GAO advises CMS on NCB

Sunday, October 31, 2004

WASHINGTON - The GAO in September recommended a “cookie-cutter” approach to competitive bidding, arguing that similar policies across all 80 locations and a mail-order delivery system could simplify the roll out of the national pricing program.

The GAO’s report, “Past Experience Can Guide Future Competitive Bidding for Medical Equipment and Supplies,” offered suggestions on how to streamline implementation and took into account insights gained from two previous competitive bidding demonstration projects in San Antonio, Texas, and Polk County, Fla.

“I thought the report stuck with what they have always said: That the two demonstration sites showed promise. Yadda, yadda,” said John Gallagher, VGM’s vice president of government relations.

Gallagher criticized comparisons between the demonstrations and the eventual reality of the bidding program.

“[CMS] said the patients were very satisfied in the demonstration areas,” he said. “Well, that’s not a true comparison. Before they were never shifted around [between providers] as they will be. They never knew the difference.”

Sen. Charles Grassley, R-Iowa, was also quick to respond to the report. The chairman of the Committee on Finance expressed concern about the potential impact of competitive bidding on small businesses and beneficiaries in rural areas.

“As the new [GAO] report points out, competitive bidding could lead to new abuses of the system,” said a statement for Sen. Grassley’s office.

Among the GAO suggestions:

- Conduct competitive bidding for demonstration items and items that represent high Medicare spending that were not included in the demonstrations;

- Develop a standardized approach for use at multiple locations;

- Use mail delivery for items that can be provided directly to beneficiaries in the home;

- Evaluate individual HCPCS codes to determine if codes needs to be subdivided because the range in characteristics and price of items included under the individual codes is too broad.

CMS agreed with many of the GAO’s recommendations and said it would study the feasibility of the mail order suggestion. The agency disagreed, however, with re-evaluating the HCPCS codes.

“We believe subdividing codes according to price ranges would lead to Medicare setting codes for particular brand names in circumstances where a manufacturer has established high prices for its products but when these prices do not reflect meaningful clinical difference or high quality,” CMS wrote in response.