The new rates that have evolved from the bidding system are initially meant for ten metropolitan areas, but will soon be extended to other areas and possibly nationwide. Information of the cuts in the reimbursement indicate steep reimburse cuts for oxygen and oxygen equipment at 30% and sleep apnea products at 29%. This is likely to cause revenue return issues for companies like Apria Healthcare Group Inc and Lincare Holdings Inc, who market oxygen equipment and ResMed Inc marketing sleep apnea products. The average reimbursement cuts for DMEs is 26%, which has significant implications for the bottom line of companies dealing with DMEs (U.S. Medicare cuts oxygen, apnea pay rates). The relevance of the study of this issue lies in these implications for the DME markting organizations and the consequent fall-out on the many senior and disabled citizens dependent on Medicare for access to DME to assist them through their difficulties.
Consequent to the provisions of Medicare Part B mandatory accreditation and competitive bidding have become a part of the supply procedures at the Centers of Medicare and Medicaid throughout the ten major metropolitan areas that have selected for implementattion of these new procedures with regard to DMEs. The category of products affected by the complicated adjudication protocols as necessitated by Medicare Part B include DMEs, prosthetics and orthotics, commencing from the beginning of 2007 (Johnson, 2007).
From the companies marketing DMEs and the chain retail pharmacies involved in making available DMEs for purchase the stumbling blocks lie in the administrative burden involved in the bidding process and the crippling $65,000 bond to participitate in the bidding process. These two hindrances may well cause many of the retail pharmacies to opt out of serving patients in this segment of health care and for the DME marketing companies there is the definite possibility of reduced revenue generation,