Bidding’s Dire Impact

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.

Read more AAHomecare Update columns. View more competitive bidding stories.

Tyler J. Wilson is president and CEO of the American Association for Homecare, headquartered in Arlington, Va. You can reach him at [email protected]. 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.