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Competitive Bidding Under Fire in Washington D.C.

Posted Jul 07 2008 7:14pm

Competitive bidding came under fire during my trip to Washington D.C. The controversial program is being questioned by an ever increasing number of legislators. Fueling much of the controversy are two unfavorable economic studies.

The first study, out of Robert Morris University, was referenced in my previous article, Competitive Bidding: An Anti-Competitive Scheme. This study was a theoretical look at the likely outcome of the national competitive bidding program.

The second study, out of Drexel University, I became aware of while in Washington D.C. This study was not simply theoretical as it examined the three demonstration projects, two in Polk County, Florida and one in San Antonio, Texas. CMS has kept all information about these demonstration areas very quiet. The Drexel study was able to uncover some disturbing information, though.

As both studies predicted, “gaming” of the system proved to be beneficial. While some low utilization items saw savings, the high utilization items actually increased in cost. This lead to an actual increase in overall cost to the Medicare benefit when compared to pre-competitive bidding.

Both studies also predicted a decrease in quality of service. The Drexel study confirmed that CMS had to hire an outside agency to go into the demonstration project areas and monitor quality of service because of consumer complaints of subpar service.

In summary, costs to Medicare increased and quality of service significantly decreased in the competitive bid demonstration projects. Yet, CMS continues ahead with national competitive bidding.

The fight to delay and defeat competitive bidding is now heating up in Washington D.C. Representatives from rural states are especially concerned. There is a letter to CMS circulating in the House asking for a delay in implementing round one. There is also a Dear Colleague letter moving through the House. A set of companion letters in the Senate are close to being drafted.

I would urge everyone to contact your Representatives and ask them to sign on to these letters and support delaying competitive bidding.

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