• Study: Competitive Bidding Slashes Patient Choice, Access, Quality

    From: HME Business

    Dobson DaVanzo & Associates study says NCB could negatively impact Medicare beneficiaries and is highly susceptible to gaming.

    Aug 26, 2010

    Competitive bidding could result in diminished choice, reduced access to care, and lower quality products and services for Medicare beneficiaries who depend on HME providers, according to a new independent study of the national competitive bidding program.

    As part of its research, actuarial company Dobson DaVanzo & Associates, which was commissioned by the American Association for Homecare to conduct the study, conducted an extensive literature review (government reports, congressional testimony, journal articles), as well as interviews with representatives from patient advocacy groups, beneficiaries, discharge planners, academic experts and the HME community.

    An executive summary of the findings is available from AAHomecare, and the full report will be available in mid September when the Association will distribute the study to AAHomecare members, Congress, and the Administration. To view the AAHomecare Issue Brief, visit http://aahomecare.us1.list-manage.com/track/click?u=3c0f3755f13930464597f245a&id=4e457f178a&e=6b946f30c2.

    AAHomecare highlighted several key findings from the Dobson DaVanzo study that it suggested HME professionals use as talking points when meeting with Representatives and Senators during the remaining three weeks of the congressional recess.

    Marketplace Implications:

    • The design of the competitive bidding program creates economic incentives that could have a negative impact on price, quality, and service for Medicare beneficiaries.
    • The design of the CMS competitive bidding process is highly susceptible to “gaming,” allowing sophisticated bidders to use complex rules and the volatility of supply and demand to their advantage.
    • The three-year bid period, the composite price structure used to calculate prices, and both “predatory” and “suicide” bidding could produce unrealistically low bid prices incompatible with sustained service and product quality.
    • Fewer suppliers could lead to less price competition over the long term, not more.


    • Freedom of choice will be challenged for beneficiaries both in terms of types of suppliers and types of equipment that will be available.
    • The competitive bidding program could eliminate up to 90 percent of DMEPOS suppliers, limiting choice of preferred providers and disrupting long-term relationships and continuity of care.


    • As the number of suppliers is reduced, beneficiaries could experience problems accessing quality equipment and services, especially over time and by geographic area.
    • Lower payments to suppliers may reduce beneficiary access to high quality, brand name, and customizable equipment, and other effective supplies that are familiar to the patient.
    • The competitive bidding program may not adequately protect against supplier unavailability and delayed response time, causing hospital discharge delays and/or more emergency department visits.
    • The competitive bidding program may reduce the provision of various services on which beneficiaries rely to remain independent and prevent complications, such as patient evaluation, education, and training, and equipment customization, adjustment, and timely repair and maintenance.


    • Suppliers may not be able to provide high quality products, and may significantly reduce the services they provide to beneficiaries.
    • Suppliers may not be able to afford (and are not incentivized to provide) higher quality products, which can affect beneficiary mobility, general health condition, and quality of life.
    • Technological innovation and development of high quality products may be stifled.

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