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Independent Study Concludes Medicare 'Competitive' Bidding Program for Durable Medical Equipment Could Negatively Affect Care Access, Quality, and Choice for Seniors and People with Disabilities
Date:9/14/2010

WASHINGTON, Sept. 14 /PRNewswire-USNewswire/ -- A new study conducted by Dobson | DaVanzo & Associates found that the Medicare "competitive" bidding program for durable medical equipment (DME) may limit Medicare beneficiaries' access to home medical equipment and services and could reduce the quality of products that Medicare consumers rely on.  

DME providers serve the medical needs of millions of Americans who require oxygen equipment and therapy, mobility assistive technologies, medical supplies, inhalation drug therapy, home infusion, and other home medical equipment, therapies, services, and supplies in the home. The bidding program for home medical equipment and services is scheduled to take effect in nine metropolitan statistical areas in the U.S. in January 2011 including Charlotte, Cincinnati, Cleveland, Dallas-Fort Worth, Kansas City, Miami, Orlando, Pittsburgh, and Riverside, Calif.  An additional 91 areas are scheduled to start the bidding program later in 2011.

The report was released the day before a House Energy and Commerce subcommittee scheduled a hearing on the controversial bidding program.

"There are several problems inherent in CMS's design of the competitive bidding process that create perverse incentives and may result in unsustainable low bids from suppliers," concluded Dobson | DaVanzo in its report, "The Risks to Medicare Beneficiaries of DMEPOS (durable medical equipment, prosthetics, orthotics, and supplies) Competitive Bidding – Considerations for Round 1 Re-Bid and Beyond."  

"Furthermore, the competitive bidding program design does not provide beneficiaries with adequate protections against degradation in care or service."

"The results of DMEPOS provider competition based on price, rather than quality of supplies or customer service, may result in significant reductions to the quality of items and services beneficiaries need to remain at home, independently," states the report.  "Unintended consequences that could result include secondary medical complications, increased emergency department visits and hospital discharge delays, and ultimately, a transition out of the home to more costly facility-based care."

Key findings on the potential repercussions of the so-called Medicare "competitive" bidding program include:

  • Negative Marketplace Implications: The design of the program creates economic incentives that could produce unsustainably low prices and lead to reduced quality and service for Medicare beneficiaries.
  • Limited Choice: Freedom of choice will be challenged for beneficiaries, both in terms of types of suppliers and types of equipment that will be available.
  • Reduced Access: As the number of suppliers is reduced, beneficiaries could experience problems accessing quality equipment and services, especially by geographic area and over time.
  • Less Quality: Under dramatically lowered prices, suppliers may not be able to provide high quality products, and may significantly reduce the services they provide to beneficiaries.

H.R. 3790, a bipartisan bill that replaces the Medicare bidding program with other types of cost-savings, would reduce reimbursements to home medical equipment providers but preserve patient access to medically required equipment and services in the home.  So far, the bill has 255 cosponsors in the U.S. House of Representatives with broad bipartisan support. More than half of both the Democratic and Republican delegations in the House support H.R. 3790.

Patient and consumer groups that support the elimination of Medicare's "competitive" bidding program for durable medical equipment include the ALS Association, the American Association for Respiratory Care, the American Association of People with Disabilities, International Ventilator Users Network, the Muscular Dystrophy Association, National Emphysema/COPD Association, National Spinal Cord Injury Association, and Post-Polio Health International, among others.

The report, commissioned by the American Association for Homecare, was intended to educate policymakers about the risks posed by the DMEPOS bidding program. See the full text at www.aahomecare.org/competitivebidding. A member of the American Association for Homecare will testify at Wednesday's Energy and Commerce subcommittee hearing.

Dobson | DaVanzo conducted interviews with patient advocates, beneficiaries, hospital discharge planners, academic experts, former CMS officials and contractors, and providers in the DME community. The firm also reviewed government reports, congressional testimony, and journal articles to examine the potential impact of the program.

Dobson DaVanzo & Associates, LLC is a health care economics consulting firm based in the Washington, DC, metropolitan area. The work of the principals has influenced numerous public policy decisions and appears in legislation and regulation. Dobson | DaVanzo researchers have provided testimony to the Centers for Medicare and Medicaid Services (CMS), the Medicare Payment Advisory Commission (MedPAC), and the U.S. Treasury, as well as before members of Congress, state legislatures, and numerous stakeholder groups.

The American Association for Homecare represents durable medical equipment providers, manufacturers, and other organizations in the homecare community. Members serve the medical needs of millions of Americans who require oxygen equipment and therapy, mobility assistive technologies, medical supplies, inhalation drug therapy, home infusion, and other medical equipment and services in their homes. The Association's members operate more than 3,000 homecare locations in all 50 states. Visit www.aahomecare.org/competitivebidding.


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SOURCE American Association for Homecare
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