While the Medicare competitive bidding program is set to restart in October, a recent study indicates the federal Centers for Medicare and Medicaid Services drastically misread the marketplace and that the current competitive bidding program reduces overall competition and hurts the quality of patient care.
Released by Brian O’Roark of Robert Morris University, the study analyzed the results for round one of the bidding program, which began July 1, 2008. Congress stopped the program two weeks later because of flaws in the bidding process.
“The bidding program forces an unsustainable business model on the DME (durable medical equipment) industry,” said O’Roark. “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.”
Of the more than 4,000 providers in the initial bidding areas, only 376 met the bidding program requirements, which critics said were not clearly defined.
“Healthcare services for the elderly and disabled cannot and should not be auctioned off to the lowest bidder,” said Georgetta Blackburn, vice president of Blackburn’s, a home medical provider in Tarentum, Pa. “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.”
“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,” said Tyler J. Wilson, president of the American Association for Homecare.
According to critics, the competitive bidding program would have prompted homecare providers to cut services, lengthen patient response times or give up providing some equipment. They also charged that contracts were awarded to unlicensed providers, violating state standards.
According to O’Roark’s study, reduced access and declining quality of care under competitive bidding will force patients into institutionalized care. This will lead to higher long-term costs for Medicare, he said, not lower, as CMS officials suggest.
The study also says private insurance firms would benefit from the program because Medicare reimbursement rates are the gold standard and the basis for reimbursement by all other forms of health insurance.
“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 bidder. “Patients will ultimately pay the price.”