Monday, December 12, 2011

AAHomecare Urges Congress to Enact Market-Based Alternative to Medicare’s Bidding Program for Home Medical Equipment

Sustainable Market Pricing Program Corrects Flaws in Current Bidding Program, Preserves Access to Home-Based Care for Millions of Americans

The American Association for Homecare urges Congress to enact the Market Pricing Program (MPP), a reform of Medicare’s pricing system that is an alternative to the controversial bidding scheme for durable medical equipment and services.

“As it’s currently designed, Medicare’s bidding system reduces choice, access, and quality of care for seniors and people with disabilities who require home medical equipment and services,” said Tyler J. Wilson, president of the American Association for Homecare. “It also discourages competition and ultimately increases healthcare costs. Our proposal, the Market Pricing Program, corrects numerous flaws in the current bidding program and features a financially sustainable auction system.”

The bidding program implemented by the Centers for Medicare and Medicaid Services (CMS) has deep flaws, which were described in a letter to Congress signed by 244 top economists and auction experts. The current bidding system allows for non-binding bids – which encourage irresponsible bids and unsustainable prices and do nothing to ensure that winning bidders are actually qualified to provide the products and services to Medicare beneficiaries in the specified market areas. Since the bidding program was implemented on January 1, 2011, hundreds of Medicare patients have reported difficulty finding local equipment or service providers, delays in obtaining medically required equipment and services, and fewer choices when selecting equipment or providers.

The Market Pricing Program is based on recommendations by economists and auction experts in the field who have studied the current program. MPP features an auction system to establish market-based prices around the country and would require Medicare to make fundamental changes to ensure the long-term viability of the pricing program. Key components are:
  • The Market Pricing Program is designed to achieve an accurate market price.
  • Bids are binding for the bidders and cash deposits are required to ensure that only serious homecare providers participate.
  • The bid price is based on the clearing price, not the median price of winners.
  • The program includes the same equipment and services as the current bidding system and would be implemented across the country during the same timeframe.
  • Two product categories per market area would be bid. Eight additional product categories in that same area would have prices reduced based on auctions conducted simultaneously in comparable geographic areas.
  • Bid areas are smaller geographically than the currently used bidding units (metropolitan statistical areas) and are more homogeneous.
In addition to the 244 economists, more than two dozen consumer and disability groups, 165 members of Congress, and the National Federation of Independent Business oppose Medicare’s current competitive bidding system.

The American Association for Homecare represents durable medical equipment providers, manufacturers, and others in the homecare community that serve the medical needs of millions of Americans who require oxygen systems, wheelchairs, medical supplies, inhalation drug therapy, and other medical equipment and services in their homes. Members operate more than 3,000 homecare locations in all 50 states. Visit

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