New York’s Medicaid program — which overpaid nearly $9 million for durable medical equipment over a two-year period — is one of seven states that has missed significant savings on medical equipment by not requiring competitive bidding by suppliers, according to multiple reports by federal watchdogs.
Nine Department of Health and Human Services inspector general reports, published in 2012, 2013, 2014 and earlier this month, focused on cases in which state Medicaid programs could potentially save millions of dollars on equipment like oxygen supplies, hospital beds and mail-order diabetic supplies, as well as standard power wheelchairs, oxygen systems and oxygen concentrators.
The inspector general cited Medicare’s Competitive Bidding Program as a prime model for cutting costs. Some of the reports also suggested lower reimbursement rates and rebates. The potential savings are significant: California, Minnesota, Texas, New Jersey, Illinois, Ohio and New York each overpaid anywhere from $2 million to nearly $9 million for the equipment.
Congress required Medicare to establish the program in 2003 for selected equipment, including prosthetics, orthotics and supplies. The program established lower payment rates for medical equipment and reduced out-of-pocket costs for beneficiaries after it became operational in January 2011.
Four states — Illinois, New Jersey, New York, Ohio — over-spend on blood-glucose test strips. Illinois “could have achieved additional savings of approximately $8.5 million” in 2011 with such a bidding program, according to an inspector general report, because state officials were paying a “significantly greater [price] than the corresponding Illinois Medicare rate.”
An inspector general report in 2014 found that “in previous audits, we identified an estimated $16.5 million that the Illinois and Ohio Medicaid programs could have saved on diabetic test strips if they had obtained pricing similar to the pricing that Medicare obtained.” The same report estimated that Minnesota’s Medicaid program could have saved $2.27 million.
A 2013 inspector general report said New York’s health department “achieved savings of approximately 51 percent for the New York State Medicaid program,” but it could have saved an additional $5.9 million with competitive bidding similar to Medicare’s program.
New York’s State Department of Health disagreed with the federal watchdog’s findings and methodology in the current report. It said the audit did not consider the different health conditions and treatment needs of beneficiaries between New York State Medicaid and federal Medicare programs.
Also, New York officials claimed implementing Medicare-like competitive bidding areas would require a consensus that would, “necessitate significant dedication of resources.”
The inspector general, however, said that “after reviewing the State agency’s comments, we maintain that our finding and our methodology for calculating the potential cost savings are valid.”
