Mainstream Media Delivers More Bad Bidding News

Opinion column portrays program as 'disaster waiting to happen,' news article highlights provider problems.

As providers concentrate during the congressional recess to convince lawmakers to back H.R. 1041, the bill that calls for the repeal of competitive bidding, two recent media offerings could bolster their arguments. Recently, conservative commentary magazine the Weekly Standard ran an opinion column labeling the program a “disaster waiting to happen,” and the Florida Sun-Sentinel published a news article that highlighted the problems the program has created and the increasing opposition to it.

The Weekly Standard column, “A Disaster Waiting to Happen,”which was penned by Eli Lehrer, vice president at the Chicago-based policy group the Heartland Institute, ran under the headline and the subtitle “Medicare bureaucrats wreck the medical equipment market.” (The American Association for Homecare met with Heartland and several two other like-minded policy groups to discuss the downside of the bidding program earlier this year.) Quoting auction expert and noted critic of CMS's competitive bidding program Peter Cramton, Ph.D. (see Camton's latest video) and Professor of Economics at the University of Maryland, Lehrer wrote the following excerpt:

“Since bidders don’t have to honor their bids or prove they can meet them in the first place, they have enormous incentives to bid less than their actual costs, because doing so gives them a zero-risk option to sell to CMS at a price that may be higher than the bid anyway. Since CMS pays less than the likely-to-be-low ‘clearing price,’ however, the system essentially guarantees that some will have to sell at a loss or drop out and thereby threaten their own survival. Finally, since nearly everything is kept secret, CMS’s own officials are free to manipulate contracts however they want. The result is a disaster waiting to happen for the market as a whole.
Cramton adds an important note. ‘It’s rare to see something like this happening in the absence of an organized interest group on the other side,’ he told me. ‘Usually somebody benefits from the flaws in a process. Here, no special interest group benefits.’ Unless, of course, one believes the CMS’s own leadership ought to be counted as another special interest group with an agenda all its own.”

Meanwhile, the Flroida Sun-Sentinal ran “Equipment Dealers Protest Test Program for Selling to Medicare,” which included interviews from representatives of the industry, one of them being HME provider Rob Brant, genearl manager of City Medical Services. Brant's 14-year-old HME business had won bids to provide oxygen and other HME services, but couldn't not withstand the price cuts.

"I closed on April 30," Brant told the Sun-Sentinell. "I'm a legitimate guy and the government drove me out of the business. A lot of my customers are having trouble finding another supplier to take them."

The article profiled one of Brant's patients, retiree Allen Berger, who depended on City Medical Services for respiratory services.

“We couldn’t find anyone who would take us,” Berger’s wife, Joan, said in the article, which reported that Brant and the Bergers' doctor finally lined them up with a firm.

The article went on to detail the industry's political fight, including the growing number of patient groups and economic experts that are in opposition to the program.

About the Author

David Kopf is the Editor of HME Business.



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