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.


    Freedom of choice will be challenged for beneficiaries both in
    terms of types of suppliers and types of equipment that will be

  • 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.


    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


    Suppliers may not be able to provide high quality products, and
    may significantly reduce the services they provide to

  • 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

    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
    target="_blank">issue brief.

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