McGeary: CMS’s model not a good idea

Monday, March 31, 2008

PHILADELPHIA – The timing couldn’t have been better. No sooner did two professors from Robert Morris University release an industry-funded study examining competitive bidding’s impact on the HME market, word got out about another study on whether the program will actually save CMS money. “Will Competitive Bidding Decrease Medicare Prices” was published in the January 2008 issue of the Southern Economic Journal. One of the study’s authors, healthcare economist Kerry Anne McGeary, spoke to HME News in early March about the study’s
HME News: So, will competitive bidding decrease Medicare prices Kerry Anne McGeary: Not on a number of goods. The best way to approach competitive bidding is to keep it as simple as possible. Because of the complicated nature of the current bidding rules, I think CMS had some results in the demonstration projects in Polk County and San Antonio that they didn’t intend to get: that prices for high-volume items would increase, that there would be a high variability of price changes and that there would be some unanticipated declines in quality for beneficiaries.
HME: You must have looked at CMS’s analysis of the demo projects as part of your study.
McGeary: Yes. One thing that we found that was different and kind of a concern of ours was that they reported a price decline of 17% to 22%, and we weren’t getting the same result. When we looked at the data more carefully, we found that what CMS reported was an average price decline. An average won’t include all price increases.
HME: Even though you don’t think CMS will get what it wants from competitive bidding, your findings imply that it’s not necessarily a bad idea.
McGeary: You’re right. I do think that competitive bidding is a good idea. Economists will always tell you that to figure out the true value of an item you should go to the market. It’s just that I don’t think the way that CMS’s model is designed is a good idea.
HME: What got you interested in HME
McGeary: I’ve always been interested in the supply of healthcare products and on a personal level, I have a need for home medical equipment.
HME: Any plans to study competitive bidding and HME further
McGeary: We’d like to. Now that round 1 has started, it would be really interesting if we could do an analysis of those bids. HME