Medicare Competitive Bidding

Pursuant to a congressional request, GAO examined how Medicare could effectively use competitive bidding to set medical services and supply prices and achieve savings. GAO noted that: (1) competitive bidding has been effective in controlling the costs of the Department of Veterans Affairs' oxygen supplies, Arizona Medicaid capitation rates, and state supplemental food programs; (2) although no comprehensive savings estimates exist, there is evidence that Medicare could achieve substantial savings by paying market rates for some services; (3) the impact of competitive bidding on Medicare costs depends upon market structure, the bid award process, and the cost of administering the bidding process; (4) likely candidates for competitive bidding include clinical laboratory services, durable medical equipment, medical imaging tests, and cardiac procedures; and (5) services and supplies that can be compared on the basis of price alone represent the most promising candidates for competitive bidding.