Competitive Bidding Is Killing Medicare Beneficiaries

The goal of the Centers for Medicare and Medicaid Services’ competitive bidding program for home medical equipment was to reduce beneficiary out-of-pocket expenses and reduce Medicare costs while ensuring beneficiary access to quality items and services. Since the program’s January 2011 pilot launch in nine test markets, Medicare continues to report that the program has saved millions of dollars with no disruption of beneficiary access to needed products and supplies and no harm to patients. This is a lie.

In April of this year, my colleagues and I published a report on the impact of competitive bidding on Medicare beneficiaries with diabetes. Our findings showed that the implementation of competitive bidding resulted in disruption of services, increased mortality and increased mortality with associated increases in emergency room and inpatient hospitalization costs. And this was just in the nine test markets. We suspect that even greater increases in disruption, mortality and costs have occurred since the expansion of competitive bidding to more than 100 markets nationwide in July 2013, as well as through the application of bidding-derived cuts to reimbursement rates to rural and other areas that’s taken effect in 2016.

Although our report only covered Medicare beneficiaries with diabetes, there is every reason to believe that beneficiaries who rely on the other, life-sustaining medical products covered under competitive bidding (e.g., oxygen, continuous positive airway pressure (CPAP) equipment, enteral nutrients, equipment and supplies) have experienced similar or even greater adverse consequences. However, due to the exorbitant cost of purchasing beneficiary records from Medicare – oh yes, you have to buy the data – we must rely on anecdotal evidence from beneficiaries and distributors, provided by the American Association for Homecare.

For example, one couple recently reported they are “having a hard time getting CPAP supplies b/c their supplier is filing non-assigned and asking them to pay up front.” They have tried calling Medicare several times for assistance but has either not been able to get through or no one has called them back. Currently, they are washing old supplies and reusing them.

A key driver of the “unintended consequences” of competitive bidding is the unsustainable reduction in reimbursement to product distributors. One distributor reports that he has reduced his service from 27 counties to four and was forced to reduce his staff from 34 full-time employees to three full-time and one part-time. Another distributor reported that he would no longer be taking Medicare oxygen patients because “the reimbursement is so low and we have such a hard time to collect money from Medicare.” When beneficiaries can’t obtain the medical products/services they need, or they are in medical crisis, their only option is to go to the hospital for assistance. 

So, where is the disconnect here? Why does Medicare continue to claim success when real science proves otherwise? Part of this disconnect is due to the inappropriate methodology Medicare uses to monitor beneficiary access and safety. According to a 37-page report by the National Minority Quality Forum, Medicare’s findings are not supported by the data and methodology descriptions presented in the agency’s reports. As far as cost savings, Medicare’s reporting is nothing short of the old “Times Square shell game”. Yes, Medicare has realized savings in Medicare Part B (e.g., physician office visits) and Part D (e.g., medications, durable medical equipment), but at the same time, hospitalization costs (Part A) have skyrocketed. So, where is the real savings? Is there any?

The increases in hospitalization costs in 2011 should have been a tip off that something was going very wrong with competitive bidding. Instead, Medicare reported that the 3.25 percent rate increase in 2016 “was based on a higher estimate of traditional Medicare spending and does not stem from a change in policy” (e.g., competitive bidding).

Just as a reminder, Medicare is not a government “freebie.” We all pay into it, and we are all entitled to access to quality medical products and services. Medicare’s competitive bidding program is not just another prime example of incompetence and duplicity; it is an ugly stain on the honesty and integrity of our government. Every American with a parent or grandparent on Medicare should be outraged.

To date, the Centers for Medicare and Medicaid Services (CMS), who administer the Medicare program, has refused to respond to our research findings. Nor, has CMS complied with requests from Congress and numerous medical organizations and patient advocacy groups. In a recent letter to Sylvia Burwell, Secretary Department of Health and Human Services, Senator Orrin Hatch asked the agency to “share the specific indicators the agency is monitoring to determine if beneficiaries experience access problems or adverse outcomes and to report the results publicly on the agency’s website.”

In spite of both research findings and reports from HME providers and patients nationwide about the negative impacts of the bidding program, CMS recently expanded the reach of the program by applying price cuts from these bidding rounds in metro areas to rural and other less-densely populated areas.  For many items, Medicare reimbursement rates for rural home medical equipment providers dropped by 50 percent or more compared to the 2015 fee schedule. 

Congress has been working to pass legislation to partially roll back these latest cuts so policymakers can have the chance to study the effects of these reductions on seniors and people with disabilities in rural areas, but the House and Senate still have differences to work out between competing bills.  Breaking this impasse and passing a bill to allow for a better assessment of the impacts of the bidding program in these areas would be a step in the right direction for fixing or replacing this badly-designed program.

When will the disruption and harm to our nation’s seniors and people with disabilities stop? When every American starts putting pressure on Congress to force Medicare to suspend competitive bidding until credible, verifiable changes are made that provide unfettered access to needed healthcare products and that protect patient safety.