Actuaries: Bidding Could Reduce Patient Choice, Access and Quality

ARLINGTON, Va. — A new study of Medicare competitive bidding
confirms what many in the industry say they already knew: Reduced
prices will likely cause a decline in beneficiary choice, access
and quality. In addition, the bidding program could ultimately
increase Medicare costs if beneficiaries’ medical complications
mean more use of hospital and physician care — or the loss of
their ability to live independently.

Commissioned by the American Association for Homecare and
conducted by Dobson DaVanzo & Assoc., an actuarial firm in
Washington, D.C., the independent study is the first on the patient
impact of competitive bidding, the association said. In their
research, the actuaries conducted interviews with patient
advocates, beneficiaries, discharge planners, academic experts and
HME providers as well as a review of government reports and
congressional testimony.

Titled “The Risks to Medicare Beneficiaries of DMEPOS
Competitive Bidding: Compromising Choice, Access, and Quality for
Medicare’s Most Vulnerable,” the study found:

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 types of suppliers and types of equipment that will be
  available.

• The competitive bidding program could eliminate up to 90 percent
  of DMEPOS providers, 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 that are 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 and training,
  and 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.

• Suppliers may not be able to afford (and are not incentivized to
  provide) higher-quality products, which can affect beneficiary
  mobility, general health condition and quality of life.

• Technological innovation and development of high-quality
  products may be stifled.

• 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.

“These are serious concerns gathered from a broad array of
health care experts and advocates,” said AAHomecare President Tyler
Wilson. “The HME community should make sure that these key points
are part of the argument against the bidding program. Your local
media, your senators and representatives in Congress, your patients
and their families, and seniors and disability organizations in
your community should be made aware of the points made in this
study.”

AAHomecare plans to make the full study available in
mid-September when the association will distribute the study to
Congress and the administration. See the AAHomecare website for an
issue brief.

View more competitive bidding
stories.