"Fixing" Competitive Bidding

Medicare’s highly touted cost savings vehicle, “Competitive” Bidding for Durable Medical Equipment and respiratory care, has been rolled out in 9 metropolitan areas across the United States. In those 9 areas Medicare beneficiaries are forced to use the lowest bidders for the products and services they require at home, to stay at home…products and services whose absence in the home setting would necessarily mandate that the patient live elsewhere, somewhere they didn’t want to live and would likely cost that patient and taxpayers exponentially more to pay for.
The results have been very mixed to date, as expected by industry leaders across the country…people who “won” bids and lost bides are equally troubled by the outcomes – and for a program that isn’t two full months into implementation you would think it would be going smoother – should be expected to run smoother, alas it is not. The success of this program, the very intellectual foundations for the program, was built upon a false argument – the government overpays for medical equipment, respiratory care, and the accompanying services. Even if the argument were true, why would a bidding program that eliminates competition, bankrupts small providers, and provides ZERO incentive or accountability for quality, be a reasonable way to fix it?
So given all this I read an editorial in the Washington Times this week with great interest.
The editorial can be found by CLICKING HERE
It acknowledges there are problems with the program, major structural issues with the way it was designed and suggests there are several items that need to be fixed before Round 2. It wasn’t so much the content of the article that interested me – it wasn’t particularly well informed or earth shattering to read for anyone who has given the program serious thought – it was the principal author, one Michael O. Leavitt, the Founder and Chairman of Leavitt Partners, and more importantly the Secretary of Health and Human Services from 2005-2009.
So when he calls for fixes to the program it causes me some pause – where was this voice from 2005-2009, when he actually had the institutional authority to do something about it? What happened to the ‘fixes’ to competitive bidding during the 18 month delay that congress mandated? Best anyone can tell they simply made their website look prettier and added some functionality, the foundation of the program remained largely intact, causing the same systemic issues Mr. Leavitt identified – and were long ago pointed out by the industry – to come to fruition after implementation on January 1 of this year.
So why write the article now? He had 4-5 years of actual authority to do something about the issues he addressed, all of which were forecasted and none of which were particularly difficult to foresee in the 2005-2009 timeframe. My sense is that there is growing distaste for the program on the ground and there is an ideological investment by many in government to stick with it, because hell, it sounded good when that guy came and gave a presentation on it, and look at all the money it will save? How many re-hospitalizations because of poor service or response time will it take to evaporate the savings? How many patients will be stuck waiting for the low bidder to get to their house during a weather emergency and be forced to go to the ER instead? What are the consequences of dismantling an entire healthcare sub-sector, when simultaneously advocating for patients to live more independent lives in their homes?
It’s a frustrating issue because there are so few people in positions of real power who get it, hopefully the call to fix the program will gain traction, but I doubt anything short of a full repeal will allow for the fundamental fixes that are necessary. It is bad policy…will it produce short-term savings? Absolutely, the same way we would see savings if we hire surgeons based on who was willing to take the lowest compensation. The surgery may cost less, but the downstream costs to society and patients would be tremendous…is it cheaper to not get your oil changed? Sure, but we have to take care of our cars and reinvest in them to sustain optimal performance. Healthcare services are no different; we need a robust sub-sector of medical equipment and respiratory care providers if we want a highly functional system, eliminating as large a percentage of providers as competitive bidding will and pushing reimbursements to unsustainable levels isn’t the answer now, nor will it ever be.
I just hope Secretary Sebelius deals with this NOW, instead of waiting until she’s powerless in the private sector in a few years to actually look at it.

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