Many medical equipment suppliers that won contracts in Medicare’s new DME competitive bidding program are financially shaky, according to Invacare, the Elyria, OH,-based home medical equipment manufacturer that has begun a financial review of suppliers with which it contracts. CMS strongly denounced Invacare’s claims and said suppliers must meet strict financial standards, plus other standards that include accreditation, licensing and Medicare supplier standards.
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Invacare: Many Suppliers In DME Comp Bid Program Are Financially Weak
From: Inside Health Policy
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Competitive bidding: Administrative delay ‘focus of attention’
From: HME News
– 11.24.2010
WASHINGTON – With the industry’s chances of repealing competitive bidding before Jan. 1 looking slim to none, HME stakeholders are pursuing an administrative delay of the program.
“The association has always been trying to stop this program because of its fatal flaws, either through legislation or an administrative delay,” said Walt Gorski, vice president of government affairs for AAHomecare. “It has become increasingly more difficult to believe that the program can be stopped legislatively because of cost issues. So the administrative delay clearly has been a focus of attention.”
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HHS OIG: 1 in 7 Medicare Beneficiaries Harmed in Hospital
A new report by HHS’ Office of Inspector General found that “An estimated 13.5 percent of hospitalized Medicare beneficiaries experienced adverse events during their hospital stays.”
The OIG report went on to state that “This rate projects to an estimated 134,000 Medicare beneficiaries experiencing at least 1 adverse event in hospitals during the 1-month study period.” The report explains that the “term ‘adverse event’ describes harm to a patient as a result of medical care, such as infection associated with use of a catheter.”
An issue that remains to be addressed is determining how many Medicare beneficiaries will be harmed by competitive bidding.
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Existing Suppliers Pummeled in Round 1 Rebid
A new analysis by Dr. Peter Cramton demonstrates the harm done to existing suppliers in the Round 1 Rebid. For example, in the Pittsburgh CBA existing suppliers won none of the contracts for CPAP devices, hospital beds or mail order diabetic supplies and only 11% of the contracts for oxygen supplies and equipment.
Across the nine CBAs, existing suppliers won half of the oxygen contracts but only 25% of the hospital bed contracts, 23% of the enteral nutruient contracts and 16% of the contracts for complex rehabilitative (Group 2) power wheelchairs.
Attached is Dr. Cramton’s analysis.
cramton-change-in-market-structure
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‘Mystery’ providers win competitive bids
From: HME News
“There are some of the same winners from last time, but there are a whole lot of names that I haven’t heard of and I’ve been here for 15 years,” said Chris Rice, director of marketing for Diamond Respiratory Care in Riverside, Calif., which won contracts in all product categories except complex rehab (Group 2).
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Economist continues campaign
From: HME News
BALTIMORE – Economist Peter Cramton has developed a new model for competitively bidding DME that he says addresses the flaws in CMS’s current program.
Cramton, a University of Maryland professor, has posted a draft of the model, which he is sharing with government officials and lawmakers, to his website, www.cramton.umd.edu. One of the components of the model: Making bids binding.
“I wanted to move beyond that the competitive bidding program has problems and try and solve those problems,” he said. “What I wanted to do was put together a workable design that respects all of our existing knowledge of auction design and attempt to apply (it) to the Medicare application.”
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CMS Not Planning To Redesign DME Competitive Bidding Program
Posted: Nov. 03, 2010CMS does not plan to redesign the competitive bidding program for durable medical equipment (DME) because 92 percent of suppliers offered contracts accepted them, CMS Deputy Administrator Jonathan Blum said Wednesday (Nov. 3). The DME industry responded that the agency is using faulty logic and pointed to a new laboratory experiment on the CMS auction that stakeholders suggest shows the situation will worsen the longer the program runs. The health reform law calls for an expansion of the bidding program.
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CMS Told In Private Meeting That DME Comp Bid Design Is Flawed
Posted: November 2, 2010CMS officials on Monday (Nov. 1) were presented with a California Institute of Technology experiment that concludes that the controversial durable medical equipment competitive bidding program is poorly designed and cannot be fixed with minor adjustments. CMS met with academics on the design of the Medicare DME bidding program after canceling an earlier meeting because it was reported by Inside Health Policy, according to sources following the issue.
Changes to the program would have large implications for DME suppliers as the health reform law calls for a major expansion of the DME bidding program.
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New Studies by Dr. Peter Cramton and CalTech Criticize CMS Competitive Bidding Process
Two new studies add further academic fuel to the public fire over CMS’ home medical equipment competitive bidding program.
The new paper by Peter Cramton and Brett E. Katzman, “Designed to Fail: The Medicare Auction for Durable Medical Equipment” examines “the theoretical properties of the proposed auction format for Medicare Durable Medical Equipment.” Cramton and Katzman conclude that the CMS process will result in “low-ball bids that set prices too low and result in supply shortages. … In other words, although it is imperative for CMS to make bids binding in order to eliminate the low-ball bidding strategies, that is not enough, since reverting to a median-price auction with binding bids would also be highly inefficient.”
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CMS Rejects Criticism of Agency Auction Process
CMS stated that since 92% of suppliers that were offered contracts accepted them, concerns over the non-binding bid process were not valid. CMS also cited their efforts to ensure that small suppliers received contracts and the need to maintain patient access to equipment as evidence of the superiority of their competitive bidding process over any recommended alternatives.