Here are AAHomcare's "mythbusters" about competitive bidding.

Medicare's competitive
bidding program for DMEPOS
is scheduled to begin Jan. 1, 2011,
in nine of the largest metropolitan areas in the country. According
to the American Association for Homecare, the controversial
program's proponents “have conveyed misleading information
that exaggerate the benefits and ignore [the program's] severe
shortcomings.” Here are AAHomecare's
“mythbusters” about competitive bidding:

MYTH #1: The bidding system improves the method
setting reimbursement rates for providers of home medical equipment
and services.

REALITY: 166 experts, including two Nobel laureates and
numerous economics professors from leading universities, recently
warned Congress and regulators that this bidding system will fail.
These experts point out that the system has four fatal flaws:

The bidders are not bound by their bids, which undermines the
credibility of the process.

  • Pricing rules encourage “low-ball bids” that will
    not allow for a sustainable process or a healthy pool of equipment
    suppliers.

  • The bid design provides “strong incentives to distort bids
    away from costs.”

  • There is a lack of transparency in the bid program that is
    “unacceptable in a government auction and is in sharp
    contrast to well-run government auctions.”

    MYTH #2: Medicare overpays for home medical equipment,
    and the bidding system applies market forces to correct
    that.

    REALITY: Proponents of the bidding system have used
    out-of-date reimbursement rates and false comparisons of retail
    costs versus Medicare costs to argue their case. For many years,
    CMS has set reimbursement rates for HME through a fee schedule.
    Over the past decade, those reimbursement rates have dropped nearly
    50 percent because of cuts mandated by Congress or imposed by CMS.
    The costs of delivering, setting up, maintaining, and servicing
    medically required equipment in the home are obviously greater than
    the cost of merely acquiring the equipment. But Medicare does not
    recognize the costs of these services. So comparing the cost of the
    equipment to the larger cost of furnishing the full array of
    required equipment, supplies, and services is false and
    misleading.

    MYTH #3: The bidding program will make health care
    more cost-effective.

    REALITY: The home is already the most cost-effective
    setting for post-acute care. So while the bidding program would
    make even more severe cuts to reimbursement rates for HME, that
    will ultimately result in much higher spending in Medicare and
    Medicaid for hospital and nursing home stays and for physician and
    emergency treatments.

    MYTH #4: The bidding program will eliminate fraud in
    the HME sector.

    REALITY: CMS continues to describe the bidding program as
    an anti-fraud tool. In reality, it is a price-setting mechanism
    that has nothing to do with fraud prevention. The real solution to
    keeping criminals out of Medicare is better screening, real-time
    claims audits, and better enforcement mechanisms for Medicare.

    MYTH #5: Only the HME sector opposes the bidding
    system.

    REALITY: In addition to the 166 economists and bidding
    experts who have expressed grave concerns about the bidding
    program, many consumer and disability organizations have called for
    a halt to the bidding system including the ALS Association, the
    American Association for Respiratory Care, the American Association
    of People with Disabilities, the Muscular Dystrophy Association and
    others.

    View more competitive bidding
    stories.