Q and A: Cramton goes behind the numbers

Thursday, January 26, 2012

BALTIMORE - Prof. Peter Cramton set the competitive bidding debate on fire earlier this month when he reported that the number of claims submitted for home medical equipment in Round 1 areas plunged in 2011. Cramton, an economist with the University of Maryland and an outspoken critic of the program, obtained the data through the Freedom of Information Act (FOIA). He spoke with HME News last week about some of his preliminary conclusions.

HME News: Did you expect to see such a steep decline in claims in Round 1 bid areas?

Peter Cramton: I would have expected some drop, but I am surprised it's as large as it seems to be. The biggest explanation, as we learned from the auction outcome, is that the whole market was radically transformed, with the vast majority of providers being removed from the supplier list.

HME: The data shows that there are claims being made by non-contract suppliers.

Cramton: I suspect that is the grandfathering aspect. For most of the products, there was a period where (the beneficiaries) could continue with their existing supplier. That, to me, is cause for concern because grandfathering will end and when it does end, if they haven't found a new supplier, that's going to be a serious issue.

HME: The data also shows an increase in negative health outcomes in bid areas vs. non-bid areas.

Cramton: The point of that set of figures is to show that the sharp decline in claims, assuming that it isn't all attributable to fraud--and I would be shocked if it was--is likely leading to a decline in utilization. The decline in utilization means there are more non-utilizers, which means there are more bad health outcomes. Those are all indicators that the program, rather than saving the taxpayers money, has a very real but hidden cost, which is that the cost simply falls in a different category within the Medicare system.

HME: Why were complex rehab codes included? They weren't in Round 1.

Cramton: The FOIA request was just for the categories that were included under the program. I think what happened--I am not sure--is that some product codes within the standard and complex wheelchairs categories changed, and so it caused that anomaly.

HME: Do you think CMS could spin this data to prove competitive bidding has resulted in a decline in fraud and abuse?

Cramton: I don't see how they could draw that conclusion. Driving down claims and driving out fraud is largely a separate issue. It's not the auction itself that prevents fraud. I guess what they would argue is, absent competitive bidding, CMS was required to deal with a potentially unlimited number of suppliers that they didn't really have the resources to check who is doing the right thing and who is not. I think it's not so much the number of suppliers but rather the checks that you make to confirm that the services being provided are legitimate.



This is our best chance of fighting competitive bidding. If we can show how noncompliant diabetics and COPD patients will now increase utilization of more expensive alternatives then we can make a case for how this entire program is harming the taxpayers by being penny wise and pound foolish.<br />
<br />
If the point is to protect the taxpayers, then competitive bidding isn&#39;t performing as hoped.

There is no way to spin the diabetic testing supply number. Making 3 out of 4 medicare diabetics noncompliant isn&#39;t going to help the taxpayers. Amputations will go up. Falls will go up. Nursing home admittances will go up. And physical therapy will go up too. All of these are far more expensive cost events for medicare than the cost of the testing supplies.<br />
<br />
You don&#39;t need to be Oliver Stone to connect these dots. This is quite obviously going to hurt the taxpayers.

I agree with Chris and Frank. But diabetic supplies may not be the best example of serious underutilization. Remember, retail was exempted. We know that if a patient complained, CMS simply referred them to the retail drug store.

If you read the actual study then you will see the mortality table comparisons of people using CPAPs vs those who do not. Enteral nutrition vs no. O2 Concentrators vs no. Death, hospitalization, etc. It is pretty compelling.<br />
<br />
Maybe we can get the HME News crew to link to the study so everyone can read it?

Here is the link to Prof. Cramton&#39;s study: http://www.cramton.umd.edu/papers/health-care/. It&#39;s the first report mentioned.

This is nothing but Rassioning period. So in the previous years you had folks faking the O2 sats or the apnea hypopneas. We all know jabbing your finger with a needle a couple times a day is fun and the new sexy is wearing a Full Face CPAP mask to bed. Yeah its fraud alright.... the government committing fraud on the Medicare beneficiaries!