Two recent OIG reports point out the savings that state Medicaid programs could attain if they based reimbursement for DME, prosthetics, orthotics, and supplies (DMEPOS) on Medicare competitive bidding payment amounts – although at least one state is pushing back on this idea. In the first report, “Medicaid DMEPOS Costs May be Exceeding Medicare Costs in Competitive Bidding Areas,” the OIG calculated the potential savings Texas could have achieved in 2011 if it adopted Medicare DMEPOS bidding prices for selected items of DMEPOS. According to the OIG, Texas Medicaid fee-schedule could have saved approximately $2 million (state/federal shares combined) in the Dallas/Fort Worth area if it had based Medicaid rates on the Medicare DMEPOS competitive bidding amounts for 32 DMEPOS items covered under both programs. The OIG states that its report provides “a tangible example of potential State and Federal savings for Medicaid programs if the programs were to use the Medicare Competitive Bidding payment amounts for DMEPOS items.” This report did not include recommendations or state reaction. 

In the second report, “New Jersey Medicaid Program Could Achieve Savings by Reducing Home Blood-Glucose Test Strip Prices,” the OIG estimates that the New Jersey Medicaid program could have saved approximately $1.8 million to $2.7 million in 2011 by reducing home blood-glucose test strip reimbursement rates to retail rates or by establishing a competitive bidding program for test strips. Such policy changes for test strips also could reduce Medicaid managed care organization reimbursement rates by up to 70%. However, the New Jersey Department of Human Services disagreed with the OIG’s recommendations to align state Medicaid reimbursement with average retail price or Medicare competitive bidding pricing, citing, among other things, doubts about the feasibility of attaining such savings and concerns about patient access and the impact on proper diabetes management.