zhang at Jane.Zhang@wsj.com