State disputes OIG findings, won't seek $9 million via competitive bidding

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The New York Department of Health will not competitively bid durable medical equipment despite a new OIG report that says the state could have saved its Medicaid program nearly $9 million over a two-year period.

As part of their multi-state review of DME procurement practices, Office of Inspector General auditors reported they initially set out several years ago to determine whether the state's Medicaid program could have achieved cost savings for 70 selected DME items, much like the state's Medicare program successfully did through its Competitive Bidding Program. DME payment rates for 2011-2012 were reviewed. 

A separate audit revealed the health department could have saved the Medicaid program $5.9 million in one year alone by competitively bidding diabetic test strips.

Auditors discovered that 54 of the 70 reviewed DME items were significantly higher than average Medicare payment rates. But state Department of Health officials declined to accept the advice, disputing the accuracy of savings calculations and claiming a switch to competitive bidding would require statutory approval and a costly “dedication of its resources,” the OIG report notes. 

Meanwhile, state officials have vowed to continue to explore and implement cost savings strategies for DME.