News Column

Medicare Says Equipment Contracts Will Save Seniors Money

April 11, 2013

Seeking to cut Medicare costs and save patients money, the federal government is requiring seniors and disabled people who need wheelchairs, medical oxygen and other medical equipment to buy it from an approved contractor.

The competitive bid program, launched two years ago in nine parts of the country, expands to 91 metropolitan areas July 1, including Austin and five others in Texas -- Beaumont, El Paso, Houston, McAllen and San Antonio.

Medicare is making the change because taxpayers and patients were paying too much for medical equipment, and officials hadn't updated the fee schedule to account for technology since the 1980s, Jonathan Blum, deputy administrator for the Centers for Medicare and Medicaid Services, said in a call with reporters Wednesday. So far, the program has saved $202 million, officials said.

The government expects to save about $26 billion over the next 10 years, while patients will save $17 billion in copays and premiums, Blum said. The program will be in all areas of the country by 2016.

Under the program, Medicare pays 80 percent of the cost for durable medical equipment, prosthetics, orthotics and other supplies, while patients pay 20 percent.

The new program affects disabled people and those 65 and older who are on traditional Medicare coverage, not patients with a private Medicare Advantage plan, said Medicare spokesman Bob Moos in Dallas. Neither he nor a spokeswoman in Washington knew how many residents in Travis, Williamson, Hays, Bastrop and Caldwell counties would be affected.

On average, Medicare officials said the change will cut costs by 45 percent.

Under the old fee schedule, Medicare and its patients were paying $177 a month to rent oxygen concentrators, for example. That will drop 48 percent to $93 a month.

Medicare beneficiaries will be referred to the contractors in their area by doctors, hospitals and others. They also can get a list online at or can call 1-800-MEDICARE for more information.

An effort is under way to educate Medicare beneficiaries about the new program, said Tami Holzman, a Medicare spokeswoman in Washington.

When the Statesman checked Medicare's website, it found that most of the Austin-area contractors had addresses outside of the area, and a couple were out of state. There could be many reasons for that, Holzman said, but the bottom line is that contractors must be able to serve the areas in which they have a contract, such as having a distribution center or a subcontractor in the area so they can deliver items to homes and provide service.

Companies that have been supplying the equipment to Medicare patients but didn't win a contract are upset with the change.

"Basically, customers have lost their choice," said Nick Murphey, a founding partner of Kerring Group Home Medical Equipment in Austin. "There were other ways to do this."

Murphey said that, instead of requiring companies to bid for contracts, Medicare could have revised the fees and required companies to charge accordingly.

"I am not against taking a cut," Murphey said. "I'm all about saving the taxpayer money, but don't make me get involved in this game of competitive bidding."

Murphey said he provides motorized wheelchairs that cost him between $900 and $1,000 each. The Medicare fee is $4,000, but that includes delivery, training recipients and other expenses, as well as his profit, he said. He bid $2,900 to provide the chairs but wasn't selected.

He will try to be more efficient and adapt, but "it's another step in trying to kill the small-business person," he said.

Lillie Gilligan of Austin, who cares for her husband Neil, 84, said she has been a customer at Kerring Group for 10 years and doesn't plan to switch companies. She will pay out of pocket for a motorized wheelchair for her husband rather than shop elsewhere, she said.

Jo Day, 68, who needs a power chair because of a paralyzed leg, said she isn't in a financial position to pay out of pocket. "I'm not happy that I will now be forced to go to other providers," she said.

Blum said that, despite such concerns, Medicare has received few complaints and has no indications that service or quality have declined: "We can save substantial dollars and ... have every confidence that quality of care will not be diminished and (have) some signs that quality of care has actually been increased."

Also starting July 1, Medicare is launching a nationwide mail-order program for diabetic testing supplies that will reduce the cost of 100 lancets and test strips by 72 percent, to about $22.

Source: (c)2013 Austin American-Statesman, Texas. Distributed by MCT Information Services.

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