More competitive bidding: Industry tries to put finger on impact

Thursday, September 16, 2010

WASHINGTON - Three of the biggest mail order providers trekked to Washington, D.C., last week to deliver this message to lawmakers: Push the pause button on a national competitive bidding program for diabetes testing supplies.

On Sept. 14, members of the Quality Diabetes Care Coalition (QDCC) asked lawmakers to first evaluate the impact of Round 1 on Medicare beneficiaries before rolling out the program nationally.

"We think it's prudent to let some of the results come out so, instead of us all speculating on the impact, we can all start to deal with some specific examples," said Michael Iskra, a founding member of the QDCC and executive vice president and general manger of the diabetes division for CCS Medical. "That would make for a much better approach to a national round for competitive bidding."

The coalition, which formed in 2008 to educate lawmakers and the public about the ramifications of competitive bidding, includes CCS Medical, Liberty and Simplex.

CMS has been considering a national program for diabetes supplies for a few years. The "2011 Proposed Medicare Physician Payment Rule," which closed for comment in August, contains several related provisions, including an expansion of the definition of what constitutes "mail order."

"We are not taking a position about repealing the competitive bidding program," Iskra said. "What we have tried to do is work with CMS and legislators to make sure we have an effective program."

Another big concern of the coalition: the extremely low winning bid amounts--on average 56% below the current allowable. If that's not a sustainable price for the three biggest mail order providers--and they all agree that it's not--it's not a sustainable price for anyone, says Iskra.

"We are curious to see who won and to see if they are providing test strips today," he said. "My assumption is that they are missing a lot of the other things that are required to properly serve beneficiaries and meet Medicare guidelines."

Study: NCB 'may result in significant reductions to quality, service'

ARLINGTON, Va. - Creating a bidding program based on price competition is just asking for trouble, says a new study.

"The results of DMEPOS provider competition based on price, rather than quality of supplies or customer service, may result in significant reductions to the quality of items and services beneficiaries need to remain at home, independently," states Dobson/DaVanzo & Associates in "The Risks to Medicare Beneficiaries of DMEPOS Competitive Bidding--Considerations for Round 1 Re-Bid and Beyond." "Unintended consequences that could result include secondary medical complications, increased emergency department visits and hospital discharge delays, and ultimately, a transition out of the home to more costly facility-based care."

AAHomecare commissioned Dobson/DaVanzo & Associates, a health economic and policy firm, to study the impact of competitive bidding.

The study included findings in several key areas:

Marketplace implications

The composite price structure used to calculate bids, a flawed coding system and "suicide" bidding could result in unsustainable pricing. Further, fewer suppliers could mean less price competition in the long run.


Beneficiaries will have less choice in both equipment and suppliers, and long-term relationships could be disrupted.


As the number of suppliers is reduced, beneficiaries could have problems getting equipment and services; lower payments to suppliers may reduce access to high-quality, brand name equipment; and there may be delays in hospital discharges if suppliers are not available.

Dobson/DaVanzo interviewed patient advocates, former CMS officials and contractors, hospital discharge planners and HME providers to conduct the study.

To read the entire report: