Medicare Patients Report Problems with Access to Medically Required Equipment and Services under Controversial “Competitive” Bidding System

WASHINGTON, DC, February 2, 2011 ---- After the January 1 implementation of Medicare’s controversial “competitive” bidding program in nine regions across the U.S., Medicare patients are reporting problems receiving home medical equipment and services that were prescribed by their physicians.

The bidding program was implemented on January 1 in nine metropolitan regions: Charlotte, Cincinnati, Cleveland, Dallas-Fort Worth, Kansas City, Miami, Orlando, Pittsburgh, and Riverside, California. The program is scheduled to start up in another 91 regions later this year. The bidding program affects millions of Medicare beneficiaries who require oxygen therapy, enteral nutrients (tube feeding), continuous positive air pressure (CPAP) and respiratory assistive devices, power wheelchairs, walkers, hospital beds and support surfaces, and mail-order diabetic supplies.

By design, this new Medicare program severely restricts the number of companies that are allowed to provide the equipment and services subject to bidding. Since the bidding program began on January 1, patients, clinicians, and homecare providers have reported:

• Difficulty finding a local equipment or service provider;
• Delays in obtaining medically required equipment and services;
• Longer than necessary hospital stays due to trouble discharging patients to home-based care;
• Far fewer choices for patients when selecting equipment or providers;
• Reduced quality; and
• Confusing or incorrect information provided by Medicare.

The Association has logged more than 100 complaints during the first four weeks since the bid program was implemented, including dozens from patients. Among those complaints are the following:

• A CPAP user in the Orlando area could not find the right supplies from the reduced number of local providers contracted under the bidding system. “I don’t like that the local people were cut out. In our area, there are very few suppliers to choose from.”
• A provider of home medical equipment and services in the Kansas City area reports that hospital discharge planners are sending patients only those equipment providers that won contracts for multiple categories under the bidding system, effectively excluding those companies that only won contracts for one or two service categories. This further shrinks the pool of homecare providers available to serve Medicare beneficiaries who depend on home medical equipment and services and does nothing to protect small providers.
• Home medical equipment providers in Cincinnati, Cleveland, and Dallas have laid off staff because of the bidding program.
• A patient in the Charlotte area was required to stay in the hospital for several extra days because of delay in delivery of oxygen equipment to the patient’s home, reports the North Carolina Association for Medical Equipment Services.
• A director of case management at a Dallas hospital said the bidding program has caused problems and burdens with respect to coordination of equipment and services. “Medicare is making it more difficult to provide services to people in need.”

The American Association for Homecare shared a number of problems with CMS earlier in January including:

• Companies awarded Medicare contracts that are bankrupt.
• Companies awarded Medicare contracts that are not licensed to provide items or services.
• Companies awarded Medicare contracts that have credit problems.
• Incorrect information distributed by Medicare about the contract winners and which beneficiaries need to change their home medical equipment providers.

MARKET EXPERTS, CONSUMER GROUPS OPPOSE THE BID SYSTEM

In November, more than 160 leading economists and auction experts, including two Nobel laureates, warned Congress in several letters that Medicare’s bidding design for medical equipment will fail. Those experts, who design market-based auction systems and do not oppose the concept of using a competitive bidding system to set Medicare prices, found that this particular bidding program designed by the Centers for Medicare and Medicaid Services has irreparable flaws that will prevent it from achieving its objectives of low cost and high quality equipment and services.

“It’s just four weeks into this program and we have received complaints from more than 100 patients, providers, and hospital administrators who have expressed grave concerns about this approach to healthcare,” said Tyler J. Wilson, president and CEO of the American Association for Homecare. “We agree with the many patient advocacy groups, the 167 economists, and the 257 members of Congress who have called for an end to this misguided pricing mechanism. Homecare is already the most cost-effective setting for post-acute care, and this bid system is merely a badly designed solution in search of a problem.”

Under the CMS-designed system, the bidding companies are not bound by their bids, which undermines the credibility of the process and encourages “low-ball” bids that create an unsustainable process and threaten the long-term viability of the program. Ultimately, the experts told Congress, the bid design provides “strong incentives to distort bids away from [actual] costs,” and lacks transparency, which is “unacceptable in a government auction and is in sharp contrast to well-run government auctions.” The experts’ letters conclude, “This collection of problems suggests that the program over time may degenerate into a ‘race to the bottom’ in which suppliers become increasingly unreliable, product and service quality deteriorates, and supply shortages become common. Contract enforcement would become increasingly difficult and fraud and abuse would grow… Implementation of the current design will result in a failed government program.”

Also opposing the controversial bidding program are more than a dozen national consumer and patient advocacy groups including the ALS Association, American Association of People with Disabilities, Muscular Dystrophy Association, National Council on Independent Living, National Spinal Cord Injury Association, and United Spinal Association. Last year, a bipartisan group of 257 members of the U.S. House of Representatives supported legislation to repeal the misguided bidding program.

Medicare beneficiaries, family members, caregivers, hospital discharge planners, and clinicians can report problems, concerns, and feedback about this bidding system by calling a toll-free number, 1-888-990-0499, or by visiting the website:www.biddingfeedback.com. To learn more, visit www.aahomecare.org/competitivebidding.