Industry to lawmakers: Pick up MPP

Cramton on bid alternative: ‘(It can) become brilliant example of government using market mechanisms in health care for benefit of society’
Tuesday, September 11, 2012

WASHINGTON – Industry stakeholders and CMS debated the merits of Medicare’s competitive bidding program during a congressional hearing on Capitol Hill this morning.

Industry stakeholders, like HME provider Tammy Zelenko, argued that the program hurts small businesses and urged lawmakers to replace it with the market-pricing program (MPP).

“In these difficult economic times, Congress should take action to protect small providers and the patients and communities they serve,” Zelenko said. “To do this, Congress must stop the current bidding program and replace it with MPP, which will allow small businesses to compete and ensure patients have access to the medically necessary HME items and services that they need.”

The hearing, hosted by the U.S. House Committee on Small Business Subcommittee on Healthcare and Technology, featured testimonies from Zelenko, CMS’s Laurence Wilson, economist Peter Cramton, and drug store owner Randy Mire.

Here are some highlights from their written testimonies:

Tammy Zelenko

“I firmly believe that the government deserves to pay fairly for the items and services that HME providers furnish. Serving Medicare beneficiaries is a privilege, not a right. However, I am equally as passionate that the government should not be able to pick ‘winners’ and ‘losers’ and bar otherwise qualified providers from serving Medicare beneficiaries.”

“This is the first year that I did not grow my company, the first time that I had to pass all of the healthcare premiums increases on to my employees, the first time that I could not offer reimbursement for continuing education.”

“We are often the eyes and ears of the elderly and the conduit between the patient, caregiver, physician and community. We communicate critical information to the physician. We support patients in their home environment with self-assessment tools. We create a customized care plan based on physician orders and patient-specific goals. There are costs to providing this type of care, and I have spent the last 24 years investing my time, energy, resources, technology and money into building a reputation on quality and outstanding care in my profession.”

“Because the competitive bidding rates are too low, we can no longer provide that level of service. Our respiratory therapists can no longer provide the clinical follow up on our oxygen patients that we have managed for years. The continuity of care that we had with the patient, caregiver, physician, and community resources no longer exists, and patient-centered care is compromised.”

Laurence Wilson

“The current Medicare DMEPOS benefit is plagued by an obsolete pricing methodology, grossly inflated prices, and a well-documented proliferation of fraudulent practices fueled by these inflated prices.”

“The Department of Health and Human Services’ Office of Inspector General (OIG), the Government Accountability Office (GAO) and other independent analysts have repeatedly warned that the fee schedule prices paid by Medicare for many DMEPOS items are excessive, as much as three or four times the retail prices and amounts paid by commercial insurers or customers who purchase these items on their own. These inflated prices in turn increase the amount beneficiaries must pay out-of-pocket for these items.”

“According to CMS’s analysis of claims from 2010 and 2011, the competitive bidding program has reduced DMEPOS spending by approximately $202.1 million—or 42% overall—in the nine Round 1 rebid areas. The program has significantly reduced payment amounts, with an average price reduction of 35% from the fee schedule.”

“For the first year of the program, CMS’s real-time claims monitoring and subsequent follow-up has indicated that beneficiary access to all necessary and appropriate items and supplies has been preserved in the nine CBAs. Moreover, utilization of hospital services, ER visits, physician visits and skilled nursing facility care has remained consistent with the patterns and trends seen throughout the rest of the country.”

“In 2011, CMS received 127,466 beneficiary inquiries regarding the competitive bidding program, which represented less than 1% of total call volume at the 1-800-MEDICARE call center. The vast majority of inquiries were about routine matters such as questions about the program or finding a contract supplier.”

Peter Cramton

“There is no disagreement among experts about what I will say and the issue is non-partisan. I have spent two years working hard on this issue—talking and sharing with experts, government leaders, congressional staff, providers, beneficiaries, Democrats, and Republicans—I have yet to hear a serious logical criticism to the arguments made here. CMS stands alone in arguing that their competitive bidding program should not be changed—yet CMS has to date failed to present any rational argument for the status quo.”

“We believe that proper design and implementation of market methods can bring gains to all interested parties: Medicare beneficiaries benefit from receiving the quality goods and services they need, Medicare providers benefit from being paid sustainable competitive prices for the quality goods and services they deliver, taxpayers benefit by paying the least-cost sustainable prices for these products, and CMS benefits from the numerous efficiencies that result from conducting an effective program, largely free of complaint, fraud and corruption.”

“The great injustice is that these businesses—both small and large—are not being wiped out because they cannot compete, but because the CMS auction is so flawed. The auction does not select the low-cost providers, but rather the suppliers that were ‘successful’ in the low-ball bidding. This inevitable will lead to a ‘race to the bottom’—a frequent problem in poorly administered procurement auctions. Here the race would be especially rapid.”

“Unfortunately I am powerless to change this terrible injustice. Only Congress can insist on Medicare auction reform. By passing the Market Pricing Program, Congress can ensure an efficient, transparent and fair market for durable medical equipment. The market—rather than illustrate government failure—can become a brilliant example of the government using market mechanisms in health care for the benefit of society.”

To read these testimonies in full, go here.