A wayward arsenal of loose cannons

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Friday, January 31, 2003

Boosters of the DMEPOS competitive bidding plan have significant firepower on their side. They can point to a persuasive report from the Congressional Budget Office that shows competitive bidding will save more than $7 billion over 10 years. They can invoke studies from Polk County and San Antonio that show Medicare beneficiaries are by and large satisfied with the service they’re getting under competitive bidding. But as President Bush and Senate Majority Leader Frist, who has identified health care as his top priority in the next Congress, make a case for Medicare reform, they won’t enjoy the same support from the world of Medicare HMOs.

Their plan, in a nutshell, is this: stir up competition to Medicare’s fee-for-service program by creating stiffer competition from Medicare+Choice plans. HME providers hate this idea. In the most resounding response to an HME NewsPoll to date, 85% of 160 respondants are saying “No” to more Medicare HMOs. Aside from bringing managed care pricing to still more Medicare business, providers loathe the thought of replacing the most dependable payer in the business with a wayward arsenal of loose cannons.

Nor does the industry want to play. Since the highwater mark of managed Medicare in December 1998 when there were 456 different Medicare+Choice plans, the option’s attractiveness to private payers has fallen by almost half to 240 different programs in December 2002. Private payers complain there’s not enough money in it for them. The nascent Bush plan would induce participation from private payers by funneling more money their way. But that, according to the GAO, will do little to improve service. Last summer, Congressional auditors slammed HMOs for not using millions in additional funding to improve services.

The government may find that the beneficiaries of Polk County are happy with competitive bidding, but they’re not likely to find similar levels of satisfaction among the Medicare patient base. In the last three years, about 30% of the patient base has returned to fee-for-service after trying out Medicare HMOs.

War or no war, Congress will have health care in its sights. The most recent report from CMS shows that healthcare spending in the United States surged by 8.7% in 2001, the greatest leap forward in a decade. Total healthcare spending in the United States rose to $1.4 trillion in 2001. That’s 14% of the nation’s GDP, and some estimates say that mark will rise to 24% of the GDP by 2011.

Restraining the galloping- away costs of healthcare should be a priority in Congress. It has to be. But doing this by privatizing an otherwise efficient government program is not the way to go. The government has leaned on its data to justify another stab at competitive bidding. Let’s hope it does the same when it comes time to futz with Medicare. HME

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