CMS misread the marketplace when it created competitive bidding, and program will reduce overall competition and hurts the quality of patient care, according to a new economic study on competitive bidding from Brian O’Roark, PhD, of Robert Morris University. The American Association for Homecare shared the study’s finding with members of the news media during a conference call this week in bid to share with the American public why the program is flawed.
“There is nothing competitive about this misconceived program,” said AAHomecare president Tyler Wilson “This study joins an extensive body of evidence showing that this bidding program will produce fewer competitors, fewer homecare services, and lowest-common-denominator healthcare for older Americans and people with disabilities who require medical care at home.”
The study analyzed the results of NCB round one of the bidding program and found several flaws with the competitive bidding program:
- Nearly 40 percent of companies awarded durable medical equipment contracts for Pittsburgh patients were located outside of Pennsylvania.
- Had the competitive bidding program continued, homecare providers would have had no choice but to cut service, lengthen patient response times and abandon providing some equipment altogether.
- Contracts were also awarded to unlicensed providers, which would have violated state standards.
- Reduced access and declining quality of care under competitive bidding would force patients into institutionalized care, which would cost the Medicare program significantly more money.
- Private insurance firms would benefit from competitive bidding given that Medicare reimbursement rates serve as the basis for reimbursement for other forms of health insurance. An artificial lowering of Medicare rates is immediately followed by a lowering of all others. As price schedules fall, insurance firms’ costs fall with them.
“The bidding program forces an unsustainable business model on the DME industry,” said study author Brian O’Roark, PhD. “Ninety percent of providers were excluded from participating because they could not meet the bid. Those who qualify are forced to sustain prices for three years—an untenable position for any business.”
During its initial implementation in 2008, the majority of providers were not included in the program. Of the more than 4,000 providers in the initial bidding areas, only 376 were deemed to have met the bidding program requirements, which were not clearly defined, essentially depressing competition and limiting patient access and choice, according to AAHomecare.
Providers on the call provided further details on how the program would impact their businesses and healthcare for their patients:
“If we are fortunate (or unfortunate) to be a winning bidder in this ill-conceived program, we will have a fixed price through 2013, minimal competition, and very few incentives to provide exceptional service,” said Joel Marx, CEO of Medical Service Company in Cleveland, a round-one bidding area. Patients will ultimately bear the burden.”
Rob Brant, general manager of City Medical Services in North Miami Beach, Fla. (a round-one bidding area), commented, “Competitive bidding may work for staplers and hammers, but not in a healthcare sector like home medical equipment which is called upon to work with doctors, hospitals and nursing agencies, to properly and safely train, and to provide products and services so patients can live independently in their homes — and not in facilities like nursing homes.”
“Healthcare services for the elderly and disabled cannot and should not be auctioned off to the lowest bidder,” said Georgie Blackburn, vice president of Tarentum, Pa.-based provider BLACKBURN’S. “Quality and access to care will most definitely suffer as the 65 and over population skyrockets and the government excludes 90 percent of qualified, accredited, community providers from servicing their patients.”