COPD Foundation Strongly Disagrees with the Government Accountability Office (GAO) Findings with the Competitive Bidding Program for Oxygen

April 24, 2014

This month the Government Accountability Office (GAO) released a report on the results of Round 1 of the Durable Medical Equipment (DME) competitive bidding program on beneficiaries, suppliers, and the Medicare program.  GAO reports that Medicare cost savings of about $400 million are estimated by the Centers for Medicare and Medicaid Services (CMS).  However, GAO further reports that the Competitive Bidding Program (CBP) did not appear to have adversely affected beneficiary access to CBP-covered items which includes supplemental oxygen. 

The COPD Foundation takes great umbrage with the GAO report that states that beneficiary advocacy groups they interviewed did not report widespread CBP beneficiary access concerns. The COPD Foundation has had direct contact with the CMS Ombudsman on this issue and is surprised that the GAO would make a statement like this regarding the CBP.  Had the GAO interviewed the COPD Foundation, we would have had the opportunity to express our displeasure and growing concern with this flawed program.

The COPD Foundation has contended for some time that CMS should exempt oxygen from the DME competitive bidding program. From the beginning, the Competitive Bidding program has caused market place changes that have brought hardship to the patient community. The unrealistic low prices for durable medical equipment (DME) have forced many suppliers in the affected communities to go out of business or no longer offer products or services to Medicare beneficiaries due to reduction in personnel. In several states, some winning bidders lacked state licensing and accreditation requirements. Consequently, many patients are services by companies located at a greater distance from their homes on less convenient and extended schedules. This causes special problems especially if the equipment malfunctions. Patients are losing access to equipment and supplies they need. They have difficulties finding new suppliers and have experienced poor service from winning bidders.

Many oxygen providers have discontinued the practice of providing liquid oxygen to patients. This practice may significantly restrict a patients' mobility by requiring them to transport multiple tanks while attempting regular day-to-day activities such as grocery shopping or seeing their physicians for routine care. In many cases, elderly patients are now being forced to pull large tanks of compressed oxygen. Further, many oxygen providers are now restricting or ceasing delivery of compressed oxygen tanks citing reimbursement issues. The result of this is many oxygen patients are being forced to drive long distances to pick up the very tanks they rely on for their mobility.  High flow oxygen patients are experiencing the greatest difficulty when losing their liquid oxygen, as no compressed system allows them the same degree of mobility they are able to attain using liquid.


Under competitive bidding, DME suppliers submit bids to the CMS that include the price at which they are willing to sell a specific item and the percentage of the geographic area’s market they would serve at that price. CMS collects these bids and offers contracts to the lowest bidders with sufficient capacity to service the market. The contracts cover a three-year period for each item in each market. The competitive bidding Round 1 rebid started in 2011 in nine geographic areas. Congress halted the initial Round 1 implementation in 2008 because of concern that the process for awarding contracts to suppliers was flawed. The program’s Round 2 began in July 2013 in an additional 91 geographic areas. The statute requires that CMS adjust the amount paid for items in all other geographic areas using the competitively bid prices starting in 2016. Once liquid is removed by providers, it will be exceedingly difficult to ever reintroduce it as the support structure required to maintain it will be irretrievably severed.

You can view the GAO report here.

The COPD Foundation is making every effort to ensure continued delivery of oxygen therapy to all individuals with COPD. We are providing information such as an oxygen therapy guide, and we are working with legislative leaders to address problems with the new competitive bidding law. It is vital that our community takes action for our efforts to be successful. Share your experiences on this survey, file a complaint when your oxygen therapy is disrupted, and contact your elected representatives.

To learn more about these new Medicare rules or to file a complaint, please call the C.O.P.D. Information Line at 1-866-316-COPD (2673).