Study: Hobson-Tanner Won’t Alter NCB Savings

Waterloo, Iowa

If the Hobson-Tanner bill takes effect, it would not significantly change the savings the government can expect from national competitive bidding, according to a study commissioned by The VGM Group.

Economist Kenneth Brown, Ph.D., a University of Northern Iowa associate professor, conducted the study on the possible impact of the bill, H.R. 3559, which aims to protect small suppliers under the Medicare DME bidding program.

“H.R. 3559 … will have little or no impact on the recent cost savings estimate for competitive bidding for DME,” said Brown. “Overall, I believe this provision will be beneficial to the overall DME market, particularly in terms of product and service quality, without adversely impacting the savings from the competitive bidding program.”

John Gallagher, VGM’s vice president of government relations, called Brown’s report a strong statement in support of the Hobson-Tanner measure and a companion bill that is expected to be introduced in the Senate. “Dr. Brown takes away one of the leading arguments against 3559 by concluding that the cost of allowing any qualifying willing provider is very small and should not be a deterrent to passage,” he said.

According to Brown, because the bill would allow qualified small providers to continue to serve Medicare beneficiaries if they submit bids that are less than the existing fee schedule, it would reduce the number of providers trying to submit winning bids. However, the number of remaining bidders would still be significant enough to result in the lower pricing sought by Congress and CMS.

Brown’s report also said the Hobson-Tanner bill would provide a built-in incentive for providers to exceed minimum standards to maintain market share. Under the current competitive bidding model, he noted, beneficiary choice is limited, thereby reducing quality.