SYS-CON UK Authors: Salvatore Genovese, Jeremy Geelan, Jamie Matusow

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Patient and Disability Groups Support Bill to Begin Market Pricing System for Home Medical Equipment in Medicare

WASHINGTON, Nov. 14, 2012 /PRNewswire-USNewswire/ -- More than 30 patient advocacy and consumer groups endorsed a bill in Congress that would replace Medicare's current "competitive bidding" program for durable medical equipment with a better market pricing system that preserves access to homecare. Millions of Americans use medically required durable medical equipment and services at home, including oxygen therapy, wheelchairs, and hospital beds.

The bill, H.R. 6490, was introduced in the House of Representatives by a bipartisan group of lawmakers in September and has gained strong bipartisan support from several dozen members of Congress. The bill would replace the current, controversial bidding program with a more sustainable system, says the American Association for Homecare.

An October 31 letter from the patient groups to the lead sponsor of the bill, Rep. Tom Price, M.D. (R-Ga.), states:

"This legislation establishes an independent auction program, known as the Market Pricing Program (MPP), which will result in accountability, transparency, and market-based pricing. It will ensure that Medicare beneficiaries, including individuals with disabilities, continue to have access to high quality, medically required durable medical equipment (DME) and services that will give our community the ability to live active, productive independent lives with improved health outcomes….

The current bidding program restricts access to, and choice of, DME items and services by forcing consumers to use certain durable medical equipment providers whether they furnish the products and services that provide the most benefit to consumers or not. With fewer providers allowed to provide products and services, normal expedient deliveries of items and services are being eliminated and therefore Medicare costs are increasing because patients are being hospitalized for longer periods and may require more frequent physician visits.

Unfortunately, consumers are already experiencing access problems in nine Round One areas. Since the January 1, 2011 implementation of this program, hundreds of consumers, patients and providers have reported problems and complaints about having access to medically required durable medical equipment and services. We expect these complaints to increase dramatically if the program expands to an additional 91 areas across the nation. The program impacts individuals with significant disabilities, the chronically ill and frail elderly who require wheelchairs, walkers, oxygen therapy, enteral nutrients (tube feeding), continuous positive air pressure (CPAP) and respiratory assistive devices, hospital beds and support surfaces, as well as mail-order diabetic supplies. Complex rehab wheelchairs are exempt under MPP, as they are with the current bidding program.

Consumers, physicians and clinicians all agree that the current bidding program is disrupting the continuum of care by restricting consumers from going to their providers of choice in order to receive the appropriate items and services that they need. Enacting a market-based auction program will ensure that beneficiaries receive high-quality service and equipment that they have become accustomed to receiving and will lower health care costs by enabling beneficiaries to stay in their homes with the products and services on which they depend.

Coverage for these needed products and services would give our community the right to fully participate in society and live active, productive independent lives with access to employment, educational and social opportunities. Without the right DME products and services, our ability to access the community is significantly limited and restricts our going to work, school or places of worship, physician visits and other medical services as well as taking care of grocery shopping or other activities associated with independent self-care or care of dependents such as young children or aging parents."

Signing the letter were the following 31 organizations:

AAPD (American Association of People with Disabilities)
ADAPT, Montana
Ability Center of Greater Toledo
American Sleep Apnea Association
Association of Assistive Technology Act Programs
Association of Programs for Rural Independent Living (APRIL)
Association of University Centers on Disabilities
Brain Injury Association of America
Christopher and Dana Reeve Foundation
Disability Policy Institute
Disability Rights Center
Disability Rights Education and Defense Fund
Friends of Disabled Adults and Children
Statewide Independent Living Council of Georgia
International Ventilator Users Network
National Emphysema/COPD Association
National Family Caregivers Association
National Council on Independent Living
National Disability Rights Network
National Organization of Nurses with Disabilities (NOND)
Pennsylvania Statewide Council on Independent Living (PA SILC)
Post-Polio Health International
Shepherd Center
Spina Bifida Association of America
Summit Independent Living Center, Inc.
Three Rivers Center on Independent Living (TRCIL)
Touch the Future
UCP/CLASS, Pittsburgh
United Cerebral Palsy
United Spinal Association
Wisconsin Council on Physical Disabilities

Tyler Wilson, president of the American Association for Homecare, commented, "We embrace competition, we believe in market pricing, but we also believe in getting it right. If market pricing is the future of healthcare reimbursement rates for Medicare, then all healthcare sectors will want to ensure that the systems are designed correctly. And experts agree universally that the existing Medicare bidding system for durable medical equipment creates serious unintended, negative outcomes and should be overhauled."

Last year, the Centers for Medicare and Medicaid Services implemented a bidding program for durable medical equipment and services in nine areas – Charlotte, Cincinnati, Cleveland, Dallas, Kansas City, Miami, Orlando, Pittsburgh and Riverside, California.  The bidding program is underway in an additional 91 metropolitan areas now.

But auction experts, providers, and consumer advocates are concerned that Medicare beneficiaries will continue to see declines in access to medically required equipment and care under the current bidding system. Since the bidding program was implemented in 2011, the American Association for Homecare has received reports from hundreds of Medicare patients about their difficulties finding local equipment and service providers, delays in obtaining medically required equipment and care, and fewer choices when selecting equipment and providers.

In the New York Times Freakonomics blog on September 21, 2012, economist and Yale Law School Professor Ian Ayers described the problems with the current bidding system and concluded, "Congress and the White House must act to reform the Medicare auction. If we do not effectively apply market methods to health care, Medicare is unsustainable."


As professional auction designers have explained to Congress and the White House, the current Medicare bidding system for DME allows non-binding bids. That leads to irresponsible bids and unsustainable prices and does nothing to ensure that winning bidders are qualified to provide the required medical equipment and services to Medicare beneficiaries.

The market pricing program is based on recommendations by economists and auction experts who have studied the current program. That program features an auction system to establish market-based prices and would require Medicare to make fundamental changes to ensure the long-term viability of the program. Key components include:

  • The market pricing program is designed to achieve an accurate market price.
  • It is designed to save the same dollars as the existing Medicare competitive bidding system.
  • Bids are binding for the bidders and cash deposits are required to ensure that only serious homecare providers participate.
  • The bid price is based on the clearing price (not the median price) of winners.
  • The program includes the same equipment and services as the current bidding system and would be implemented across the country during the same timeframe. 
  • Two product categories per market area would be bid. Eight additional product categories in that same area would have prices reduced based on auctions conducted simultaneously in comparable geographic areas. 

Millions of Americans use home medical equipment and services prescribed by their physicians to treat lung disease, diabetes, spinal cord injuries and disorders, and other conditions that require homecare to allow people to live safely and independently at home. 

The American Association for Homecare represents durable medical equipment providers and manufacturers who serve the medical needs of millions of Americans who require oxygen equipment and therapy, mobility devices, medical supplies, inhalation drug therapy, and other medical equipment and services in their homes. Members operate more than 3,000 homecare locations in all 50 states.  Please visit www.aahomecare.org.  

SOURCE American Association for Homecare

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