New PRI Issue Brief Supports Reforms to Medicare’s DMEPOS Competitive Bidding Process for Improved Quality and Sustainability
The Pacific Research Institute’s recent report on CMS’s reimbursement system details flaws in Medicare’s competitive bidding methodology, including supply shortages, and outlines needed reforms to ensure Americans’ access to care.
WASHINGTON, DC –– A issue brief published by the Center for Medical Economics and Innovation at the Pacific Research Institute (PRI) this week highlights flaws in the Centers for Medicare & Medicaid Services (CMS)’s competitive bidding program for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) –– including systemic problems in previous rounds of competitive bidding that have contributed to limited access to equipment and services for Medicare patients. Echoing the PRI’s 2018 analysis of the competitive bidding structure, patients have experienced “adverse consequences” – including lower health outcomes. Unless CMS’s methodology is addressed, these problems could be repeated in Medicare’s newly proposed bidding structure.
PRI’s issue brief titled “Reforming CMS’ Competitive Bidding Process to Improve Quality and Sustainability: An Update” emphasizes that the proposed bidding structure for compensated winning DMEPOS bids would be inefficient because the new, untested methodology does not reflect market forces but rather reflects government price fixing. For example, CMS would set a bid ceiling that would be capped at the previous year’s rates, driving down rates, and creating problems of “uneconomical pricing and supply shortages will persist as a result.”
Following CMS’s recent proposal to reinstate Medicare’s competitive bidding program for DMEPOS, the report emphasizes that the bidding structure would worsen supply shortages for DMEPOS, including the supplemental oxygen supplies and equipment that millions of Americans rely on. If a similarly flawed methodology is implemented, the report claims that shortages of medical supplies and inflated prices are likely to occur.
“Poorly delineated bidding areas where the costs of providing care vary will cause either higher costs in the low-cost region or exacerbate the equipment shortage problems. These adverse consequences can be avoided by ensuring that the costs of serving the area are similar throughout,” according to Dr. Wayne Winegarden, the report author.
The Pacific Research Institute report underscores how reforms to Medicare’s competitive bidding methodology could protectMedicare access to home-based durable medical equipment and respiratory therapy, lower systemic costs, and enhance patient outcomes. Specifically, a more efficient bidding process would price “equal to (or nearly equal to) the bid that was high enough to ensure that there will be adequate supplies, but no higher,” with winning bidders’ rates matching their bids to encourage supplier bid fulfillment. Implementing such a bidding structure would ensure supplier bids are high enough to reflect the accurate costs of providing DMEPOS, thereby ensuring patient access to respiratory care and oxygen therapy.
“PRI’s issue brief underscores similar concerns raised by the supplemental oxygen provider community in our comments to CMS, including significant concerns with our ability to meet patient need based on higher prices and a more clinically complex population,” said Robin Menchen, Chair of the CQRC. “We have asked the Administration to revise its competitive bidding methodology to reflect market-based pricing to ensure Medicare does not unintentionally replicate patient access issues from prior rounds, and to work toward a balanced approach to establish market-based prices for DMEPOS suppliers.”
Supplemental oxygen is clinically necessary for 1.5 million Medicare patients living with chronic pulmonary and respiratory conditions like COPD, pulmonary hypertension, and cystic fibrosis. Strengthening Americans’ access to this critical modality, which helps patients maintain their independence and enhance their quality of life, is vital.
To download the full PRI brief, click here.
To read the CQRC’s CBP recommendations, click here.
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The Council for Quality Respiratory Care (CQRC) is a coalition of the nation’s leading home oxygen therapy provider and manufacturing companies providing in-home patient services and respiratory equipment including liquid oxygen, oxygen concentrators, and sleep therapy devices to Medicare beneficiaries who rely upon home oxygen therapy to maintain their independence and enhance their quality of life. Learn more at cqrc.org.
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