Experts continue speaking out against bidding program

Thursday, June 16, 2011

WASHINGTON - Criticism of Medicare's competitive bidding program continues to mount--much of it coming from outside the HME industry.

On Thursday, Dr. Peter Cramton, a vocal critic of the program, and 244 economists, computer scientists and engineers sent a letter to President Obama, expressing concerns with the program.

The letter states:

"In September 2010, many of us signed a letter to Congressional leaders pointing out the numerous fatal flaws in the current Medicare competitive bidding program for durable medical equipment (DME). We also emphasized that the flaws could easily be fixed by adopting modern auction methods that have been developed over the last fifteen years and are now well-understood."

"There are to date no signs that CMS has responded to the professional opinions of auction experts or taken any serious steps to fix the obvious flaws to the competitive bidding program. Rather CMS continues to recite the mantra that all is well and that CMS does not plan to make any changes to the program as it expands from nine pilots to the entire United States."

Read the entire letter. 

Also last week, another study found fault with Medicare's competitive bidding program.

The San Francisco-based Pacific Research Institute, a non-profit organization which supports free-market policy solutions, released "Durable Medical Equipment: Price Suppression and Research and Development Investment" on June 13.

The way the bidding program is designed creates prices that are "substantially lower than those that would emerge in a competitive market," stated the study' author, Benjamin Zycher, a PRI senior policy fellow.

Such artificially low prices will have an adverse impact on investment in research and the development of new medical technologies, according to the report. Investment would be reduced by 12% to 15% or approximately $2.1 billion $3.1 billion annually from 2011 through 2020. 

"This investment loss would cause, conservatively, a loss of about 500,000 expected life-years each year, the economic cost of which would be about $50 billion per year, which is substantially greater than the entire U.S. market for medical devices and equipment," stated Dr. Zycher. 

To see the report:

Meanwhile, H.R. 1041, the bill to repeal the bidding program, continues to gain support. Last week, it picked up nine new co-sponsors, bringing the total to 125.