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Medicare Patients Report Problems With Access to Medically Required Equipment and Services Under Controversial 'Competitive' Bidding System
Date:2/2/2011

including two Nobel laureates, warned Congress in several letters that Medicare's bidding design for medical equipment will fail. Those experts, who design market-based auction systems and do not oppose the concept of using a competitive bidding system to set Medicare prices, found that this particular bidding program designed by the Centers for Medicare and Medicaid Services has irreparable flaws that will prevent it from achieving its objectives of low cost and high quality equipment and services.

"It's just four weeks into this program and we have received complaints from more than 100 patients, providers, and hospital administrators who have expressed grave concerns about this approach to healthcare," said Tyler J. Wilson, president and CEO of the American Association for Homecare. "We agree with the many patient advocacy groups, the 167 economists, and the 257 members of Congress who have called for an end to this misguided pricing mechanism. Homecare is already the most cost-effective setting for post-acute care, and this bid system is merely a badly designed solution in search of a problem."  

Under the CMS-designed system, the bidding companies are not bound by their bids, which undermines the credibility of the process and encourages "low-ball" bids that create an unsustainable process and threaten the long-term viability of the program.  Ultimately, the experts told Congress, the bid design provides "strong incentives to distort bids away from [actual] costs," and lacks transparency which is "unacceptable in a government auction and is in sharp contrast to well-run government auctions." The experts' letters conclude, "This collection of problems suggests that the program over time may degenerate into a 'race to the bottom' in which suppliers become increasingly unreliable, product and service quality deteriorates, and supply shortages become common. Contract enforcement would become increasingly difficult and fraud and abuse would
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SOURCE American Association for Homecare
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