Maine medical suppliers are watching nervously — some with dire predictions — after the Obama administration this week deemed a Medicare competitive bidding pilot program a success and announced its expansion.

Medicare officials said the pilot program saved the government and individual Medicare recipients so much money that it will expand the program, requiring bidding for national mail order diabetic supplies and the purchase of some medical equipment and supplies in 100 metro areas.

Although Maine will not be involved in that second phase, Medicare officials plan to expand bidding nationwide by 2016 or, in less populated areas like Maine, lower payment rates based on what was bid elsewhere.

Medicare officials say bidding on oxygen supplies, wheelchairs and scooters, walkers, hospital beds, mail order diabetic supplies, enteral nutrients and supplies and continuous positive airway pressure and respiratory devices caused few problems for patients and could save the government $25.7 billion and Medicare beneficiaries $17.1 billion between 2013 and 2022.

But medical suppliers say bidding will cause shortages, hurt patients and ultimately put suppliers out of business.

“I don’t think the prices that they’ve seen are sustainable,” said Gary Sheehan, CEO of Cape Medical Supply, which serves Massachusetts, parts of New Hampshire and southern Maine.

Competitive bidding was established for Medicare in 2003 as part of the law that created the Medicare drug benefit, though drugs are not among the items allowed for bid. Implementation was halted in 2008 after two weeks. The program was revised and implemented as a pilot program in nine metro areas in 2011.

Bidding requires suppliers to compete for the ability to sell products. Once Medicare chooses bids, contracted sellers must sell at the new price. To preserve patient choice, more than one seller can be approved. For example, during the pilot program, between 12 and 83 companies were OK’d to sell oxygen supplies and equipment in each metro area.

Medicare officials considered the pilot program a success for everyone. According to a Medicare report:

* Ninety-two percent of suppliers who submitted a bid accepted Medicare’s final contract terms, and 51 percent of the winning bidders were small suppliers with annual gross revenues of $3.5 million or less.

* Of the 2.3 million Medicare recipients living in the nine metro areas, only 151 had complaints that couldn’t be immediately resolved by a call center operator.

* The pilot program saved $202.1 million and “substantially reduced” out-of-pocket costs for Medicare recipients.

But various trade groups, including the American Association for Homecare and New England Medical Equipment Dealers, oppose Medicare’s bidding process, with members calling it flawed, inefficient and dangerous.

“I think they’re going to lead to inevitably really bad health outcomes, really bad economic outcomes and sort of frightening reshaping of an industry, and they don’t really seem to take any of that into account,” Sheehan said.

Among other things, he doesn’t like the fact that bids are non-binding. He believes it could lead to suppliers bidding low and then finding themselves unable to meet patients’ needs

At Black Bear Medical, a Portland-based supplier that serves most of Maine and parts of New Hampshire, president Jim Greatorex believes bidding will put many suppliers out of business because they won’t be able to afford to sell at the new price and they won’t be able to survive without Medicare patients.

“Seventy-five percent of the suppliers like me are going to get their Medicare numbers taken away,” said Greatorex, who gets 18 to 22 percent of his business from Medicare patients.

Because parts of New Hampshire will be involved in the second phase, his company is bidding now. He called it a “painful process.”

“You really don’t know if you want to win or not,” he said.

Medical suppliers expect no bidding in Maine. The state is too rural, they say, and there aren’t enough suppliers to bid. They believe Medicare will ultimately lower payment rates here based on what was bid elsewhere.

Officials at the Maine Department of Health and Human Services said it’s too early to predict what the Medicare changes will mean to Maine.

At Bedard Medical in Auburn, owner and CFO Annette Nadeau echoed that.

“We’re watching it close,” she said. “They’re still kind of shaking out a lot of the details, so how it’s going to have a direct impact on us, we’re not real sure yet.”

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