Competitive bidding may cut HME spending in Iowa by one-third

CEDAR FALLS, Iowa, July 25, 2012—Medicare’s Competitive Bidding Program will reduce government spending on home medical equipment in Iowa by almost $100 million a year, or about one-third of what is now being spent, according to a new study by Ken Brown of the University of Northern Iowa Department of Economics.

The study noted that none of the initial 100 competitively bid cities are in Iowa, but several counties representing more than 100,000 people in the Omaha-Council Bluff are included in Round Two of competitive bidding. Starting in 2016, bid rates will be applied nationally, and that will have a direct impact on Iowa. The program is hitting other areas sooner and will likely have an impact similar to what will occur in Iowa in 2016. Competitive bidding was implemented in nine metropolitan areas during Round 1, and Round 2 of the program is being implemented in another 91 metropolitan areas. Round 2 contracts and prices are scheduled to go into effect on July 1, 2013.

The study found that the program will lead to the elimination of 2,285 jobs in Iowa. In addition, two large HME industry companies—VGM Group Inc. and Medline Industries Inc.—are located in Iowa, the study noted. “Both companies will be forced to scale back operations, with additional losses to output and jobs in the state,’’ the study said.

In addition, competitive bidding will eliminate many providers in the state and make it more difficult for Medicare beneficiaries to obtain HME goods and services, the study said.

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