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American Association for Homecare Calls for Market-Based Alternative to Medicare's Flawed Competitive Bidding Program
Date:4/18/2012

system improves the method for setting reimbursement rates for that equipment and service.

REALITY:  Proponents of the bidding system use out-of-date reimbursement rates and false comparisons of retail costs versus Medicare costs to argue their case.  For many years, CMS has set reimbursement rates for home medical equipment through a fee schedule. Over the past decade, those reimbursement rates have dropped nearly 50 percent because of cuts mandated by Congress or imposed by CMS. 

The costs of delivering, setting up, maintaining, and servicing medically required equipment in the home are obviously greater than the cost of merely acquiring the equipment. But Medicare does not recognize the costs of these services. So comparing the cost of the equipment to the larger cost of furnishing the full array of required equipment, supplies, and services is misleading. 

Moreover, experts, including two Nobel laureates and numerous economics professors from leading universities, have warned Congress that this bidding system will fail.  The experts, who do not otherwise oppose competitive bidding to set Medicare prices, point out that the system has four fatal flaws:

  • The bidders are not bound by their bids, which undermines the credibility of the process. 
  • Pricing rules encourage "low-ball bids" that will not allow for a sustainable process or a healthy pool of equipment suppliers.
  • The bid design provides "strong incentives to distort bids away from costs." 
  • There is a lack of transparency in the bid program that is "unacceptable in a government auction and is in sharp contrast to well-run government auctions."

These concerns have been shared with CMS, which designed the bidding system. But the agency has dism
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SOURCE American Association for Homecare
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