A new competitive bidding process implemented by the CMS, will significantly limit growth in many segments of the home care products market in the coming years. Despite several factors that would normally lead to strong growth, healthcare market research publisher Kalorama Information's analysis in its newly updated report, The Market for Home Care Products, 6th Edition, indicates only a modest increase of 2.2% annually between 2009 and 2014, down from 4.1% between 2006 and 2009.
These factors include the aging population, as seniors constitute a large majority of home care customers, and ongoing efforts to move chronic care patients from expensive institutional care to relatively less costly home care. In 2009, an estimated 18 million people received home health care from either professional or unpaid caregivers, and most of them also used associated home care products.
"The new competitive bidding practices mandated by the Medicare Modernization Act of 2003 for certain durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) are beginning to impact prices," notes Bruce Carlson, publisher of Kalorama Information. "These encompass several large market segments covered in Kalorama’s report, including walkers, home care beds, wheelchairs and scooters, enteral nutritional products, oxygen equipment and diabetic supplies."
Round-one of the program was initially piloted in nine of the largest metro areas of the United States, with implementation of prices and contracts occurring in January 2011, after a rebid. CMS estimates the new reimbursement rates will result in an average 32% reduction in payments.
For example, the report indicates that a round-one bid for a standard power wheelchair is $2,554, about 30% below the current Medicare allowable rate. The wheelchair segment will contract by 2.4% per year as a result of competitive bid pricing pressure, thus inhibiting greater total market growth as wheelchairs comprise the largest home care product segment. Together, the segments affected by competitive bidding represented more than $3.9 billion in sales in 2009 or over 42% of the home care market.
Round-two of the competitive bidding program will add another 69 of the largest metro areas, with supplier registration and bidding in 2011 and 3-year round-two contracts beginning in January 2013.
The program requires that equipment suppliers submit sealed bids with the lowest reimbursement rates they will accept with selected Competitive Bidding Areas (CBAs). CMS then selects suppliers based upon these prices as well as other product and supplier information. The final reimbursement amount is derived from the median of all winning bids for an item. Suppliers who have not been selected will not receive reimbursement from Medicare if they furnish items to Medicare beneficiaries.
More information on this topic can be found in Kalorama Information's The Market for Home Care Products, 6th Edition, which provides market estimates and forecasts for various segments and sub-segments of home care products. Discussions of issues and trends, and profiles of key companies are also included.
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