Battling Competitive Bidding

In the closing weeks and months of 2012, we have an opportunity to replace Medicare’s dangerous Competitive Bidding Program with an alternative that preserves access to home care and saves the home medical equipment sector from the devastating effects of the bidding program. The alternative is outlined in H.R. 6490, a bipartisan bill that would eliminate the current Competitive Bidding Program and replace it with a state of the art payment system called the Market Pricing Program (MPP). This bill is our best shot at fixing this badly designed system that threatens to decimate the HME sector.

At the deadline for this column the outcomes of the November presidential and congressional elections were unknown and the legislative outlook for a “lame-duck” session of Congress was uncertain. However, Congress will need to act to prevent pending Medicare payment cuts for doctors among other issues, so there will likely be some type of opportunity to attach the MPP provisions in a bill that Congress will need to pass. So what can you do now?

Contact your Senators and your Representative and tell them to make sure that the Market Pricing Program in H.R. 6490 gets passed this year. Since all lawmakers need to understand the importance of getting the bidding system right, share these points with your members of Congress.

The Current Bidding System for HME is a Terrible Model
As policymakers consider spreading competitive bidding to other parts of America’s health-care system, they will not be able to point to this current bidding program as a good design. The pricing program incorporated into H.R. 6490 was developed with assistance and endorsement from auction experts, and it is consistent with the original intent of Congress with respect to creating a competitive acquisition program that saves money without limiting access to care.

MPP Will Continue Big Cost Savings for Medicare
The Market Pricing Program created by H.R. 6490 is designed to be budget-neutral and reduces Medicare HME spending by the same amount as the current bidding program.

Better Bidding Integrity and Price Determination
Under the MPP, bids would be binding and cash deposits required to ensure that only serious bidders participate. The bid price would be based on the auction “clearing price” (the accepted method) rather than the median price of winners. The auctions would consist of multiple rounds of bidding, concluding when supply from providers meets demand (expected utilization), thereby establishing the clearing price. The capacity of each bidder would be determined based upon the bidder’s historical supply.

Same Timetable and Products
Reimbursement rates determined by the Market Pricing Program would be effective July 1, 2013. The program would include the same HME items as the current system. Two product categories would be bid per geographic area. Eight more categories in that same area would have reimbursement rates determined by auctions conducted simultaneously in comparable geographic areas.

Realistic Market Areas
Compared to the market areas used in the current system (Metropolitan Statistical Areas), the bid areas in H.R. 6490 will be smaller and more homogeneous, reflecting real market areas.

Bidder Accountability and Small Businesses
Successful bidders (those whose bids are below the clearing price) would be offered two-year contracts for their area; they must accept and perform responsibilities under the contract. Any qualified HME provider may supply nonauctioned product categories at the “clearing price” as determined from auctions in other areas. Small businesses would represent at least 30 percent of the number of HME providers in each area.

Expert Design, Implementation and Monitoring
Through a competitive process, the HHS Secretary would contract with an auction expert for design and implementation of the program, and separately contract with a market monitor to evaluate and report on the design, implementation, and functioning of the program in order to identify problems and recommend adjustments.

For details on how to take action, please visit www.action.aahomecare.org.