University of California Health System Voices Concern Over Competitive Bidding

The executive VP of the University of California Health system (UC Health) has written a letter to the Centers for Medicare & Medicaid Services (CMS) to express deep concern over the agency’s competitive bidding program for Medicare durable medical equipment (DME).

This week, the American Association for Homecare (AAHomecare) shared a letter written in late August by John D. Stobo, M.D., executive VP of UC Health, to Andy Slavitt, acting administrator for CMS.

The UC Health system comprises 12 hospitals and 18 health professional schools on seven University of California campuses: Berkeley, Davis, Irvine, Los Angeles, Riverside, San Diego and San Francisco. Stobo referred to it as “America’s largest academic health system.”

In the letter, Stobo pointed out that the competitive bidding program “has led to a number of unintended consequences that, with proper oversight and program changes, can be avoided.”

Stobo said that after competitive bidding was implemented, personnel within the UC Health system began having problems getting the DME they needed for their patients.

“Hospitals throughout California began to report difficulty obtaining medically necessary equipment on a timely basis,” Stobo said in his letter. “In some cases, they reported that designated suppliers had dropped out of the program, thus limiting DME availability in the region. In others, suppliers implemented reduced or inflexible delivery schedules or required that a family member pick up the item at a storefront location.”

Stobo added that as a result, patients weren’t able to be promptly discharged from hospitals, hospitals had to loan DME to patients who were going home, or patients had to purchase the DME out of pocket “even when the items should have been provided and paid for by Medicare.”

While the Medicare competitive bidding program has been highly controversial throughout its existence, CMS has steadfastly maintained that it has received few complaints from beneficiaries. Stobo’s letter challenges those assertions and also questions the efficiency and usability of the quality-control measures CMS currently has in place.

“Unfortunately, hospitals do not report any intervention by [CMS customer service representatives] beyond providing a list of DME providers from the Web site,” Stobo wrote. “UC Health believes Medicare should capture situations in which a hospital case manager has called every listed DME provider and none are able to meet the expectations for timely delivery to the hospital or beneficiary home to ensure a safe discharge.”

Stobo added, “Adding insult to injury, case managers report lengthy wait times in accessing CSRs during business hours.”

He strongly recommended that CMS work with DME suppliers to create a streamlined system so DME can be efficiently delivered to hospitals and post-acute care providers.

“We believe that one conduit for the issue’s identification and resolution, with appropriate steps for escalation, is the only way CMS will truly be able to capture real-time information that can be evaluated and acted upon,” Stobo said in his letter. He also suggested that CMS launch pilot programs in California “to test the scalability of an approach that could be refined as needed.”

He acknowledged that any new system would be expected to encounter initial difficulties, but noted that Medicare’s competitive bidding process is no longer new.

“We are concerned,” Stobo wrote, “that many [problems] have yet to be fully resolved despite several years of implementation.”

About the Author

Laurie Watanabe is the editor of Mobility Management. She can be reached at

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