Second Chance for MPP

Grab it with both hands. That’s what you do when you’re offered a second chance. Right now, we have a second chance to convince Congress to enact the Market Pricing Program (MPP) as a replacement for the current competitive bidding model. But it requires immediate action.

Our opportunity comes in the form of “doc fix” legislation that Congress will likely enact by the end of February. In December 2011, Congress passed a short “patch” to delay physician pay cuts required by the Medicare Sustainable Growth Rate (SGR) formula. This two-month patch expires at the end of February. When Congress writes longer-term doc-fix legislation, that bill will be the most promising vehicle for enacting the MPP because the SGR corrective legislation is popular and is likely to pass. The debate and vote will probably occur around the time this issue arrives at your desk.

The American Association for Homecare—along with economists and auction experts who have designed market-based pricing systems—has worked hard throughout the past few months to develop and build support in Congress for an alternative to the badly-designed bidding program. In congressional meetings, we have received many positive responses to the MPP alternative—which many members of Congress wanted as an approach short of full repeal.

Flaws in the existing bidding program are well known and are creating problems in Round 1 areas. But every member of Congress needs to hear about why the program is bad for homecare and why expanding it to 91 new areas in Round 2 will cause further problems.

The argument for the MPP is compelling. The original congressional intent for bidding was to reduce HME spending in Medicare and ensure beneficiaries have access to quality items and services. But that objective cannot be met because of flaws in the design of the bidding system. The Centers for Medicare & Medicaid Services (CMS) created a system that:

  1. Does not hold bidders accountable.
  2. Does not ensure bidders are qualified to provide the products in the bid markets.
  3. Produces prices that are financially unsustainable .

MPP would require CMS to make fundamental changes to ensure a financially-sustainable program. It uses an auction system to establish market-based prices around the country. These changes are consistent with Congress’ original intent but also protect providers and beneficiaries. 

Some key components of MPP are:

• It includes the same HME items as the existing bidding program and is implemented nationwide in the same time frame.
• Bids are binding and cash deposits are required to ensure that only serious bidders participate.
• Two product categories per geographic area will be bid upon. Eight additional product categories in that same geographic area would also have prices reduced based on auctions conducted simultaneously in comparable geographic areas.
• Bidding areas in MPP are smaller than the vast metropolitan statistical areas used in the current system and are more homogeneous.
• The bid price is based on the clearing price, not the median price of winners.
• The same rural areas that are exempted under the current bidding program will be exempted.

MPP also improves on many elements of existing bidding program. It still permits grandfathering to ensure beneficiary continuity of care, but it sets limits on providers’ capacity based on their past experience rather than on unverifiable projections. And it establishes essential transparency with respect to financial and performance standards, capacity allocation, bidding rules, winning awards, and performance accountability. The revised program would be implemented under the same timetable that CMS has announced for Round 2: July 2013.

Take action to get these vital improvements included in congressional legislation. Urge your members of Congress to contact their party leadership and members of the influential House-Senate conference committee working on the doc fix legislation.

Tell them:

• Competitive bidding, as now structured, is bad for homecare beneficiaries and providers.
• Expanding the current bidding program to more areas will only compound problems.
• MPP is a far better alternative and must be included in the final doc fix bill.

You can reach offices of lawmakers by calling the Capitol switchboard at 202-224-3121. Or e-mail legislators through AAHomecare’s Action Center, www.capwiz.com/aahomecare. To learn more about enacting the Market Pricing Program into law, visit www.aahomecare.org.