Medicare 'Competitive' Bidding Program for Home Medical Equipment Is Plagued by Myths; Economists Warn that the Bid System Will Fail

/PRNewswire/ -- While Medicare paints a glowing picture of the controversial "competitive" bidding program for home medical equipment and services (HME), economists and consumer groups have lined up to oppose the flawed system.

New restrictions and unsustainable prices based on this controversial bidding system are scheduled to take effect on January 1, 2011 in nine of the largest metropolitan areas including Charlotte, Cincinnati, Cleveland, Dallas-Ft. Worth, Kansas City, Miami, Orlando, Pittsburgh, and Riverside, Calif. Another 91 areas throughout the U.S. will be subjected to the bidding program starting later in 2011. The bidding system affects providers and users of home medical equipment and services such as oxygen therapy, respiratory devices, hospital beds, wheelchairs, and other medically required equipment and supplies needed by seniors and people with disabilities in Medicare.

Proponents of the bidding system have conveyed misleading information that exaggerate the benefits and ignore the severe shortcomings of the program.

MYTH #1: The bidding system improves the method setting reimbursement rates for providers of home medical equipment and services.

REALITY: 166 experts, including two Nobel laureates and numerous economics professors from leading universities, recently warned Congress and regulators that this bidding system will fail. The experts, who do not otherwise oppose competitive bidding to set Medicare prices, point out that the system has four fatal flaws:

* The bidders are not bound by their bids, which undermines the credibility of the process.
* Pricing rules encourage "low-ball bids" that will not allow for a sustainable process or a healthy pool of equipment suppliers.
* The bid design provides "strong incentives to distort bids away from costs."
* There is a lack of transparency in the bid program that is "unacceptable in a government auction and is in sharp contrast to well-run government auctions."


These concerns are not new. They have been shared with the federal Centers for Medicare and Medicaid Services (CMS), which designed the bidding system. But the agency has dismissed those concerns.

The 166 economists sent letters outlining the flaws in the bidding system to Senators Max Baucus (D-Mont.) and Charles Grassley (R-Iowa) and to Representatives Jason Altmire (D-Pa.) and Ralph Hall (R-Tex.) on October 15, 2010, and sent a letter to Rep. Pete Stark (D-Calif.) on September 26. See http://www.cramton.umd.edu/auction-papers.htm.

A September 30, 2010 New York Times' "Freakonomics" article by two of the 166 economists addresses the bidding issue. Yale University economist Ian Ayres and University of Maryland economist Peter Cramton, conclude: "The mystery is why the government has failed over a period of more than ten years to engage auction experts in the design and testing of the Medicare auctions…. We suspect the problem is that CMS initially did not realize that auction expertise was required, and once they spent millions of dollars developing the failed approach, they stuck with it rather than admit that mistakes were made." See: http://freakonomics.blogs.nytimes.com/2010/09/30/fix-medicares-bizarre-auction-program/

MYTH #2: Medicare overpays for home medical equipment, and the bidding system applies market forces to correct that.

REALITY: Proponents of the bidding system have used out-of-date reimbursement rates and false comparisons of retail costs versus Medicare costs to argue their case. For many years, CMS has set reimbursement rates for home medical equipment through a fee schedule. Over the past decade, those reimbursement rates have dropped nearly 50 percent because of cuts mandated by Congress or imposed by CMS.

The costs of delivering, setting up, maintaining, and servicing medically required equipment in the home are obviously greater than the cost of merely acquiring the equipment. But Medicare does not recognize the costs of these services. So comparing the cost of the equipment to the larger cost of furnishing the full array of required equipment, supplies, and services is false and misleading.

MYTH #3: The bidding program will make healthcare more cost-effective.

REALITY: The home is already the most cost-effective setting for post-acute care. For many years, home medical equipment providers have competed in Medicare on the basis of quality and service to facilitate in the hospital discharge process and enable patients to receive cost-effective, high-quality post-acute care at home. As more people receive quality equipment and services at home, patients and taxpayers will spend less on hospital stays, emergency room visits, and nursing home admissions. Home medical equipment is an important part of the solution to the nation's healthcare funding crisis. Home medical equipment represents less than two percent of total Medicare spending. So while this bidding program would make even more severe cuts to reimbursement rates for home medical equipment, that will ultimately result in much higher spending in Medicare and Medicaid for hospital and nursing home stays and for physician and emergency treatments.

MYTH #4: The bidding program will eliminate fraud in the home medical equipment sector.

REALITY: CMS continues to describe the bidding program as an anti-fraud tool. In reality, it is a price-setting mechanism that has nothing to do with fraud prevention. In fact, the exact opposite is true, according to the 166 market experts who warned Congress in their October 15 letters that the CMS bidding program "will lead to a 'race to the bottom' fostering fraud and corruption."

When explaining on October 14, 2010 why it has missed the deadline for announcing the bid winners, CMS raised concerns about fraud associated with the bidding program. Yet the agency said it will implement the new system on January 1, 2011. The economists' October 15 letter states, "This haste to implement results that raised many red flags with respect to program integrity seems contrary to the public interest and common sense."

The real solution to keeping criminals out of Medicare is better screening, real-time claims audits, and better enforcement mechanisms for Medicare. Two years ago, the American Association for Homecare proposed to Congress an aggressive, 13-point legislative action plan to combat fraud, and many of those provisions have been included in legislation passed in Congress. Moreover, two important anti-fraud requirements – accreditation and surety bonds – took effect more than one year ago, in October 2009.

MYTH #5: Only the home medical equipment sector opposes the bidding system.

REALITY: In addition to the 166 economists and bidding experts who have expressed grave concerns about the bidding program, many consumer and disability organizations have called for a halt to the bidding system. Those groups include the ALS Association, the American Association for Respiratory Care, the American Association of People with Disabilities, COPD/ALERT, the International Ventilator Users Network, the Muscular Dystrophy Association, the National Emphysema/COPD Association, the National Spinal Cord Injury Association, and Post-Polio Health International, among others.

These consumer groups support H.R. 3790, a bill in the U.S. House of Representatives that would eliminate the bidding program in a fiscally responsible manner. That legislation would lower reimbursement rates for durable medical equipment but would allow providers to continue competing to serve Medicare beneficiaries on the basis of service and quality. The bipartisan bill has 257 cosponsors, including more than half of the Democrats and more than half of the Republicans in the House.

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Debunking Top Health Myths Even Doctors Believe

(SPM Wire) Do you think that you need eight glasses of water a day, that reading in dim light damages your eyes or that eating turkey makes you sleepy? Think again.

In a study entitled "Medical Myths Even Doctors Believe" published in the "British Medical Journal," Indiana University School of Medicine researchers explored some commonly held and untrue medical beliefs.

The researchers studied various myths -- including those seemingly age-old beliefs that people only use 10 percent of their brains and that hair and fingernails continue to grow after we die.

The surprising findings are that all these beliefs were unproven or untrue.

"We got fired up about this because we knew that physicians accepted these beliefs and were passing this information along to their patients… We didn't set out to become myth busters," said the study's co-author Dr. Aaron Carroll, assistant professor of pediatrics and a Regenstrief Institute, Inc. affiliated scientist.

The first belief they explored was that people should drink at least eight glasses of water a day. This advice has long been promoted as healthful as well as a useful dieting or weight control strategy.

"When we examined this belief, we found that there is no medical evidence to suggest that you need that much water," said Dr. Rachel Vreeman, a pediatrics research fellow and co-author of the new study.

She thinks this myth can be traced back to a 1945 recommendation from the Nutrition Council. But an important part of the Council's recommendation has been lost over the years -- the large amount of fluid contained in food, especially fruits and vegetables, as well as in the coffee and soda people drink each day should be included in the recommended total.

Indeed, drinking excess water can be dangerous, resulting in water intoxication and even death, the study authors note.

Even before Abe Lincoln was told that reading in dim candle light was bad for his eyes, people have believed that reading in dim light causes permanent eye damage. And ever since, generation after generation of parents have thusly admonished children caught reading with flashlights under their blankets.

However, the new study found no evidence that reading in dim light causes permanent eye damage. It is true that eye strain can occur in dim light, causing some temporarily decreased acuity, but after rest the eyes return to their full potential.

And don't worry about falling asleep at the dinner table after gnawing on a turkey drumstick.

Yes, scientific evidence supports that tryptophan, which is contained in turkey, can cause drowsiness. However, turkey doesn't contain an exceptional amount of tryptophan. In fact, turkey, chicken, and ground beef contain about the same amount of tryptophan and protein sources like pork and Swiss cheese contain more tryptophan per gram than turkey.

So why do people believe eating turkey makes them sleepy but never feel that way after a burger or pork chop? This myth most likely gained credence because turkey is often consumed during large, heavy dinners. It's the total content of the meal that makes one feel lethargic.

Dr. Vreeman and Dr. Carroll also explored the popular belief that we use only 10 percent of our brains. MRI scans, PET scans and other imaging studies show no dormant areas of the brain, and even viewing individual neurons or cells reveals no inactive areas of the brain. Metabolic studies of how brain cells process chemicals show no nonfunctioning areas.

This myth probably originated with self improvement experts in the early 1900s who wanted to convince people that they had yet not reached their full potential. With the help of these self proclaimed experts one could tap into the 90 percent of the brain supposedly not being used.

The study also showed that finger nails and hair do not grow after death and that shaved hair does not grow back faster, coarser or darker, among other popularly-held incorrect medical myths.