HHS OIG Repeats Itself: Medicaid Should Implement Bidding

Office’s latest report recommends either CMS apply Medicare bid pricing to Medicaid programs, and Medicaids implement their own bid programs.

• By David Kopf
• Oct 15, 2015

State Medicaid programs should implement competitive bidding programs, or apply Medicare competitive bidding rates to specific HME/DME items to ave roughly $30.1 million, according to a new report from the HHS Office of Inspector General.

In the report (available at 1.usa.gov/1LRuDfy), OIG audited California, Minnesota, New York, and Ohio to determine if their state Medicaid agencies could achieve savings for selected DME items. The Office compared each state’s Medicaid reimbursement rate for selected DME items with available Medicare rates to determine the amount of potential savings had the states used a competitive bidding program similar to Medicare’s.

The audit found that Medicaid provider reimbursement rates for those DME items varied significantly among the states, but that the states could lower provider reimbursement rates, resulting in approximately $30.1 million in potential cost savings. However, the OIG did not determine the cost for the states to implement a rebate or competitive bidding program.

Based on those findings, HHS OIG recommended that CMS do the following:

• Seek legislative authority to limit State Medicaid DME reimbursement rates to Medicare program rates.
• Encourage further reduction of Medicaid reimbursement rates through competitive bidding or manufacturer rebates.

A CMS commentary from CMS Acting Administrator Andrew Slavitt to Daniel Levinson, inspector generator of the HHS OIG, said that CMS concurred with both recommendations.

“States have the flexibility to administer their Medicaid programs in accordance with a CMS-approved State plan,” Slavitt wrote. “CMS communicates frequently with States through the State plan process to inform them of all available options, including manufacturer rebates and competitive bidding procedures, for their DME purchasing programs. “

The report comes after a number of state-specific reports by HHS OIG suggesting various state Medicaid programs adopt competitive bidding and similar reimbursement cuts. Those reports have included California, Illinois, Indiana, Minnesota, New Jersey and Ohio.