Consumer groups, market experts support repeal of Medicare bidding program

Hundreds of Patients and Providers Report Problems with the Program

Providers of home medical equipment and services (HME) in Oregon support H.R. 1041, a bipartisan bill in Congress that would repeal the controversial Medicare "competitive" bidding program for certain medically required equipment and services used at home.  That bidding program is scheduled to start up in the Portland-Vancouver-Beaverton metropolitan area later this year.

This bidding program will affect millions of Medicare beneficiaries nationwide who require oxygen therapy, enteral nutrients (tube feeding), continuous positive air pressure (CPAP) and respiratory assistive devices, power wheelchairs, walkers, hospital beds and support surfaces, and mail-order diabetic supplies.  The program was implemented on January 1 in nine metropolitan areas (round one), and later this year it begins in 91 round two areas including the Portland region.

"This bidding program must be stopped before round two is implemented," said Angelene Adler, vice president of operations at Portland-based Care Medical. "It will harm patients, reduce competition, lower quality of products, increase Medicare spending, and cost thousands of jobs throughout the country. Congress must pass H.R. 1041."

Care Medical is a member of the Pacific Association for Medical Equipment Services and the American Association for Homecare, which support H.R. 1041.        

"Homecare is an industry built on care and service and it has always been cost effective," said Adler. "This fact seems to be ignored by Medicare officials. The bidding program will not save taxpayers' money in the long run. It is not sustainable, and Congress must act now."

The bill to repeal the bidding program in the U.S. House of Representatives, H.R. 1041, has 113 cosponsors so far with broad support from both Republicans and Democrats in Congress.

CONSUMER GROUPS, MARKET EXPERTS SUPPORT REPEAL OF BID PROGRAM

More than two dozen national patient advocacy and consumer groups also support H.R. 1041 including the ALS Association, the Brain Injury Association of America, the Christopher and Dana Reeve Foundation, the International Ventilator Users Network, the Muscular Dystrophy Association, National Emphysema and COPD Association, the National Council on Independent Living, the National Spinal Cord Injury Association, and United Spinal Association, among others.  

The legislation to repeal the bidding system was introduced after hundreds of patients and providers reported problems with the program.  By design, this Medicare bidding system severely restricts the number of companies that are allowed to provide the equipment and services subject to bidding.  Since the bidding program was implemented in nine areas on January 1, more than 500 patients, clinicians, physicians, and homecare providers have reported:

• Difficulty finding a local equipment or service provider;
• Delays in obtaining medically required equipment and services;
• Longer than necessary hospital stays due to trouble discharging patients to home-based care;
• Far fewer choices for patients when selecting equipment or providers;
• Reduced quality; and
• Confusing or incorrect information provided by Medicare.

In January, the American Association for Homecare shared with Medicare a number of problems and concerns related to the bidding program including:

• Medicare awarded contracts to companies that are bankrupt.
• Medicare awarded contracts to companies that are not licensed to provide the specific medical items or services.  
• Medicare awarded contracts to companies with serious credit problems.
• Medicare distributed incorrect information about the contract winners.

In a November, 2010 letter, 167 leading economists and auction experts, including two Nobel laureates, warned Congress that Medicare's design for a medical equipment bidding system would fail. Those experts found that the bidding system designed by the Centers for Medicare and Medicaid Services (CMS) has irreparable flaws that will prevent it from achieving its objectives of low cost and high quality equipment and services. Under the CMS-designed system, companies are not bound by their bids. Non-binding bids undermine the credibility of the whole process, encouraging low-ball bids that create an unsustainable process and threaten the long-term viability of the program.  

The experts told Congress that the bid design devised by Medicare 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 concluded that, "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 grow… Implementation of the current design will result in a failed government program."