American Association for Homecare Study Demonstrates that CMS Competitive Bidding Program Decreases Competition

A study released by the American Association for Homecare demonstrates that the CMS Competitive Bidding program decreases competition.

Conclusions drawn from the study include:

During its initial implementaton in 2008, the vast majority of providers were shut out of the program.  Of the more than 4,000 providers in the initial bidding areas, only 376 were deemed to have met the bidding program requirements, which were not clearly defined. This “competitive” bidding program, in fact, depresses competition and limits patient access and choice.

During the bidding implementation, nearly 40 percent of companies awarded durable medical equipment contracts for Pittsburgh patients were located outside of Pennsylvania.

The misguided bidding program would allow the government to selectively contract with only a small group of homecare providers, based on lowest-cost, forcing out providers who use high-quality equipment or provide critical patient services.  The bidding program ignores the provider’s ability to serve a geographic market, meaning fewer home visits to patients in rural areas. By ignoring the role of service, bidding will result in fewer resources for setting up and adjusting wheelchairs, walkers, and hospital beds.

Competitive bidding concentrates market power, which creates regional oligopolies and reduces quality of patient care.

Primary among economic concerns: by eliminating nine out of ten suppliers in the market for durable medical equipment (DME), the industry would become more concentrated. The initial bid results from 2008 confirmed the fears economists have in placing market power in the hands of very few firms, including reduced service and quality of, and access to, patient care.

CRE will work to have CMS respond to study.

Relevant study documents are attached below.