AAH: Medicare’s Competitive Bidding System “Dangerously Flawed”

Despite a government report finding that Medicare’s competitive bidding system for personal medical equipment reduces millions of dollars’ worth of waste and fraud on medical devices, a national homecare group calls the system “dangerously flawed,” and urges Congress to implement an alternative Market Pricing Program.

The Centers for Medicare and Medicaid Services (CMS) launched the competitive bidding program as a test about a year ago in nine different cities—Charlotte, Cincinnati, Cleveland, Dallas, Kansas City, Miami, Orlando, Pittsburgh, and Riverside, Ca.—and a recently released report said the experiment resulted in $200 million in savings to the Medicare program.

However, the medical supply industry says the program can lead to shortages or hardships in acquiring equipment. Since the program’s 2011 implementation, the American Association for Homecare says it has “received reports from hundreds of Medicare patients about difficulty finding local equipment and service providers, delays in obtaining medically required durable medical equipment, and fewer choices when selecting equipment and providers.”

Medical oxygen, walkers, respiratory devices, hospital beds, wheelchairs, and other medical equipment and supplies prescribed for Medicare beneficiaries reduce spending by preventing treatment in higher-cost settings. Data from CMS shows that when Medicare patients don’t use prescribed home medical equipment and services, their use of emergency room and hospital services increases. So while the current bidding program may further reduce spending on durable medical equipment (which represents 1.4 percent of Medicare spending and is falling), taxpayers will see spending increase dramatically in hospitals and ERs as patients’ options for home-based care continue to shut down.

With the report indicating significant savings, CMS now plans to expand the bidding program to an additional 91 metro areas throughout the U.S., bringing the total number of participating areas to 100.

But 244 economists, 30 consumer and disability groups, and 171 members of Congress oppose the program in its current form, says the AAH, which “allows non-binding bids, encourages irresponsible bids, and creates unsustainable prices while doing nothing to ensure that winning bidders are qualified to provide the products and services to Medicare beneficiaries,” according to association president Tyler Wilson.

Rather than a competitive bidding program, these groups are calling on Congress to enact a Market Pricing Program, which features an auction system to establish market rates around the country, and would require Medicare to “make fundamental changes to ensure the long-term viability of the pricing program.”

Other features of the MPP include binding bids and cash deposits from bidders to ensure only serious participation; and a bid price that’s based on the clearing prices rather than the median price of winners, along with encompassing the same equipment and services as the current system.

Read the full American Association for Home Care article here.

Written by Alyssa Gerace

Alyssa Gerace