The Medicare national competitive bidding program (NCB) for durable medical equipment (DME) traces its roots to 2003's Medicare Prescription Drug, Improvement, and Modernization Act. Since 2011, NCB -- like a sword that slashes reimbursement, closes down businesses, restricts access -- has hung over the heads of home medical equipment providers who work with Medicare.

That's been the case for so long that the new Leitten Consulting report -- published last month by VGM & Associates -- was both revealing and a bit startling.

Because the Centers for Medicare & Medicaid Services (CMS) has treated DME as a costly burden for so long, it was entirely refreshing to see DME being rightly respected as the path to better patient outcomes.

And it was gratifying to read about how DME, rather than being reduced to a cost, could actually save Medicare money and make the most of every Medicare dollar spent. That perspective has been rarely seen the last two decades.

The report -- Competitive Bidding for DME: Is It Still Part of Medicare's Future? -- was authored by Brian Leitten, the CEO of Leitten Consulting.

In the first of the company's DME studies, going back to 2011, Leitten quoted Benjamin Franklin's famous "An ounce of prevention is worth a pound of cure" and noted that CMS seemed intent on using NCB "to slash the cost of providing needed DME to Medicare beneficiaries. Instead, it should have been prudently investing in providing DME.

"The logic supporting continued investment in DME was and is that the cost of treating the injuries and illnesses incurred by beneficiaries who lack the critical DME far exceeds the cost of providing needed DME in a timely manner."

In layman's terms, providing walkers to Medicare beneficiaries experiencing balance or gait difficulties is far cheaper than paying for the costs -- ambulance services, emergency room visits, hospitalizations, surgeries, rehab, etc. -- incurred from injuries caused by falls.

But CMS put NCB into action, and the Leitten report acknowledged that the program "led to a 45% reduction in total spending on all the items that were included in the program over the first four years of the program."

Reduced spending on DME wasn't NCB's only result. "The share of beneficiaries receiving DME dropped 11% over the same period," the report said. "Those decisions also reduced the number of viable DME suppliers." For certain DME categories, the number of DME providers dropped by nearly half.

After decimating beneficiary access to DME and forcing too many providers to close their doors or decline to work with Medicare customers, NCB may have finally hit bottom.

"Much of the evidence suggests that competitive bidding may have reached its natural end," the Reitten report said, citing "delays and failures" following the first two NCB rounds. "For over five years, CMS has been unable to cobble together even a single effective round of competitive bidding."

The report analyzed three categories of DME: mobility, oxygen, and CPAP machines and supplies.

"In every iteration of the study, the treatment spending losses incurred by CMS in every category were orders of magnitude greater than the cost of providing the needed DME," the report said. "In each new iteration of the study, the ratio of treatment cost to prevention increased. ... Total dollars CMS had to spend on treatment soared."

So while CMS was praising the cost savings brought about by NCB, the agency was simultaneously paying far more for treatments that included hospitalization and other medical services.

And ironically, while CMS was paying as little as it could for DME, the American health-care system was ramping up home-based care -- a trend accelerated by the COVID-19 pandemic, when telehealth proved enormously successful in keeping patients out of beleaguered hospitals.

"CMS needs to realize that DME is not the culprit, but an important part of the solution," the report said. "It has to acknowledge that relatively small investments in prevention can reduce much larger costs for treatment. Until then, it will not be able to capture the savings from treatment reduction costs and get better control of overall Medicare spending."

As an example of how the timely provision of DME at a relatively small cost can ultimately save CMS money, the report said, "For mobility DME, the goal is still to eliminate all senior falls by providing the proper DME in advance of need. Annually, over 9 million seniors require treatment for fall injuries."

And for oxygen and CPAP, the report said, "The goal is to identify and treat Medicare beneficiaries with diagnosed and undiagnosed COPD [chronic obstructive pulmonary disease] and OSA [obstructive sleep apnea]; 50-60% of Medicare beneficiaries with COPD and up to 95% with OSA remain undiagnosed."

"For every dollar that Medicare spends providing mobility DME, CMS can avoid spending $62.38 on direct fall-related health-care costs, including ER visits, hospitalizations, doctor visits, rehabilitation care, and other related costs," the report said. "Medicare beneficiaries and their private insurers, who shoulder copays that Medicare doesn't cover, save an additional $15.59 [for every dollar spent on mobility DME]."

For every dollar Medicare spends on providing oxygen equipment and supplies, CMS saves approximately $42.96 in COPD-related treatments costs; beneficiaries and insurers save an additional $10.74.

And for every dollar Medicare spends to provide CPAP therapy, CMS saves $21.21 for sleep apnea treatment and related complications. Beneficiaries and insurers save an additional $5.30.

Investing in prevention isn't a new health-care strategy. Insurers have long paid for six-month dental checkups and cleanings in hopes of preventing the need for root canals. Physicians would rather treat high blood pressure than heart failure or stroke.

The Leitten report points out that DME can be an investment that's financially responsible and clinically beneficial. By providing DME in a timely, proactive manner, CMS could ultimately save Medicare dollars and make it possible for more patients to age in their homes, where they'd rather be.

That's always been the goal of home medical equipment providers and manufacturers.

"In all, CMS can achieve a minimum savings of $130 billion that could approach $200 billion (when undiagnosed COPD and OSA costs are included) by focusing on managing treatment," the report noted. "This equates to 13-20% of its total annual spending and does not include the additional $32-40 billion in additional savings that will flow to Medicare beneficiaries and their payors."