Medical-equipment dealers are mobilizing against a plan by the federal government to implement a competitive bidding process, a move they say will put 90 percent of them out of business.

The U.S. Congress has been trying since 2003 to implement a competitive bidding process through which the Centers for Medicare and Medicaid Services buys medical equipment for Medicaid and Medicare patients.

The goal is to save money on medical equipment such as power wheelchairs, walkers, oxygen tanks, and equipment, which cost CMS $8.85 billion in 2008 alone.

In a 2003 law, CMS was given five years to implement a system, which launched on July 1, 2008, in nine U.S. markets, including Charlotte, North Carolina. But the rollout was a disaster. The instructions were confusing. Medicare’s website kept crashing. And about 90 percent of medical-equipment providers say they were either unable to bid or their bids were rejected.

The program was ditched after just two weeks, but it did deliver the intended cost savings: Ellen Griffith-Cohen, a Medicare spokeswoman, says CMS realized a reduction in costs of 26 percent. She says the agency often pays more for medical equipment than someone who would walk into a retail store and buy it.

Congress on July 15, 2008, passed another law telling CMS to scrap the bidding system and design a new one. The agency says it’s moving forward with doing just that, and the action has medical-equipment dealers up in arms for one main reason: Medicare and Medicaid payments account for a large portion of many equipment suppliers’ business, meaning failing to secure low-bidder status could signal the end for a provider.

With its new system, CMS is moving forward in the original nine metro areas, including Charlotte. The window to submit bids is December 21, after which the agency will announce winners. They will become sole providers starting January 1, 2011.

CMS has not yet announced when bidding will begin for the second group of 70 metro areas, though it is expected that bidding will occur in early 2011, with the program being implemented in 2012.

Beth Bowen, executive director of North Carolina Association of Medical Equipment Suppliers, and others in the industry are trying to prevent that from happening. They are lobbying members of Congress to pass a bill that does away with competitive bidding. In its place, the bill proposes stepped reductions in CMS reimbursements for the items over several years to meet the cost savings the government hopes to achieve.

Vendors say they price equipment fairly for Medicaid and Medicare. Marcia Ladd, owner of Triangle Aftercare in Durham, North Carolina, says she charges the same price regardless of who is paying.

And Wayne Grau, vice president of supplier relations and government affairs for The Med Group, a 370-member buying group, says any higher price often is related to the fact that the product is rented, rather than sold, which requires the provider to file monthly for reimbursement from CMS, deliver the equipment, and service the equipment as needed. Items sold to non-Medicare members do not come with such requirements.

And, says Ladd, the competitive bidding model ignores the services that providers offer. She says, for example, that if a patient on oxygen has a problem in the middle of the night, he or she can call her, and a Triangle Aftercare employee will take care of it. But under the competitive bidding model, a company in Raleigh may be responsible for servicing patients in, say, Roxboro, or vice versa, potentially making it difficult for providers to supply and service equipment as needed.

Confusion over the original competitive bidding system was high enough to keep some out of the medical-equipment business. Tony Gurley, owner of Gurley’s Pharmacy in Durham and chairman of the Wake County Board of Commissioners, says he had intended to enter the medical-equipment market, but competitive bidding presented such an ordeal that it wasn’t worth it.