Study says competitive bidding program likely to compromise patient choice, access and quality.
by Tyler Wilson

The first comprehensive study of the impact of HME "competitive" bidding on
Medicare beneficiaries has been completed by a respected actuarial
firm in Washington, D.C.

Among the conclusions:

Medicare's bidding program will lead to desperation bidding and
reduced prices, likely causing Medicare's most vulnerable
beneficiaries to see a decrease in choice, access, and quality in
the HME benefit.

Ultimately, the bidding program could increase Medicare's costs
if beneficiaries have more medical complications, thereby
increasing their use of hospital, emergency room and physician
care, and perhaps losing their ability to live independently.

The study was commissioned by AAHomecare and was conducted by
Dobson DaVanzo & Assoc., an actuarial firm in Washington, D.C.
In their research, the firm conducted an extensive review of the
published literature and conducted interviews with patient
advocates, beneficiaries, discharge planners, academic experts and
HME providers.

Titled "The Risks to Medicare Beneficiaries of DMEPOS
Competitive Bidding: Compromising Choice, Access, and Quality for
Medicare's Most Vulnerable," the study will be shared with every
member of Congress as well as the media. Some of the key findings
follow:

Marketplace Implications

The design of the competitive bidding program creates
economic incentives that could have a negative impact on price,
quality and service for Medicare beneficiaries.

The design of the CMS bidding process is highly susceptible to
"gaming," allowing sophisticated bidders to use complex rules and
the volatility of supply and demand to their advantage.

  • The three-year bid period, the composite price structure used to
    calculate prices and both "predatory" and "suicide" bidding could
    produce unrealistically low bid prices incompatible with a system
    that ensures sustained service and product quality.

  • Fewer suppliers could lead to less price competition over the
    long term, not more.

    Choice

    Freedom of choice will be challenged for beneficiaries both
    in terms of providers and equipment that will be
    available.

    The competitive bidding program could eliminate up to 90 percent
    of DMEPOS suppliers, limiting choice of preferred providers and
    disrupting long-term relationships and continuity of care.

    Access

    As the number of suppliers is reduced, beneficiaries could
    experience problems accessing quality equipment and services,
    especially over time and by geographic area.

    Lower payments to suppliers may reduce beneficiary access to
    high quality, brand name and customizable equipment, and other
    effective supplies familiar to the patient.

  • The bidding program may not adequately protect against supplier
    unavailability and delayed response time, causing hospital
    discharge delays and/or more emergency department visits.

  • The program may reduce the provision of various services on
    which beneficiaries rely to remain independent and prevent
    complications, such as patient evaluation, education, training,
    equipment customization, adjustment and timely repair and
    maintenance.

    Quality

    Suppliers may not be able to provide high-quality products,
    and may significantly reduce the services they provide to
    beneficiaries.

    They may not be able to afford (and are not incentivized to
    provide) products of the same quality, which can affect beneficiary
    mobility, general health condition, and quality of life.

  • Technological innovation and development of high-quality
    products may be stifled.

    These are serious concerns gathered from a broad array of health
    care experts and advocates. The HME community should make sure that
    these key points are part of the argument against the bidding
    program.

    The full study can be accessed from the American Association for
    Homecare website, www.aahomecare.org.

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    Tyler J. Wilson is president and CEO of the American
    Association for Homecare, headquartered in Arlington, Va. You can
    reach him at tylerw@aahomecare.org. For more
    information on critical home care issues, visit the association's
    Web site at www.aahomecare.org.
    The first
    comprehensive study of the impact of HME "competitive" bidding on
    Medicare beneficiaries has been completed by a respected actuarial
    firm in Washington, D.C.