MedPAC Calls Rebate Proposal a Bad Idea
WASHINGTON--The rebate program proposed under CMS' draft competitive bidding rule for Medicare DME has the potential to induce fraud and should be eliminated, the Medicare Payment Advisory Commission told CMS.
"Although the goal of sharing potential provider profit with the beneficiaries is laudable, it is preferable to obtain the best price through competition, not through a rebate," MedPAC wrote in a June 28 letter commenting on the rule.
Under the proposed competitive bidding rule (see HomeCare Monday, May 1), winning suppliers that bid below the payment amount set by CMS have the option of offering beneficiaries a rebate, representing the difference between their bid amount and the Medicare payment. If a provider decides to offer a rebate for any item, it must be given to all beneficiaries--but a provider cannot advertise that it is offering a rebate.
"A rebate program will complicate the design and administration of the program and possibly induce additional demand for DME, as well as raise the risk of fraud and abuse as noted in the proposed rule," wrote MedPAC, which advises Congress on Medicare policy.
"If beneficiaries' cost-sharing were reduced or eliminated, demand for DME may be induced (allowing a beneficiary to be paid to purchase DME if the rebate exceeded cost sharing would be even worse)," the commission continued. "Demand could be channeled to more expensive substitute items if rebates made those items less expensive for the beneficiary. Induced demand and item substitution could increase rather than decrease Medicare spending."
Also in the letter to CMS, MedPAC recommended: