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I-Team: Patients Feeling Effects Of New Medicare Bidding Program

HARWICH (CBS) - When Marilyn Thierren is in her Harwich home, the COPD patient is tethered to an oxygen generator. She needs a portable tank to leave the house.

The company Medicare pays to supply the oxygen used to deliver about 30 tanks a month, but recently, they cut that number in half.

"I feel right now they are holding me hostage to my own home," Marilyn says.

The company offered her a home-fill system, which is hard to manage with her severe arthritis.

"They have taken my life away from me," she says.

The California-based company refused to tell the I-Team why they cut back on the deliveries, but industry experts say it is likely because of a program called competitive bidding.

Companies submit bids for products like oxygen, hospital beds, wheelchairs and walkers. Suppliers with the lower bids are offered Medicare contracts.

Companies like Alternative Care Providers in Chelmsford are also getting pinched. Co-owner Michael Schleipfer says he can't afford to operate at those low rates so he didn't win a contract.

"The only way that you can really compete would really drive down the benefits of our employees and we would have to go to products that are really not that great," Schleipfer says.

"It's just not sustainable," says Karen Estrella who represents medical equipment businesses across New England. She said Medicare providers are now taking a hit of up to 40% since the bidding prices went into effect this past summer. "It's already started to have an impact on companies going out of business."

Supporters of the program say it's vital to keep Medicare from being overcharged for these items. But the companies that did win contracts have to cut back somewhere, and that usually means service. Many of those companies are also struggling to keep up with demand.

"What we are hearing is that the patients are staying at the hospitals for one, two, three days or more because the discharge planner is having a hard time getting the equipment that a patient needs to go home," Estrella says.

"We are not saving any money, if we think we are, we're mistaken," Schleipfer says.

Experts say private insurers could eventually adopt the Medicare pricing, meaning more people could run into problems.

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