Medicare competitive bidding ramps up

Oct. 14th, 2010 by Andrew Van Dam
Filed under: Health care reform, Health journalism, Hot Health Headline 

The California HealthCare Foundation Center for Health Reporting and the San Bernardino County (Calif.) Sun teamed up for a package of stories explaining the local roll-out of a Medicare program that’s testing a competitive bid process for medical devices and equipment.

On Jan. 1, 2011, Medicare will implement the program in nine metropolitan areas nationwide. Bids are already underway. In the series’ flagship story, Deborah Schoch, of the Center for Health Reporting, and the Sun’s Monica Rodriguez looked into the program’s potential for controlling costs and cutting down on fraud. For an illustration of potential savings and payment amounts, see the graphic that ran alongside their work.

The potential savings of going from a set fee schedule to a competitive one should be fairly evident. The anti-fraud measures, on the other hand, require a bit of explaining. According to Schoch and Rodriguez, the system promises to prevent fraud by requiring vendors to be bonded and insured, and to have legitimate storefronts for their durable goods. It will be harder for vendors to upsell seniors into buying needlessly elaborate equipment, and the smaller community of suppliers will be easier to police overall.

Local reporters can refer to the CMS site for precise zip code maps of the round one bidding areas.

medicarebids1

Competitive bidding is nothing new to government agencies, and the duo’s sources believe that they’re ready to make it work in Medicare as well.

After working for Medicare for 32 years, (regional Medicare administrator David Sayen) believes the new plan contains the elements to make it work, Sayen, 57, said in a recent telephone interview. “It’s got the three legs - a mechanism to set pricing, a mechanism to provide quality assurance, and one to prevent waste and fraud.”

The ambitious program has, of course not gone unchallenged, though officials seem confident they will be able to resist the last-minute push from vested interests this time. Some, they write, were inefficient enterprises that were sustained only by Medicare’s generous fee schedule. They will probably not survive in a competitive environment.

Industry groups are pointing to a Sept. 26 letter signed by 166 economists, including two Nobel Prize winners, addressed to California Rep. Pete Stark, Democratic chairman of the powerful health subcommittee of the House Ways and Means Committee.

The signers lambaste what they call four key problems with the program: a lack of binding commitments, the use of composite bids, and what they call flawed pricing and a lack of transparency.

The program could degenerate if vendors become unreliable, product and service quality lags and supplies dwindle, they wrote.

Medicare recipients will be advised of the changes by mail, and through a series of educational sessions.

And, for the record, here’s a list of items up for bids in this first round:

  • Oxygen supplies and equipment
  • Standard power wheelchairs, scooters, and related accessories
  • Complex rehabilitative power wheelchairs and related accessories
  • Mail-order diabetic supplies
  • Enteral nutrients, equipment and supplies
  • Continuous positive airway pressure (CPAP), respiratory assist devices (RADS) and related supplies and accessories
  • Hospital beds and related accessories
  • Walkers and related accessories
  • Support surfaces (Miami only)

If you work in one of the nine bidding areas and have written something about the process, let us know in the comments! We’re hoping to feature more local stories on the program as the new year draws nearer.

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Comments

2 Comments on Medicare competitive bidding ramps up

  1. Carol Gentry on Fri, 15th Oct 2010 6:39 am

    2. I look forward to reading the California package. You asked for other examples, so — not to toot our own little horn, but we have been all over this story since April 2007, a month after we launched! At that time, we didn’t even have a full-time reporter or editor.

    In June 2008, free-lancer Susan Jaffe did an amazing job of explaining the program in a good read: “Medicare discovers free market, baffles beneficiaries”

    Here are the first two grafs:

    WASHINGTON, D. C. – Ruth Kleiner of Delray Beach, who has emphysema, got a letter the other day from the company that delivers her portable oxygen tanks. She read it three times, but still wasn’t sure what to make of it.
    She couldn’t get through to Medicare, perhaps because 4 million other Medicare beneficiaries are also trying to figure out the payment system for medical equipment that will take effect in 10 metro areas — including South Florida and metro Orlando — July 1. Medicare officials say the point is simple: Stop over-paying. Save money.

    Here is the link:
    http://www.healthnewsflorida.org/index.cfm/go/public.articleView/article/7706

    Since October 2009 we’ve run a number of stories on the political fight to kill the program, led by Florida Congressman.

    On July 30, we reported that one of the companies awarded 17 contracts in the bidding program had been accused of Medicare fraud twice in the past eight years.

    To see all our stories on the program, go to our home page and search under “bidding.”

  2. Michael Reinemer, American Association for Homecare on Tue, 19th Oct 2010 9:58 pm

    3. Speaking on behalf of the association that represents providers of home medical equipment, I’d like to point out several errors in your description of the competitive bidding program — which may have originated in the reporting. The fraud prevention mechanisms listed are already in place — they have nothing to do with competitive bidding. Accreditation and surety bonds have been required of home medical equipment providers in Medicare for more than a year now. We advocated for that accreditation requirement for 31 years. Among the “vested interests” that oppose this bidding program and support the bill to repeal it are the ALS Association, the Muscular Dystrophy Association, the American Association for People with Disabilities, United Spinal, and many other consumer and patient advocacy groups, as well as 166 leading economists, and 257 members of Congress (the majority of both parties in the House). If enterprising reporters want to do a serious job looking at this topic, they will have to dig a little deeper into the fine print. Usually they see the term “competitive bidding” and stop thinking. What, after all, could possibly be wrong with that? To find out, contact me or visit http://www.aahomecare.org/competitivebidding.

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