Caltech Research Shows Medicare Auction Will Face Severe Difficulties

From: Pasadena Now

By Marcus Woo

Medicare’s new method for buying medical supplies and equipment—everything from wheelchairs and hospital beds to insulin shots and oxygen tanks—is doomed to face severe difficulties, according to a new study by Caltech researchers.

The Center for Medicare and Medicaid Services (CMS) implemented the purchasing process—a novel type of auction—in nine metropolitan areas across the country last year and plans to expand it to 91 in 2013.

Medicare’s competitive bidding program is doomed, researchers say

From: McKnight’s Long Term Care & Assisted Living

Medicare’s competitive bidding program for durable medical equipment was not built to last, new research asserts.

Under the program, about which long-term care groups have had mixed reviews, skilled nursing facilities seeking DME supplies can purchase them only from companies that submit the lowest bid to, and are approved by, the Centers for Medicare & Medicaid Services. Critics charge that the program’s rules could force participants to submit low-ball bids, causing prices to be pushed so far down that companies would have to cancel their offers.

“the CMS auction is not a good auction. … the CMS auction cannot be easily fixed”

A new study by researchers at the California Institute of Technology, attached below, blasts CMS’ “competitive” bidding auction for Durable Medical Equipment.  The study published in the Quarterly Journal of Economics, found that CMS’ decision to use non-binding bids and median bid pricing does NOT result in competitive prices.  Of particular concern to Medicare beneficiaries and their families, the paper also found that the auction “fails to satsify demand.”  Researchers has already shown based on CMS data that utilitzation of life-sustaining home medical equipment dropped sharply under the new acquisition program.  Specifically, the paper concluded that: “The CMS auction fails to generate competitive prices of goods and fails to satisfy demand.”

Medicare auction will face severe difficulties, research shows

From: Phys.Org

by Marcus Woo

Medicare’s new method for buying medical supplies and equipment — everything from wheelchairs and hospital beds to insulin shots and oxygen tanks — is doomed to face severe difficulties, according to a new study by Caltech researchers.

The Center for Medicare and Medicaid Services (CMS) implemented the purchasing process—a novel type of auction—in nine metropolitan areas across the country last year and plans to expand it to 91 in 2013.