Bush proposes nat'l competitive bidding

Thursday, February 28, 2002

WASHINGTON - Just like every spending plan since Ronald Reagan's first term, President Bush presented a 2003 budget last month that called for a national competitive bidding program for durable medical equipment.

But unlike past years, some industry watchers think its chances of becoming law in 2003 have improved, thanks to a need in Washington to cut programs to pay for increased defense spending. By and large, however, most believe that won't happen, due to among other things, uncertainties surrounding how much it would cost to set up and administer.

"In a normal year, I would say it has no chance, but I don't think there is any thing normal about this budget cycle and that is what's bothering me," said Michael DeCarlo, a healthcare attorney with the DC law firm of Dickstein Shapiro Morin & Oshinsky. "There is an emphasis on increasing the military budget and finding savings in other places to offset that."

Competitive bidding is a "shiney bright apple hanging on the tree" just waiting to be plucked, he said.

Asela Cuervo, vice president of governmental affairs for AAHomecare, suspects there'll be more talk about competitive bidding this year than in past budget cycles, given the desire to increase defense spending and save money elsewhere. But she feels confident the industry can present persuasive arguments to derail it.

"The pressure to show some savings or get off-sets to pay for other programs like prescription drugs are probably very high," Cuervo said. "But I think there are some significant issues about what it costs to implement something like this nationwide. That is not part of their estimate and that has always been the case."

CMS states that its competitive bidding demonstration projects in Florida and Texas have saved Medicare $6.8 million over the past three years. But that figure doesn't take into account what it has cost to run the demonstrations, and therefore isn't accurate, said Dave Williams, Invacare's vice president of government affairs.

Based on that $6.8 million figure, the Bush administration has extrapolated that a national competitive bidding program would save about $200 million in its first year. That's a much more aggressive figure than the $100 million the Clinton Administration estimated it would save over five years, Cuervo said.

What the administration doesn't estimate is how much it would cost to set up a massive national competitive bidding program or where the money would come from. And compared to the multi-billion dollar increase the Bush Adminstration is seeking for defense spending, even a savings of $200 million is miniscule, said Cara Bachenheimer, a healthcare attorney with Epstein Becker & Green in Alexandria, Va.

"It's not that huge of an issue budget wise," Bachenheimer said. "People aren't going to say, 'Oh my god, competitive bidding. Let's go buy another bomber.'"

And while HHS Secretary Tommy Thompson is seen as a reformer, it's uncertain whether he'd have much influence in helping to push through a national competitive bidding program.

"This is not something new," Williams said. "It's something the OMB loves to put in the budget. But Congress always says, 'We aren't ready for this yet. Until CMS demonstrates that it can manage what they've got, we aren't going to give them any more authority."'

Additionally, Medicare's competitive bidding is really "government price fixing" since any DME can participate if it meets standards set by CMS and accepts the bid price. And given the free marketeers now in charge in Washington, any mention of government price fixing is the kiss of death to proposed legislation, Williams said.

"All you have to say is that this is government-sponsored price setting and they say, 'We don't want any thing to do with it,'" he said. HME