Independent Study Says Bidding Program Could Lead to Decline in Patient Choice, Access, and Quality

The first independent study focused on the patient impact of the “competitive” bidding program for HME predicts that the program may produce a number of negative outcomes, including fewer choices, reduced access to care, and lower quality products for the Medicare beneficiaries who depend on home medical equipment and services.

The study, by health economics consulting firm Dobson DaVanzo & Associates, includes an extensive literature review (government reports, congressional testimony, journal articles) as well as interviews with representatives from patient advocacy groups, beneficiaries, discharge planners, academic experts, and the HME community.

The Association encourages all HME professionals to use the talking points from the study for meetings with your Representatives and Senators during the remaining three weeks of the congressional recess.

An executive summary of the findings is available now, with highlights below. The full report will be available in mid September.

Key Findings of Dobson DaVanzo Study

Marketplace Implications:
• The design of the competitive bidding program creates economic incentives that could have a negative impact on price, quality, and service for Medicare beneficiaries.

• The design of the CMS competitive bidding process is highly susceptible to “gaming,” allowing sophisticated bidders to use complex rules and the volatility of supply and demand to their advantage.

• The three-year bid period, the composite price structure used to calculate prices, and both “predatory” and “suicide” bidding could produce unrealistically low bid prices incompatible with sustained service and product quality.

• Fewer suppliers could lead to less price competition over the long term, not more.

Choice:
• Freedom of choice will be challenged for beneficiaries both in terms of types of suppliers and types of equipment that will be available.

• The competitive bidding program could eliminate up to 90 percent of DMEPOS suppliers, limiting choice of preferred providers and disrupting long-term relationships and continuity of care.

Access:
• As the number of suppliers is reduced, beneficiaries could experience problems accessing quality equipment and services, especially over time and by geographic area.

• Lower payments to suppliers may reduce beneficiary access to high quality, brand name, and customizable equipment, and other effective supplies that are familiar to the patient.

• The competitive bidding program may not adequately protect against supplier unavailability and delayed response time, causing hospital discharge delays and/or more emergency department visits.

• The competitive bidding program may reduce the provision of various services on which beneficiaries rely to remain independent and prevent complications, such as patient evaluation, education, and training, and equipment customization, adjustment, and timely repair and maintenance.

Quality:
• Suppliers may not be able to provide high quality products, and may significantly reduce the services they provide to beneficiaries.

• Suppliers may not be able to afford (and are not incentivized to provide) higher quality products, which can affect beneficiary mobility, general health condition, and quality of life.

• Technological innovation and development of high quality products may be stifled.