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:
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The design of the competitive bidding program creates economic incentives that could have a negative impact on price, quality and service for Medicare beneficiaries.
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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.
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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.
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Fewer suppliers could lead to less price competition over the long term, not more.
Choice:
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Freedom of choice will be challenged for beneficiaries both in terms of types of suppliers and types of equipment that will be available.
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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:
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As the number of suppliers is reduced, beneficiaries could experience problems accessing quality equipment and services, especially over time and by geographic area.
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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.
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The bidding program may not adequately protect against supplier unavailability and delayed response time, causing hospital discharge delays and/or more emergency department visits.
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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:
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Suppliers may not be able to provide high quality products, and may significantly reduce the services they provide to beneficiaries.
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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.
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Technological innovation and development of high-quality products may be stifled.
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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.
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