At Odds Over Plummeting Claims

Professor Peter Cramton’s recent study confirmed the HME industry’s fears—the competitive bidding system in Round 1 areas took a devastating toll on providers, caused claims to plummet and appears to have shattered the delivery system that serves Medicare beneficiaries.

Officials from the Centers for Medicare & Medicaid Services agree that claims and providers have declined, but insist that the supply line to beneficiaries remains intact.

Cramton, a University of Maryland economist who has been watching and analyzing Medicare’s competitive bidding program, says CMS should quickly release more data to prove the point.

Cramton—along with many other auction experts—has warned that the Competitive Bidding Program is poorly designed and destined for failure.

CMS officials have doggedly defended competitive bidding, calling it a success because it has lowered costs, and done so without limiting HME access for beneficiaries.

In an interview about his latest work, Cramton responded to CMS officials who criticized his methodology as “seriously flawed” and called his conclusions “grossly inaccurate.” At issue is a key finding in Cramton’s study—a dramatic decline in claims submitted for HME products, which could be an indication that beneficiaries are losing services.

Cramton’s study, which was released January 20, involves three sets of charts created from Medicare’s own data taken from Round 1 areas of competitive bidding:

• The first set shows a sharp decline in the number of HME providers, which is not surprising since competitive bidding was expected to do that.
• The second set shows dramatic declines for claims submitted for HME products. That is surprising because competitive bidding was not expected to lower claims that severely.
• And the third set of charts shows that lack of access to HME products results in higher rates of death and hospitalization for beneficiaries with certain diagnoses such as COPD and diabetes. Again, this was not surprising data since there is no debate about the benefit of HME products.

So the second set of charts is the focus of controversy. Those charts show an average 70 percent decline in the number of claims submitted in 2011 for seven HME product categories in Round 1 areas.