AAHomecare: Bipartisan Market Pricing Bill Introduced

WASHINGTON, DC, September 21, 2012—The American Association for Homecare applauds a bipartisan bill introduced today in the House of Representatives that would implement market-based pricing for home medical equipment and services such as oxygen therapy, wheelchairs, and other durable medical equipment that allow Medicare beneficiaries to remain safe and independent at home.

Rep. Tom Price (R-Ga.) and 13 cosponsors introduced the “Medicare DMEPOS Market Pricing Program Act of 2012.” The bill would a market pricing program (MPP), replacing in a budget-neutral manner the current Medicare competitive bidding program for home medical equipment and services.

Tyler J. Wilson, president of the American Association for Homecare, commented, “A lot of providers, state associations, and other advocates have worked hard to make sure their lawmakers understood the importance of this bill. We appreciate all these efforts. Now we have to work even harder to ensure that MPP is enacted this year to save the homecare sector and ensure that beneficiaries get the equipment and care they deserve.”

The 13 Representatives who introduced the bill with Rep. Price include:

• Rep. Renee Ellmers (R-NC-02)
• Rep. John Barrow (D-GA-12)
• Rep. Pat Tiberi (R-OH-12)
• Rep. Steven LaTourette (R-OH-14)
• Rep. Marsha Blackburn (R-TN-07)
• Rep. Steve King (R-IA-05)
• Rep. Tom Latham (R-IA-04)
• Rep. Mike Kelly (R-PA-03)
• Rep. Bruce Braley (D-IA-01)
• Rep. Jason Altmire (D-PA-04)
• Rep. Kathy Castor (D-FL-11)
• Rep. Theodore Deutch (D-Fl-19)
• Rep. Joe Wilson (R-SC-02)

The Centers for Medicare and Medicaid Services (CMS) implemented the bidding program in nine areas last year: Charlotte, Cincinnati, Cleveland, Dallas, Kansas City, Miami, Orlando, Pittsburgh and Riverside, California. The bidding program is underway in an additional 91 metropolitan areas now. However, consumer advocates, auction experts, providers, and economists are concerned that seniors and people living with disabilities are not receiving critical medical equipment and services. Since the program was implemented in 2011, the American Association for Homecare has received reports from hundreds of Medicare patients about difficulty finding local equipment and service providers, delays in obtaining medically required equipment and care and fewer choices when selecting equipment and providers.

Opposing the current bidding design that was implemented by Medicare are 244 economists (link), 30 consumer and disability groups (link)  such as United Spinal and the ALS Association, and at least 171 members of Congress (link).

In the New York Times Freakonomics blog (link) on September 21, 2012, economist and Yale Law School Professor Ian Ayers described the problems with the current bidding system and concluded, “Congress and the White House must act to reform the Medicare auction. If we do not effectively apply market methods to health care, Medicare is unsustainable.”

Medical oxygen, walkers, respiratory devices, hospital beds, wheelchairs, and other durable medical equipment, services, and supplies (DME) prescribed for Medicare beneficiaries help to reduce healthcare expenses by preventing treatment in higher-cost settings. So while the current bidding program may further reduce spending in the DME silo (which represents 1.4 percent of total Medicare spending and falling), taxpayers will see spending increase in hospitals and ERs as patients’ options for home-based care continue to shut down.

As professionals who design auction systems have explained to Congress and the White House, the current Medicare bidding system for DME allows non-binding, irresponsible bidding, which leads to unsustainable prices while doing nothing to ensure that winning bidders are qualified to provide the required equipment and services to Medicare beneficiaries.

The Market Pricing Program is based on recommendations by economists and auction experts who have studied the current program. MPP features an auction system to establish market-based prices around the country and would require Medicare to make fundamental changes to ensure the long-term viability of the pricing program. Key components include:

• The Market Pricing Program is designed to achieve an accurate market price.
• Bids are binding for the bidders and cash deposits are required to ensure that only serious homecare providers participate.
• The bid price is based on the clearing price, not the median price of winners.
• The program includes the same equipment and services as the current bidding system and would be implemented across the country during the same timeframe.
• Two product categories per market area would be bid. Eight additional product categories in that same area would have prices reduced based on auctions conducted simultaneously in comparable geographic areas.

“The market-based system proposed in this new legislation would ensure that Medicare beneficiaries receive the services and equipment that they need and ensure that the government pays fair, competitive prices for the equipment and services provided,” said Wilson. “That makes it a win-win for taxpayers and beneficiaries.”

The American Association for Homecare represents durable medical equipment providers and manufacturers who serve the medical needs of millions of Americans who require oxygen equipment and therapy, mobility devices, medical supplies, inhalation drug therapy, and other medical equipment and services in their homes. Members operate more than 3,000 home-care locations in all 50 states. Please visit www.aahomecare.org.