Competition Cuts Down Medicare Fraud

by InvestorPlace Staff | April 18, 2012 6:48 pm

[1]A pilot program that allowed competitive bidding for power wheelchairs, diabetic supplies, and other personal medical equipment saved nearly $200 million for Medicare[2] in the past year, and reduced Medicare fraud.

The program, tested in nine cities including Miami, Cincinnati, and Riverside, Ca., differed from how Medicare usually handled these sorts of expenses. In a non-competitive system, Medicare frequently paid more than private insurers for comparable equipment and occasionally had suppliers committing Medicare fraud by ordering expensive and unneeded equipment for beneficiaries.

In the pilot program, though, a limited number of suppliers in the tested areas competed to fill orders for Medicare patients. Implemented more widely, and the government estimates that $26 billion can be saved from 2013-2022. The pilot will be expanded next year to 100 cities, with hopes for an eventual national rollout. There will also be a national mail order plan for diabetes supplies like testing strips next year.

The home-care supply industry, however, sharply criticized this program, saying it would lead to shortages in supplies, economic difficulties for smaller suppliers, and increased reliance on lower quality products. However, the number of complaints about Medicare in the areas covered by the pilot decreased significantly.

For more information, check out this Associated Press article[3].

— Benjamin Nanamaker, InvestorPlace Money & Politics Editor

The opinions contained in this column are solely those of the writer.

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