Policy experts on bidding program: 'Good idea gone bad'

Thursday, August 25, 2011

WASHINGTON - It's a mistake for CMS to push forward with Round 2 of competitive bidding, says a group of policy experts from outside the HME industry.

"CMS is not listening, and the adverse consequences are going to affect consumers," said Steve Pociask, president of the American Consumer Institute, during an Aug. 22 call moderated by The Heartland Institute, a non-profit think-tank that promotes free-market solutions to social and economic problems.

In addition to the American Consumer Institute, the Pacific Research Institute and the Galen Institute participated in the call.

While, in theory, having providers bid for Medicare contracts might seem like a good idea, the way CMS has gone about it is all wrong, the policy experts say.

"The current Medicare competitive bidding process is a good idea gone bad," said Eli Lehrer, vice president of Washington, D.C., operations for The Heartland Institute.

The poor design of the program, including non-binding bids, was a key point made by the policy experts during the call.

"The auction process that CMS uses for gathering bids and allocating quantities to be supplied is seriously flawed," said Benjamin Zycher, senior fellow at the Pacific Research Institute. "The bids are not treated as binding so the bidders can walk away."

It doesn't help that CMS doesn't understand the cost of the services that HME companies provide, the policy experts say. That's something the industry has long pointed out.

"CMS is not counting the costs of maintaining, setting up and servicing this equipment, which is at least as important as the equipment itself," said Grace-Marie Turner, president of the Galen Institute. "If CMS is disregarding that, then it's not understanding the ultimate goal, which is to get the right treatment to the right patient at the right time."

When CMS on Aug. 19 released the affected zip codes and product categories for Round 2, it stated that it hasn't seen a lot of problems associated with Round 1 of the program. But that's because they're not looking in the right place, the policy experts say.

"It seems they are basing that on the number of calls they've received," Turner said. "How many seniors know to call CMS to complain? They are going to call suppliers and doctors. CMS should have taken a real survey and found out what's happening in these nine markets."