Sleep Alliance Unites to Raise Prices

While individual members of the Sleep Manufacturers Alliance will not openly admit that their agenda is to raise prices, it is clear from their actions that this is likely their cause. Respironics recently announced that distributors and dealers of their products must now advertise their selling price at artificially higher prices (30% to 80% higher) than standard pricing.

Excerpts from the Sleep Alliance internet site indicate the following as a goal:

Submit formal comments to the Centers for Medicare and Medicaid Services (CMS) regarding proposed rules for competitive bidding as they relate to sleep disordered breathing

AND

The Sleep Manufacturers Alliance has researched what they are allowed to openly discuss:

Anti Trust Guidelines
All discussions of the Sleep Manufacturers Alliance (SMA) are in accordance with anti trust laws and regulations.

CMS (Centers for Medicare and Medicaid Services) implemented the Competitive Bidding program and list their goals as:

CMS lists their objectives of competitive bidding to be the following:

• To implement competitive bidding programs for certain covered items of Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) and associated services in select areas;
• To assure beneficiary access to quality DMEPOS as a result of the program;
• To reduce the amount Medicare pays for DMEPOS and create a payment structure under competitive bidding that is more reflective of a competitive market;
• To limit the financial burden on beneficiaries by reducing their out-of-pocket expenses for DMEPOS they obtain through the program; and
• To contract with suppliers who conduct business in a manner that is beneficial for the program and Medicare beneficiaries.
  
  The Manufacturers Sleep Alliance, comprised of companies who should be competing against one another, have formed an alliance. Who are they aligned against? If there is not a common enemy or opposing force, why do they need an alliance? What is their central goal? Could it be to fight Competitive Bidding - which will ultimately reduce the dollar amount which Medicare will reimburse Durable Medical Equipment Dealers?

  Competitive Bidding was introduced due to the extremely high dollar value of claims filed on behalf of Medicare Patients in this new and expanding industry of sleep medicine. Pete Stark, Democrat, California stated in a New York Times article (Nov. 2007)

  All you have to do is pick up an equipment catalog or search for ‘oxygen device’ on eBay to figure out better prices than what we’re currently paying,” Mr. Stark said. (Full Article: http://www.nytimes.com/2007/11/30/business/30golden.html?pagewanted=1&hp)
  
  What does competitive bidding have to do with the manufacturers? In the past, sleep manufacturers have been able to charge DME companies a premium price for their products. Since the internet is now an easy, less expensive method of shopping, many consumers are turning to the internet. As sleep related products flood the market to meet this new demand, the prices have spiraled down. As the published prices on the internet are constantly falling, legislators are taking note, which means the amount Medicare will pay for product is being reduced. The end result of this chain of events; the manufacturers are no longer able to sell their products at a premium.

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