BY DAVE PARKS
The Centers for Medicare & Medicaid Services acknowledges that HME claims have declined in Round 1 biddings areas, as reported in a recent study by economist Peter Cramton. But CMS says the declines are being driven by better controls for fraud and waste, and insists there is no evidence that beneficiaries are losing services.

The CMS statement came late Tuesday in response to inquiries from HomeCare about a study published Jan. 20 by Cramton, a University of Maryland economics professor and critic of competitive bidding.

Cramton used the Freedom of Information Act to acquire data from the nine Round 1 areas on claims submitted in seven categories of HME products. He found dramatic declines—averaging about 70 percent—in submitted claims, and concluded that the declines were evidence that many Medicare beneficiaries may have lost access to HME products and services.

CMS confirmed that claims had declined since competitive bidding was implemented in January 2011, but disagreed with Cramton’s methodology and conclusions.

“CMS has now had an opportunity to evaluate Dr. Cramton’s study and has found its methodology seriously flawed, and its conclusions grossly inaccurate,’’ CMS said in a written statement. “CMS has found some decline in allowed services or paid units from the competitive bidding areas for the items subject to Round I competitive bidding. Given the lack of evidence of adverse beneficiary impacts, CMS believes this decline may underscore competitive bidding’s value as an antifraud strategy, as well as its value in reducing costs to taxpayers and beneficiaries for the competitively bid items.”

CMS said the Round 1 areas were chosen for competitive bidding because they had higher volumes of claims than other areas, an indication of fraud, waste and abuse.

“A significant decrease in allowed services following competitive bidding in these areas indicates that the program is successfully addressing the high concentration of Medicare fraud that is associated with the DME benefit and which has been well documented by the media, the Office of Inspector General, and the Government Accountability Office over many years,” according to the CMS statement.

Further, CMS said there was no evidence that beneficiaries were losing access to services.

“CMS has been conducting extensive and careful monitoring to determine whether beneficiaries in competitive bidding areas are experiencing problems with access to medically necessary items. Whether we look at beneficiary calls to the 1-800-Medicare number, hospital visits that might be related to access problems, or a variety of other factors, we are finding nothing and the industry has not presented us with any factual evidence to support Dr. Cramton’s speculation that beneficiaries may not be receiving medically necessary equipment.”

Earlier in the day, Cramton said he had heard that CMS officials were blaming fraud for the decline in claims and were criticizing his study’s methodology. Neither explanation makes sense, he said. His study was based on Medicare’s own data, and his approach was sound. Fraud of such a high magnitude is highly unlikely because CMS had previously implemented layers of audits and oversight in Round 1 areas.

Cramton said his study was preliminary, and certainly there could minor variations in how far rates of claim submissions are dropping, but it is highly unlikely there are major errors.

“What I did was very much a first step,’’ he said. “Even recognizing that the data is very limited, it’s the best I had. I thought it was important to simply get it out and raise a warning sign that there could be some substantial costs and hidden problems in the competitive bidding program.”

Cramton said Medicare should release more data on rates of HME claims being submitted for beneficiaries with specific diagnoses living in Round 1 areas. “Many people are concerned,’’ he said.