Try looking on the bright side

Wednesday, December 31, 2003

WASHINGTON - When it comes to the Medicare Prescription Drug Bill’s requirement that CMS begin implementing competitive bidding for DME in 2007, providers have a couple of reasons to take heart, say industry watchers.

First of all, 2007 is a long way off. The industry has time to delay or possibly even scuttle competitive bidding all together. Secondly, installing competitive bidding in the 10 largest metro areas in 2007 and the top 80 in 2009 will be extremely difficult. Medicare’s demonstration projects in Polk County, Fla., and San Antonio - both much smaller areas - will seem like a breeze in comparison. Thirdly, it won’t be necessary. Competitive bidding would be overkill. DME reimbursement cuts scheduled to kick in earlier will save Medicare plenty. And if all else fails, at least providers have several years to prepare of it.

“[Competitive bidding] creates bigger government to deal with fewer providers on price only,” said AAHomecare board member Steve Knoll. “Home care is already a great value. If the government drives the service component out, it will restrict access and people will end up in doctors’ offices and in the hospital. I don’t think that is the goal.”

Indeed, it’s not, said Mark Wynn, who oversaw the demonstration projects and believes competitive bidding will work fine in larger metro areas.

In CMS’s three competitive bidding demonstration projects - two in Polk County and one in San Antonio - Medicare saved 19.1%. Reimbursement dropped $9.4 million in the project areas, but was partly offset by $4.8 million in administrative costs, said Wynn.

Furthermore, that $4.8 million in administrative costs is misleading. The bulk of that money, $4.3 million, went to starting up the Polk County project. Most of the expenses related to running competitive bidding occur in the initial start-up. Subsequent projects cost much less because the staff and technology to support them are already in place. The same should be true in larger metropolitan areas, Wynn said.

As for patient satisfaction with competitive bidding: “In general, people are very happy with their DME supplier,” he said. “That is true inside the demonstration and outside the demonstration. We did a lot of surveying.”